Trends in Government: The rewards of government sector work outweigh the complexities – August/September 2024

By Jessica Chevalier

The government sector is a sprawling landscape chock-full of opportunities for flooring manufacturers that are willing to dive into its complexity. At present, the government sector is facing a number of transitional factors that are reshaping its profile and flooring needs. To start, the government has an excess of unused interior building space-much of which needs modernization-and its effort to right-size its footprint will result in renovation work as agencies revamp and move.

In addition, these modernization efforts aren’t simply about updating aesthetics and materials, but also about creating spaces that align with how people work today. As in the private sector, government workspaces should support different styles of work, including collaborative, as well as both physical and mental wellbeing. And these efforts, too, will generate renovation and flooring needs.

Unlike the private sector, the government sector is managed by legislation outlining not just how agencies and suppliers must work together but also what is allowed to be supplied. President Biden’s Build America Buy America Act (BABA), for instance, requires that all iron, steel, manufactured products and construction materials used in infrastructure projects be produced in the U.S. In addition, the many and varied subsectors of government and the agencies within all have their own standards for process and products.

And keep in mind that, at the federal level at least, the landscape of government agencies and funding can shift with every administration, shaking up priorities and thereby impacting materials. For instance, if an administration that prioritizes sustainability is replaced by one that does not, that can shift the product mix considerably.

ACTIVITY
The U.S. government is one of the largest property owners worldwide, with its properties comprising spaces from every other vertical sector. A military base, for instance, includes office space, residences, hotels, education facilities, hospitals and healthcare clinics. The Department of Veterans Affairs (VA) operates office space as well as acute care and senior living environments. And then, there are the out-of-the-box spaces, such as Navy ships, which serve as a home-workplace for sailors, as well as high-tech research facilities requiring specialty flooring solutions.

“Often, when people think of government buildings, they think of a huge office in D.C. that is managed federally, a beautiful, massive, 150- to 250-year-old building, but there is a lot more to it than that,” says Jonathan Stanley, director of education and government strategies for Tarkett North America.

“Everything you find in the civilian world, you will find in government and military,” says PJ Hughes, vice president of strategic accounts, government, military and GSA for HMTX Commercial/Teknoflor.

When it comes to activity, this is an advantage to suppliers serving the sector, as the broad variety of agencies and spaces under the government umbrella ensures that business remains relatively steady.

Another advantage of government work, interviewees report, is that there is more visibility to the pipeline than in the private sector. “The government sector is more predictable and consistent than other segments because of its transparency,” notes Randa Dean, vice president of strategic accounts and government for Shaw Contract and Patcraft. “It has long-term forecasts, large budgets put in place far in advance, a list of projects on the docket. We have seen growth this year, and that tends to happen year over year.”

“The government sector is something Mohawk Group identifies as recession-proof,” says AnnaLeigh Warmack Koné, Mohawk’s director of government and retail segments. “As we saw coming out of Covid, the federal government continued to pump money into the market to upgrade infrastructure and put people to work, whether that be through the Bipartisan Infrastructure Law, the National Defense Authorization Act, or SLED [state, local, education] funding being released.”

The Inflation Reduction Act of 2022 is another piece of legislation that has benefited government-sector suppliers, says Jay Lanier, regional sales director for Interface. Inflation Reduction Act funds have found their way to both federal and state levels, he notes, adding, “We see the trend continuing and perhaps accelerating through the rest of the year. With the potential shift in political spending preferences looming in 2025, there may well be a push to use funds now that may not be as readily available in the near future. In the longer term, we would expect spending to return to more normal levels, as the odds of similar spending bills becoming law are hard to foresee.”

Stanley reports, “All of the rating systems show government sector work growing consistently 2% over the next three to four years.”

PATHS TO MARKET
The Government Services Administration (GSA) constructs, manages and preserves government buildings and, in that effort, establishes contracts with service and material providers, such as flooring manufacturers, to streamline purchasing for government agencies. Agencies-local, state and federal-that receive federal tax dollars of any amount have the ability to buy under the GSA contract, but they aren’t required to use GSA contracts for their purchases.

“The big challenge with GSA purchasing for many is that it is complicated,” says Hughes. “To execute a GSA contract purchase order requires multiple steps of paperwork, and some people don’t want to be bothered. GSA is a nice vehicle, but truth be told, the amount of purchasing through the GSA is diminishing. People seek the path of least resistance.”

According to Jody Steger, director of government sales for Mannington Commercial, there has been a boom in local and state governments using buying cooperatives for purchasing instead of GSA. There are varied cooperatives that agencies can join, leveraging the power of numbers to lower product pricing for their members. For example, The Interlocal

Purchasing Systems (TIPS) is a national purchasing cooperative that offers access to competitively priced purchasing contracts to members, which include government agencies, school districts, emergency service districts and private organizations like churches and charities. Other cooperatives, such as Sourcewell, offer membership to specific groups. In Sourcewell’s case, that is education and government agencies in Minnesota, while E&I is a national cooperative exclusively focused on serving the education community.

Steger reports that while cooperative contacts accounted for roughly $18 million in sales in 2017, today they account for over $100 million. One reason cooperatives are appealing is that they streamline the bidding process, saving time and money.

For flooring specifically, the value of GSA contracts has decreased from around $75 million in 2005 for all flooring manufacturers combined to less than $12 million this year, adds Steger, who notes that, despite that flagging figure, being on the GSA schedule remains important. “It’s like a ticket to the dance,” he says.

Hughes agrees. “On the manufacturer side, there is complexity in selling through the GSA,” he says. “But what the GSA does is provide something akin to a Good Housekeeping Seal of Approval. It’s a checkpoint that means a manufacturer’s products meet the Federal Acquisition Rules and Regulations. In the past, we were all operating under the Trade Agreement Act, which allowed product manufactured in countries that are U.S. allies to be sold under GSA. Within the last 12 months, we have BABA, which goes into act fully in 2025.” According to Hughes, BABA closes loopholes that allowed manufacturers to, for instance, construct the bulk of a product abroad, finish it in the U.S. and call it U.S.-made.

In addition to BABA, there are initiatives aimed at supporting businesses owned by historically marginalized populations, such as minorities and women, as well as small businesses, so a large flooring manufacturer may make government-sector sales by partnering with a minority-owned commercial contracting firm, for instance.

And it’s important to remember that these initiatives aren’t only established at the federal level. “Over the years, we have seen lots of agencies go out on their own to create their own contract or purchasing requirements due to the fact that they are trying to meet their own goals,” says Dean.

With all that said, Christi Hitch, vice president of Americas Floor Covering for Milliken, notes that the GSA remains the preferred path for some government agencies, and it is currently revamping its program to regain its appeal. The Facilities Standards for the Public Buildings Service (P100) establishes mandatory design standards and performance criteria for GSA-owned buildings. Design and construction professionals must abide by the policy and technical criteria in P100 while programming, designing and documenting GSA buildings. Right now, the P100 is going through an update phase, reports Stanley, calling on stakeholders, including flooring suppliers, to offer their insight about modernizing the document.

THE POLITICS OF GOVERNMENT FUNDING
While government projects generally continue once funding is earmarked, unspent dollars can actually count against an agency, as an agency’s allotment the following year will be decreased, says Hughes. As such, late summer and fall are busy months for government work as agencies sprint toward the finish line for spending.

In addition, monies unspent under one administration can be reappropriated under a subsequent one. Explains Koné, “We have to consider that a significant portion of dollars allocated under the Biden administration has not been spent. If the U.S. moves into a Trump administration, there is uncertainty for the federal dollars that remain unobligated. As a country overall, this would impact dollars approved under the 2021 infrastructure law, the 2022 CHIPS and Science Act, the Biden climate law, and the Inflation Reduction Act. As of May 2024, only 17% of the $1.6 trillion has been spent between the $242 billion for infrastructure, pandemic and CHIPS, then $60 billion through the Inflation Reduction Act. It takes a lot of effort to move the dollars allocated, whether that be through grants, loans or contracts. A new administration could easily halt or slow down the process and approvals to obligate the funds.”

EXCESS SPACE
One of the challenges that the U.S. government faces today regarding its physical footprint is excess square footage. As in the private sector, non-essential government workers took to their home offices amid Covid, and, today, remote work remains more prevalent in government agencies than it was prior to the pandemic. In June 2024, Governing.com reported that last year, 54% of federal workers worked remotely at least one day a week. This is one factor that has led to an excess of government-owned office buildings.

As an example of how much space is unused, federal government agencies in Washington, D.C., are using just 12% of the space in their headquarters buildings on average, reported the Public Buildings Reform Board in its 2024 study.

“The government is coming upon decisions about consolidation, which will lead to renovation, so I think we will see that work grow significantly,” reports Stanley.

This is also an opportunity for government to transition to spaces more compatible with 21st Century workstyles, and Koné sees that happening at present, noting, “With the consolidation of real estate and cohort workspaces, areas are being renovated to support the new working environment in a post-pandemic hybrid world.”

Another factor that impacts the need for renovation is the inconsistent maintenance of government space flooring, which was especially lacking during the pandemic. Dean points out that renovation is “more cost effective than new construction and aligns better with the sustainable practices that everyone is trying to enforce,” adding that she is seeing new construction in the defense and scientific research subsegments.

Similarly, new construction may occur in areas of population growth. An expanding city will require more government resources and space to house them.

As humans have decried for as long as they’ve been organized around a central system, nothing happens fast in government, and that holds true in construction of government projects, as well. “Where politics stands in the way of true outcomes being met, there is a softening of space, but true integration of collaboration space isn’t there yet,” explains Stanley. “So often, it becomes about just getting a project done. Design innovation takes buy-in, and politics get in the way, so what we end up doing as a segment is just falling back to getting it done rather than innovating around humanity.”

TRENDS IN FLOORING
The flooring material trends Floor Focus has tracked within the private sector hold true in public space, as well: an increase in the use of hard surface; LVT taking share from VCT; carpet tile taking share from broadloom; and a preference for same-height carpet tile and LVT due to their ability to be installed without a transition and eliminating a trip hazard.

Dean reports that there has been a significant change regarding the government’s willingness to consider alternative flooring options. “While the government sector was previously rigid about the types of flooring it would utilize, it is now more open to a variety of solutions,” she says. Her approach to serving the sector is educating stakeholders that there is always an appropriate flooring product for each space.

Regarding specification priorities in government, durability and ease of maintenance rank highest, as funding and renovation cycles can ebb and flow.

Cost also comes into play, though interviewees report that agencies are now more attuned to considering lifecycle cost as opposed to just upfront cost. “Cost is a factor but not the factor,” reports Steger. “What is the factor is telling government agencies the cost on the front end so they know how much to budget. If they set aside $20, it had better not be $30.”

HARD SURFACE
“The VA exited VCT many years ago,” reports Koné. “However, it still exists in its facilities. We are seeing other agencies exit VCT, all the way down to local government. It used to be a value option but, post-Covid, the cost of VCT plus the maintenance cannot compete with LVT in price or performance over time.”

Similarly, Hughes reports that the Marine Corps replaced all its VCT with LVT due to VCT’s need for waxing, which uses water that must then be disposed of. Hughes adds, “The Air Force Center for Engineering and the Environment is considering the toxicity of products on its bases. Everything on the floor will end up in the water, especially products used as part of the maintenance cycle.”

As in the private sector, homogeneous sheet is a key product for government-owned healthcare facility treatment spaces, whereas LVT is often utilized in the public areas.

The aesthetic story of public space also follows private sector trends. Wood looks are in high demand, prized for their home-like feel. “The Seafarers International Union of North America dictates that commercial work boats must have plank-look floors to make them more warm and appealing,” says Hughes. “For its ships and submarines, the U.S. Navy uses wood-look flooring to create a more home-like environment to retain personnel.” Hughes adds that shipboard logos are incorporated into Navy ship flooring, featuring the ship’s crest and, often, motivational messaging, with the intention of “reminding sailors or Marines why they are there and create a sense of pride.”

As for ceramic, Whitney Welch, vice president of commercial sales at Dal-Tile, which does not do GSA work, reports that she sees “the bread-and-butter basics” as the most popular choices for government sector space, noting that the fact that product must be North America-made-and adhere to an often-tight budget-makes for a limited number of styling options. High-style ceramic is generally imported to the U.S. market, while concrete and clean looks, mosaics and wall tile are products of North America. In spite of the limiting nature of that, Welch believes ceramic tile has an edge in the government sector because of its inherent sustainability. The company mainly sees ceramic used in lobbies and other shared space and restrooms.

In addition to its standard array of solutions, “Flexco has a variety of specialty products like electrostatic dissipative (ESD) flooring and IMO marine flooring that are important to the government market,” reports Flexco’s Brian Dubois, national sales manager.

SOFT SURFACE
On the soft surface side, there is a push-pull factor at work. In office space, soft surface is key for its acoustic qualities and becomes even more important as walls come down to make way for flexible or collaborative space. At the same time, in other areas of government, soft surface flooring is being deselected due to issues around cleanliness, especially related to fleas, bed bugs and biological fluids that can be hard to remove, says Hughes. This is generally occurring in areas of government that house workers, such as the branches of military. Hughes says one factor at work here is the increasing number of service animals, bringing both insect pests and a likelihood for “accidents” indoors. These spaces are generally moving toward an LVT product.

When soft surface is utilized, it is generally carpet tile, which offers a host of benefits over broadloom for certain applications. Carpet tile is easier to move into existing buildings than rolls of broadloom, easier to install, easier to replace and produces less waste. Steger estimates that around 80% of soft surface in government spaces today is carpet tile. And Milliken has noted an increase in demand for its cushion-backed carpet tile due to its elevated acoustic properties.

In commercial spaces, there has been an uptick in the demand for rugs, reports Koné. Rugs are being used to break up spaces and create a resimercial feel in spaces that were formerly very corporate. This supports the employees’ desire to work in an environment that feels inviting and more residential.

PRODUCT LIFECYCLE
With so many different agencies and types of space in the government sector, it is impossible to pinpoint a single expectation with regard to the expected lifecycle of a flooring product, though interviewees place the renovation cycle between seven and 25 years. Leased space may be renovated more frequently-say, every seven to ten years-due to lease obligations.

“We recognize that many agencies are stretching their flooring solutions for longer periods of time, whether that be due to budget or inconvenience to the occupying agency, which doesn’t want to endure a renovation,” Koné notes.

“We have some installations that are over 30 years old,” says Dubois. “With several products that have 20-year or greater commercial warranties, Flexco has a history of creating flooring products that stand the test of time. We believe specifiers are realizing the benefit of long-lasting finishes and are eager to learn about the entire lifecycle ownership and maintenance costs versus the initial installation cost only. Usually, resilient products like rubber flooring cost less over time.”

Key to the lifecycle cost discussion is maintenance. Stanley reports that there is an outstanding amount of deferred maintenance in the government sector. “We have to abandon first-cost mentality to have an impact on deferred maintenance, which is at crisis levels. In the public sector, this is a significant problem. Agencies get one-time money; they don’t know when it will come again because it requires a public vote, so they have to have flooring last as long as possible with the least amount of maintenance,” Stanley explains.

He continues, “I recently talked with a friend who is a leader in the ISSA [a trade association for the cleaning, hygiene and facility management industry], and he said, ‘I was just at a government entity last week, and they have no strategy around flooring maintenance.’ And that is a common theme.” Stanley points to Dr. Joseph Allen’s contention that the person who designs and operates your building has a greater impact on your health than your doctor. And following this premise to the natural conclusion, transparency becomes a massively important concept.

Hitch reports that her team partners with end users long term to collaborate on product maintenance, emphasizing that better maintenance often equates to longer life and, therefore, a better ROI.

Dean is hopeful that, with the new focus on modernization and repurposing space, government may make more of an effort to keep up with the times and, in doing so, shorten the renovation cycle.

SUSTAINABILITY
Steger believes there has been a shift with regard to which stakeholder is driving sustainability. Ten to 15 years ago, government standards were pushing manufacturers to develop greener products, but, today, manufacturers have checked all the boxes and, in some cases, are providing a higher level of sustainability than the government requires.

The government’s sustainability efforts aren’t just about checking a box or two. “There are some sustainability criteria that get more publicity: targeted goals from individual agencies focused on carbon impact or landfill diversion,” says Dean, “but at the end of the day, if we don’t make product with healthy ingredients and pay attention to embodied carbon, it doesn’t matter if the product goes to landfill or not. If we are making product that doesn’t have healthy materials, what good are we doing?”

Still, the government is seeking measurable change. Koné says, “We have seen the federal government implement carbon neutrality in steel, asphalt, concrete and glass through the bipartisan infrastructure bill. While still in the early stages, we expect to see this trickle into flooring.”

With many aged structures part of the U.S. government portfolio, “there is a big push to renovate existing buildings to be more sustainable and energy efficient,” reports Dubois.

Stanley reports seeing a shift from the just-get-the-building-open mentality of the past, as the health of those working and visiting these facilities is now a primary concern. One of the government’s concerns in wellbeing is acoustics, as a study found that acoustic quality has a significant impact on comfort and productivity of those within the space.

“Material ingredients, manufacturing efficiency, durability and longevity, and end-of-life options are all important to this market segment,” says Dubois. “In addition to the significant increase in sustainable design practices, we see that the government sector is moving toward more flexible and agile workspaces that improve productivity and employee satisfaction. While functionality remains paramount, there’s an increasing recognition of the role of aesthetics in creating inspiring and productive spaces. Specifiers are incorporating design elements that reflect the organizational culture, mission and values, along with upscale products that hint at the luxury often found in hospitality to increase happiness in building occupants.”

TESTED & TIMELESS
When renovation cycles are in question, timeless design is always the best bet, and, as such, the government sector leans toward inspired but un-trendy. This is especially true with flooring, which can’t be swapped out as easily as window treatments or décor.

This may include an emphasis on reflecting local culture and values with design choices that resonate with the community, reports Lanier.

“A sense of curiosity is returning, maybe because we are allowing it and due to new sustainability policy or health and safety standards,” says Dean. “When you have a sense of curiosity, instead of designers just filling in blanks, you are asking ‘What are we trying to accomplish?’ This starts with focusing on who you are designing for. Just because it’s government doesn’t mean it has to be boring, ugly or cheap.” Dean points to the GSA office in D.C. as a great example of this rethinking; the space was re-outfitted with a variety of different space types-head-down space, open office, collaboration-furnished with colorful pieces from an assortment of vendors. The space encourages the team to “bounce around,” says Dean, utilizing different spaces through the day as their work style or project demands.

PUBLIC VERSUS PRIVATE
“From a 40,000-foot view, everyone has a seat at the table for publicly funded projects as long as they meet compliance and show up,” says Koné. “The private sector can be heavily influenced by prior or existing relationships. While relationships matter in government, there is more oversight and a level playing field in the arena.”

The other side of that coin, says Hughes, is the complexity of government projects, with an abundance of rules that must be followed precisely. “Price fixing, bid rigging and pricing games can get you in an adult timeout,” he says.

In addition, in government work, “you can’t have a proprietary specification. You must have an ‘or equal’ clause and allow for at least three equals,” says Hughes. In some cases, this is focused on performance alone, providing no insight on the desired aesthetic.

Stanley believes that while policy drives outcomes, politics can cripple the process. He notes, “What shifts that opportunity is the A&D community engaging in purposeful storytelling and making sure the intent of the design is gratefully articulated to end users. As one of Tarkett’s government reps, Rich Padgett, says, ‘The government is paralyzed by analysis paralysis.’ You can unlock that by being a trusted advisor.”

Copyright 2024 Floor Focus 

Related Topics:Tarkett, HMTX, Interface, Mohawk Industries, Lumber Liquidators, Shaw Industries Group, Inc., Daltile, Mannington Mills