March 25, 2009

Stimulus funding: What contractors need to know now

Washington state will receive almost $739 million from the federal stimulus for infrastructure projects and nearby states will receive $914 million, all of which is going to create work opportunities for contractors who know where to look.

David Ashbaugh, partner and chair of the commercial litigation group at Stanislaw Ashbaugh, said a lot of federal money is going to be spent in the Northwest.

“There is actually going to be some legitimate money to be spent, there is no question about it,” he said. “We have to figure out how to get our share of it.”

Stanislaw Ashbaugh and the Associated General Contractors of Washington are presenting a series of free talks on the stimulus funds at regional AGC offices. On Monday, the talk was given in Seattle.

Where's the money?

For contractors willing to look, there are lots of places to find work. Nationally, military construction will be getting $2 billion, and operation and maintenance of Department of Defense facilities will get $3.5 billion. The Army Corps of Engineers is getting $4 billion. About $60 million will go toward ferry funding nationwide. Ashbaugh said Washington could get half of that amount because it has the largest ferry system in the country.

Tymon Berger, a lawyer at Stanislaw Ashbaugh, said contractors must be bold in going after federal work. “There (are) opportunities abounding here on the federal side. You can't be a little bit intimidated or shy to tiptoe into that water.”

Though states will be receiving a lot of the stimulus funding, the federal government will be getting more. “That's where the money's at. There's a lot more money that's going to stay within federal agencies,” Berger said. Fort Lewis alone is getting at least $60 million. The Department of Energy also does a lot of work in Washington and allocated $124 million to the Pacific Northwest National Laboratory in Richland this week. If you're interested in federal work, check out www.fbo.gov.

Washington state will be getting $492 million from Federal Highway Administration stimulus funds. Mandatory enhancements such as safety improvements or provisions for bikes and pedestrians will get $15 million of that.

Transit infrastructure will get $172 million, with $125 million going to Seattle, $11 million to Spokane and $1.7 million to Bellingham. Clean water will get $68 million and fixed guideway modernization will get $47 million.

What to look for

Bob Marconi, partner and chair of Stanislaw Ashbaugh's Construction Law Group, said he thinks public owners will be under more pressure to award jobs, so they will be more likely to waive irregularities in bids and there will be fewer bid rejections than in the past. But he also thinks there will be more bid disputes.

With more competition, bid prices will fall. If you are a low bidder on a project, Marconi said he would recommend getting copies of the other low bids to see what you can learn. “All's fair in this kind of public arena, “ he said. “I guarantee you, if you're low, someone's looking at your bid.”

Once the state receives stimulus money, most projects must be advertised within 120 days. Ashbaugh said it may seem like a “highfalutin” goal but if agencies stick with their time requirements and bid projects quickly, “It will mean real jobs for real people, including your companies.”

The lawyers warned contractors to be aware of certain aspects of the stimulus before taking on jobs. The stimulus includes a Buy American provision, but Berger said it is unclear exactly what it applies to. Depending on what standard is used for the provision, he said agencies like the Washington State Department of Transportation would need to change specs.

Berger said contractors should be aware of the issues but worry about them after getting the project. “Follow the bid documents and you can argue once you get your foot in the door and get the job.”

Richard Skalbania, a partner at Stanislaw Ashbaugh, said transparency and oversight issues are also important to understand. For any project with stimulus funds, he said, there is a mandatory contract provision that authorizes the government to examine any records of any contractor or subcontractor and to interview any officer or employee of the contractor or subcontractor.

If a team is working on a project administered by a federal agency, it must provide quarterly reports that include the total funds received from the federal agency, an evaluation of the project status, an estimate of the number of jobs created and retained, and detailed information on subcontracts. Skalbania said it is highly likely that this information will be required for WSDOT stimulus projects.

What to do now

Grant Degginger, chair of the Construction Litigation Practice Group at Lane Powell, agreed there may be more changes on the accountability side than in the bidding process. Most stimulus projects are going to get bid publicly through whichever department or city is the lead agency. So the most important thing for contractors, Degginger said, is to pay attention to sources of information and to be in the right place at the right time when projects do go to bid.

“Stay tuned to the DJC,” he said.

Rick Fellows, business development manager of Seattle's Control Contractors, said he is hoping to benefit from stimulus funds targeting energy efficiency or controls upgrades. Right now, he said, it is unclear where money is heading and when it will be distributed, so he's monitoring Web sites like recovery.gov on a daily basis to find out which projects are getting funded and when.

Once it is clear where the money will go, he said his company will target the projects it wants and go after them early.

“It's just making sure that we get plugged in early in the process on these projects,” he said. “So that we're allowed to bid on them and we're just aware of them.”