Defense engineering firm expands footprint in Albuquerque

BlueHalo CEO Jonathan Moneymaker at the BlueHalo complex in Southeast Albuquerque on July 20, 2021. The Virginia-based engineering firm is aggressively expanding its Albuquerque operations to manage rapidly growing defense-related work. (Mike Sandoval/For the Journal)

Virginia-based engineering firm BlueHalo LLC is aggressively expanding its Albuquerque operations to manage rapidly growing defense-related work, which includes nearly $1.5 billion in new contracts it's won just since May. The company provides a variety of products and services for the defense industry at sites around the U.S. But in New Mexico, it generally focuses on space-related technology development, and on "directed energy," which refers to laser and microwave systems. In late May, the Space Rapid Capabilities Office at Kirtland Air Force Base awarded BlueHalo a $1.4 billion contract to build a new state-of-the-art communications system for satellites that will maximize remote management and automated operations, while also providing a foundational base to continuously modernize systems going forward. And in late June, the Kirtland-based Air Force Research Laboratory's Directed Energy Directorate awarded BlueHalo a 10-year, $80 million contract to build a "virtual range" for real-time modeling and simulation of new directed energy technology. Those contracts come on top of nearly $140 million in space-related defense funding that BlueHalo was already managing as of last summer, when it announced a major expansion of its local operations. In a July 2021 press conference with Gov. Michelle Lujan Grisham and Albuquerque Mayor Tim Keller, the company said it would invest $60 million in a new, 200,000-square-foot facility to be built on the north side of Kirtland, backed by $2.5 million in Local Economic Development Act funding. Those plans have since changed. Rather than constructing the new building, BlueHalo is now renovating a 73,000-square-foot facility at the Sandia Science and Technology Park that was previously occupied by Raytheon Technologies. And on June 22, BlueHalo's local director of operations, Steve Conyne, told the Albuquerque City Council that the company had just leased another 83,000-square-foot building at the technology park, although he withheld details about that newly inked deal. The company already occupies a 41,000-square-foot space in the park that was previously owned by local engineering firm Applied Technology Associates, which BlueHalo acquired in fall 2020 for an undisclosed price. And now, with the newly leased buildings, plus some smaller facilities around town where the company also operates, BlueHalo's total Albuquerque-based operations will grow to well over 200,000 square feet, Conyne said. "We're excited to extend our footprint here going forward," Conyne told the council. "We have a forthcoming announcement about our newest lease." At the meeting, the City Council approved $16 million in industrial revenue bonds to help finance renovation and upgrades at the old Raytheon building. It also approved the city's oversight as fiscal agent for $2.25 million in state LEDA funding for the Raytheon renovation project — which the Economic Development Department had previously awarded for BlueHalo to build a new building — plus an additional $250,000 in LEDA assistance from the city. Economic impact BlueHalo declined to discuss any of its facility expansion plans, or its new defense contracts, with the Journal. But a government economic impact report on the LEDA funding and IRBs approved by the city shows substantial tax and employment benefits for Albuquerque and the state. The company will invest about $33 million to renovate the Raytheon facility, or about half the cost it expected for constructing a new building. That includes $20 million for land, building and infrastructure upgrades to modernize offices, laboratories and manufacturing facilities, along with construction and refurbishment of the site's high bay area to provide robotic test spaces and a modern control room. Another $13 million will finance new furniture, fixtures and equipment. The project, already underway, will employ up to 50 people in construction. It will create 64 new permanent positions once renovation concludes, with New Mexico residents expected to fill up to 70% of the new jobs at an average annual salary of $90,000, according to the report. BlueHalo's total local workforce will grow to 324 — up from 260 now — pushing the company's local annual payroll from about $29 million currently to nearly $44 million over the next decade. The report projects $127 million in total local and state tax benefits over 10 years from BlueHalo operations. MaxQ and industry expansion BlueHalo's accelerated growth reflects rapid expansion in recent years in New Mexico's space industry, and in defense-related technology development. It's one of many companies that are aggressively tapping into U.S. Department of Defense efforts to both modernize space technology and begin deploying emerging laser and microwave weapon systems. Those efforts are highly concentrated at Kirtland, which houses key DOD space and directed energy-related agencies. In fact, under BlueHalo's original expansion plans, the company expected to build an entirely new facility at a 70-acre mixed-use site known as MaxQ, which is currently under development on Kirtland property along the south side of Gibson between Carlisle and Truman. MaxQ aims to attract a lot more high-tech companies connected to military-related technology development, providing them with close access to Kirtland-based entities by setting up shop on MaxQ property, which is located on the north side of the base. Thunderbird Kirtland Development LLC — a joint venture that includes Yearout Properties and architecture firm Dekker/Perich/Sabatini — signed a 50-year lease in 2020 with the U.S. Air Force to build out the MaxQ property into a sprawling office, laboratory, manufacturing and retail complex. BlueHalo's planned building would have been one of the first facilities to open there. But last year, the Washington, D.C.-based Theia Group — which briefly occupied the Raytheon building — canceled plans to build a massive satellite manufacturing complex near the Albuquerque International Sunport. As a result, it pulled out of New Mexico, opening up the Raytheon space for BlueHalo. The loss of BlueHalo, however, had little impact on MaxQ development, said Kevin Yearout, who manages the Thunderbird partnership. Thunderbird broke ground in April on the first phase of MaxQ, encompassing about 20 acres where contractors are now developing the underground utilities and roadways for the park to pave the way for above-ground facility construction. It also broke ground on a stand-alone, 25,000-square-foot facility for Northrop Grumman, which will open in February 2023 as the first high-tech operation at MaxQ. And it's now actively negotiating with more prospective technology and retail tenants. "Construction is underway as we speak on site development, and on the first tenant building for Northrop Grumman," Yearout told the Journal. "We're working with three other build-to-suit tenants, with at least one of those expected to break ground later this year. And we're working with four or five retail tenants for food and beverage operations." With so many firms wanting to set up operations next to Kirtland, demand for MaxQ space remains strong, Yearout added. "Location is what it's all about, and this is directly on Air Force land adjacent to Kirtland," he said. "We've had no issues in finding interested tenants." Still, MaxQ has moved slower than originally anticipated, largely reflecting today's difficult market dynamics, said Dale Dekker of Dekker/Perich/Sabatini. "Inflation, the rising cost of materials, and supply-chain interruptions are impacting projects everywhere," Dekker told the Journal. "We're dealing with all of that."