Army's 50% Faster Military Construction Push Rewrites Contractor Risk

The U.S. Army wants military infrastructure delivered up to 50% faster and at 30% lower cost — and contractors will carry much of the new risk. That is the core warning from construction attorneys after the Army announced a military construction reform initiative in October.

The initiative emphasizes design-build delivery and industrialized construction methods, such as modular construction, as alternatives to traditional project delivery. The 2026 National Defense Authorization Act (NDAA) compounds the shift. It expands the Department of Defense's authority to use Other Transaction Agreements — OTAs, a contract vehicle that generally operates outside the standard federal procurement rulebook — for facility repairs and construction projects.

"The biggest change is a move toward faster, more flexible military construction procurement," said Trent Cotney, a Tampa, Florida-based partner at law firm Adams & Reese. "This represents a significant shift in how military construction projects may be awarded and completed."

What does the OTA expansion change?

Plenty, according to Stephen Tobin, a government contracts partner at Philadelphia-based law firm Cohen Seglias. Previously, OTA use in military construction applied only to a pilot program focused on new construction technologies, with restrictions on the number and total value of projects.

The 2026 NDAA removes those limits.

"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."

That last clause matters commercially: a contractor that performs well on an OTA project could win follow-on work without recompeting for it.

Contractors have already taken notice. Last month, Tutor Perini highlighted the accelerated design-build-to-budget delivery method used for $315 million in U.S. Coast Guard work at Base Kodiak, Alaska, performed by its subsidiary Perini Management Services. On its Oct. 29 earnings call, Granite Construction pointed to the new procurement regime as a growth avenue.

"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.

Where does the risk shift?

Faster procurement can produce design errors and cost overruns, Cotney said. Accelerated schedules compress decisions that traditionally took months.

"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."

Cotney's practical advice: read the risk-allocation language closely, especially in OTAs. "Depending on the contractual language, it may shift more of that risk to contractors," he said. "Faster procurement should not come at the expense of reasonable risk allocation."

The Army's reform moves away from design-bid-build, where the government completes the design first and then awards a construction contract. Under design-build, the contractor and designer collaborate before construction begins, shortening timelines and giving builders more influence over costs. It also expands their role in value engineering — the process of identifying cost savings or improvements before construction starts.

"Yes, design-build shifts both the design and the construction risk onto the contractor," said Douglas Proxmire, a partner at Washington, D.C.-based law firm Venable. "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."

Proxmire said design capabilities and partnerships with modular construction firms are now more important than ever. He recommended builders develop relationships with design partners and strengthen modular capabilities.

Fewer protections, fewer protest routes

The legal safety net is thinner under OTAs. Because OTAs generally operate outside the Federal Acquisition Regulation (FAR) — the rulebook governing most federal contracts — contractors cannot assume familiar clauses will appear automatically.

"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 said. "Contractors need to be aware of this and take steps to reduce risks and ensure protective clauses are included in their favor."

Award challenges also narrow. The Government Accountability Office generally reviews whether an agency properly used its OTA authority, rather than reconsidering the agency's evaluation and selection of a contractor.

Will faster procurement mean faster construction?

Not necessarily. Tobin noted that government efforts to accelerate procurement have historically produced mixed results. Faster acquisition can produce mistakes or poorly defined requirements that surface later as post-award claims.

"Contracting personnel may be more conscientious in evaluating acquisition cycle phase pairings such as planning and designing," Tobin said. "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."

Attorneys recommend a deliberate approach before firms commit. Cotney advises companies to evaluate their capacity to meet accelerated schedules, get fluent in alternative delivery methods, and participate in federal industry outreach programs.

"Ultimately, these changes present significant opportunities, but contractors need to understand the risks," Cotney said. "Faster procurement is only an improvement if it results in better project delivery without placing unreasonable burdens on contractors."