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At Last, New GSA Contracts Start to Surge

September 11, 2009

By Tom Ichniowski and Pam Hunter
A version of this story first appeared in Engineering News-Record. .

As the American Recovery and Reinvestment Act enters its eighth month on the books, the General Services Administration’s $5.5-billion ARRA-funded program to build or upgrade scores of federal buildings finally has taken off.

As of July, it had awarded contracts totaling nearly $1.1 billion for projects involving about 120 buildings. At least 20 of those are already under way, according to Anthony Costa, of GSA’s Public Buildings Service department, who delivered the news during a House Transportation and Infrastructure Committee hearing on July 31. He added that the rest of the projects “will begin soon,” and says the agency plans to award another $1 billion in ARRA contracts by December 31, with the goal of having 91 percent of the $5.5 billion under contract by September 30, 2010.

Architects Get Slice of Stimulus Pie
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“I think it’s probably the conventional wisdom that GSA took a while to get the procurement machine moving as fast as it wanted to,” says Jim Whitaker, vice president and national director of Skanska USA Building’s Federal Center of Excellence, based in Virginia. But recently, he adds, “the agency’s been on a buying spree—no question.” Skanska won two major ARRA renovation contracts in GSA’s July push: a $60-million award for a federal building in Jackson, Mississippi, and a $35-million contract for a federal building/courthouse in Orlando.

Projects across the board
Mike Crase, senior manager of Gilbane Building Co.’s federal services group in Maryland, says GSA’s stimulus projects range “across the country, from Florida to Montana to California to New York,” and include prospective work for architects, engineers, construction managers, and general contractors.

A 50-50 joint venture of Gilbane and Grunley Construction Co., also based in Maryland, was awarded one of the GSA’s largest stimulus-act contracts: $158 million for the next two phases of a major overhaul of the Commerce Department’s huge headquarters in Washington, D.C. The same team was awarded the project’s first phase in 2007 and was nearly finished with that job when the new award was announced.

Kenneth Grunley, president of Grunley Construction, adds that the GSA awarded his firm two additional contracts funded by stimulus money. Both are new phases of renovations of Washington, D.C., buildings: the Interior Department headquarters, and offices for the Health and Human Services Department. Grunley previously had completed earlier phases of those projects.

Architects to benefit
The wave of GSA contracts is welcome news for design and construction firms struggling in the recession. Flocks of companies are chasing the work, making winning the contracts extremely tough. “The competition is far fiercer than I have ever seen,” says Skanska’s Whitaker, a 20-year veteran of government markets. Of the ARRA contracts Skanska won, he says, “We started out in bid fields in excess of 30 on each project.” Even the short lists contained 15 to 20 firms.

“I think the competition is very stiff,” says Kip Daniel, a managing director with The Beck Group, in Dallas. So far, Beck has bid on four GSA stimulus projects and in July won a $34-million contract to renovate a post office/federal courthouse in San Antonio. “Every contractor that I hear about or talk to is saying, ‘We’ve got to go where the money is, and obviously it is in government work,” he adds. Daniel says he has heard that about 80 firms went after a GSA stimulus contract to design a new courthouse.

Bids lower than usual
With so many bidders vying for the stimulus work and materials prices down from recent peaks, GSA is reaping benefits. The agency says bids on its ARRA projects so far are averaging 8 percent to 10 percent below projections. Grunley says that figure is probably conservative and could be as high as 15 percent. GSA says those favorable bids will enable it to add more “high performance” features to projects on its list and also consider adding more projects to the roster.

GSA also is using some stimulus money to upgrade its own technological tools. For instance, The Beck Group is on teams short-listed for a building-information-modeling national indefinite-delivery/indefinite-quantity contract, according to Daniel. It also is on a team vying for an ID/IQ contract for laser scanning of existing buildings.

Pace too slow?
Meanwhile, some are not happy with the pace of the overall federal stimulus program. House Transportation Committee Chairman James Oberstar (D-Minn.) says “the highway and transit portion, especially the highway formula funds, are in place and are working as we anticipated, except for a few states.” But, he adds, “I am troubled that there is considerable unevenness in the implementation in non-highway and transit agencies.”

“While the construction portion of the stimulus is having an impact, it is far from delivering its full promise and potential,” adds Stephen Sandherr, CEO of the Associated General Contractors of America. Results of an AGC survey released on July 30 found little difference in hiring and purchasing patterns between companies that are doing stimulus-funded work and companies that are not.

Sandherr cites federal agencies’ “disappointingly slow” pace in distributing ARRA funds, except at the Department of Transportation. The AGC did find in its survey, however, that the stimulus has been more successful in helping firms save jobs: Of the 190 responding firms that have won ARRA-funded work, 60 percent have saved or retained jobs because of the stimulus bill.

Read more economic news in our Recession & Recovery special section.

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