About $131 billion, or 17% of the total cost of the Stimulus Bill, is targeted to construction of all kinds.
The Stimulus Bill should put many contractors across the U.S. to work as projects are approved.
Also see What You Need to Know to Do Business with the Government
Whether you believe the Stimulus Bill will kick-start the economy or not, there is some construction money coming for infrastructure work. But do concrete producers have any hope of getting in on these projects? Definitely maybe.
First, despite the $787 billion size of the package, the amount going to construction is only about $131 billion. Transportation is well-funded. But buildings—especially new buildings—are not a priority. A heavy emphasis is on “shovel-ready” projects.
The bill is taking a fast-track approach. Preference is given to contracts that can be “completed expeditiously and use at least 50% of the funds for activities that can be initiated not later than 120 days from enactment.” Since the bill was signed on Feb. 17, those 120 days are quickly running out.
“We had 13 or 14 projects that we thought were ready to go,” says Pam Broviak, public works director in LaSalle, Ill. “But now we have to go through three months of paperwork to get them ready to apply for stimulus funds. It is 25% free money and 75% interest-free loans, but the need for so much speed means the bids are thrown together and quality will suffer.”
The quickness with which these funds are allocated may stress the normal construction system, says Patrick J. Lee-O'Halloran, an attorney with Fabyanske, Westra, Hart & Thomson in Minneapolis. He warns that agencies deploying stimulus funds may have an incentive to change their normal practices to more quickly take advantage of these funds.
“Contractors should be especially vigilant in their review of procurements before putting in their bids or proposals,” says Lee-O'Halloran. “Careful review will not only limit bid errors, but also help bidders ferret out small but important changes in normal agency procurement documents, avoiding potentially larger problems.”
This may be a time producers will witness a change in how their customers do work. They will be following the changing market trends. The seasonally adjusted spending for construction is very volatile, says the Associated General Contractors of America. While private residential construction has fallen more than 30% in the last year, private non-residential has stayed practically level (0.2% loss), and public works construction actually gained (3%).
Contractors are turning to government spending on infrastructure to help keep afloat until things turn around. But if you have done mostly private work in the past, you must learn and should prepare now to be ready for the opportunities.
The ability to navigate the Internet is essential. Practically everything the government does can be easily accessed at various Web sites. Individual agencies have their own sites and their own requirements.
The government has lots of regulations and lots of bureaucrats who oversee the work. They will insist that every regulation and every form be filled out completely and properly. This results in extra paperwork and oversight.