UOG report: $2 billion worth of defense projects on Guam hit a snag
An estimated $2 billion worth of defense projects on Guam are on pause due to stumbling blocks that have prevented the execution of contracts already awarded, according to a report by the University of Guam.
“The first reason regards reallocation of money,” stated the UOG’s Guam Recovery Research Project released early this week. “The U.S. Department of Defense had previously detoured money allocated for the military realignment in Guam to other federal projects, such as the border wall.”
In 2019, the Department of Defense announced its plan to scale back the $8.7 billion military buildup on Guam as a result of President Trump’s raid of the defense construction funds to build 175 miles of wall along the Mexican border.
The DoD had approved the diversion of $3.6 billion in funding from military construction projects to finance the controversial wall projects, nixed by U.S. Democrats. A total of 127 projects authorized under fiscal 2019 defense budget were placed on the chopping block.
The 2019 National Defense Authorization Act has authorized $409 million worth of projects for Guam.
A fact sheet released by the DOD in February 2019 listed 13 projects for military installations on Guam. At least 10 of these projects were scheduled for bidding next year, two have already been awarded, while one is up for bid. Updates on these projects were currently not available.
The National Defense Authorization Act for fiscal 2020 appropriated $310.2 million for military construction for Guam — plunging 31 percent from the $448.5 million authorized under fiscal 2017.
“The second reason references the scarcity of labor, caused by the denial of H-2B labor visas for contractors in Guam,” the UOG report said.
Last year, the U.S. Department of Homeland Security lifted the ban on Philippine labor, reinstating the country's eligibility for the H-2B program in the final rule that applies to Guam and the CNMI.
"The U.S. military realignment away from Japan and subsequent military construction on Guam requires a sizeable workforce that cannot be sustained by the local workforce in Guam," the DHS stated in the final rule posted on the Federal Register in January 2020.
Federal officials have determined the Philippines' inclusion in the H-2B non-immigrant visa program "is in the U.S. interest."
The new rule has paved the way for construction companies on Guam and the CNMI to resume their recruitment of workers from their main source of manpower in Asia.
DHS said the defense department anticipated a further increase in labor demand over the next five years.
“The third reason—and most frequently mentioned reason—concerns recent changes made to the permitting process,” the UOG report said.
The report said interviews with construction companies indicated that because of Covid-19, the permitting process had slowed down.
“Once a land-use and construction permit review committee was implemented, the review process system seemed to slow down as more agencies began coordinating,” the UOG report said. “In addition, staffing problems were created due to mandated shutdowns, and the appointment of board and agency personnel was delayed.”
Between 2017 and 2020, the report said revenue-generating performance of construction companies declined by 47 percent—a much less dramatic amount.
“The slightly less amount in decline may be due to the fact that most construction companies remained operational during the Covid -19pandemic,” the report said.
Construction companies were considered “essential” businesses and therefore, were allowed to operate for most of 2020, except on few occasions when the government of Guam ordered a pause on construction due to Covid clusters involving some construction workers.