Construction Opportunities Will See Boom Due To DoD ARRA Allocation

Though we all know that many areas of the United States economy are suffering right now, the federal construction market is likely to soon see a huge boom. The Department of Defense presented a 191 page report to Congress which details how it plans to spend the money is has been allocated by the Stimulus Package, more properly known as the “American Recovery and Reinvestment Act (ARRA) of 2009.”

The Stimulus Package currently includes just under $7.5 billion allocated for the Department of Defense (less than 1% of the total). The DoD stated recently that it intends to spend its funding with “unprecedented full transparency and accountability.” www.Recovery.gov has been created in order to help citizens monitor the progress of the spending of ARRA dollars, and the DoD will be making use of this. They have also set up a website at http://www.defenselink.mil/recovery to further this initiative.

How does this apply to the construction market? The DoD has “identified specific investments in construction, facility improvements, and energy efficiency projects that will help improve the quality of life for our troops and their families.” Their report to Congress included an extremely detailed breakdown of how their share of ARRA dollars will be spent. The report includes anticipated costs, descriptions of work, and project locations for each expense they are proposing.

The Department of Defense intends to spend roughly $2.1 billion on military construction and family housing projects, including $1.3 billion to construct two new hospitals (to be located at Camp Pendleton, California and Fort Hood, Texas). DoD has also indicated that it will be “pursuing architectural and engineering services greater than $1 million for 5 projects, conducting repair projects greater than $7.5 million for 56 projects, and carrying out 45 Energy Conservation Investment Program projects, respectively.”

The DOD also provided a list of roughly 3,300 other Facilities Sustainment, Restoration, and Modernization (“FSRM”) projects costing an estimated total $3.4 billion. These FSRM projects account for over $3.83 billion of their entire Stimulus spending.

The U.S. Army Corps of Engineers, the federal agency that is the most heavily involved in construction, has also provided Congress with “informed estimates” of existing capability to perform additional work. Of that, about $2.1 billion is appropriated for construction projects.

These and other projects will provide enormous opportunities for companies acting as federal construction contractors. Time will tell whether there are enough procurement officers currently active in the government to issue this many solicitations in such a short time and whether the specific agencies have the capability to properly administer all of this work, but there is certain to be a surge in construction projects over the upcoming months!

SBA Budget Increase: What's The Impact?

If you've been paying attention to the news and popular media in the past few weeks, you are sure to have heard about the meeting between Jon Stewart and Jim Cramer. Their debate is already going down as one of the most controversial in history. However, how many people are talking about the House decision on the SBA budget that came out at almost the same time?

Not many.

This is for the simple reason that, to most people, small business government contracting just isn't as 'sexy.' It is a dry, difficult topic which few people partake in and even fewer truly understand. However, it is just this topic with which you, the small businessperson, should be familiarizing yourself during these times.

As one of the benefits of the stimulus package, a House panel decided to approve a vastly larger budget for the SBA in 2010. This increase of over $700 million roughly triples the budget for next year, providing a wide array of advantages to the small business owners interested in doing work with the federal government.

The SBA is the small business owner’s best friend in the federal government. It is literally their job to make sure that you get contracts and money; adding to their powers is going to make it much more likely that a small business will be able to get a contract.

For one thing, the federal appropriation to subsidize SBA loans has been put back into place, which will make it easier to get funding and money from the Small Business Association. This will raise the overall amount of loans the SBA can back to over $28 billion. This is going to increase federal contracting opportunities over time.

By getting started now, your business can be perfectly positioned in time to get access to some of the stimulus billions. This decision to increase funding to the SBA is likely to add just that much more opportunity for your company!

Not Down For the Count: Citigroup’s Round Two

Think about last year, 2008. What comes to mind? For many Americans graduations, vacations, and anniversaries are the first things that pop into their head. However, quickly following these happy thoughts are ones focusing on the declining stock market, job loss, and the economy. I think I’m the only one who thinks it was the year of the rat, which I’m sure no one else but Chinese food lovers know, thanks to the free Christmas calendar. Last year also marked a key time in America’s history—the government didn’t let big businesses fail. Multiple American-based corporations received bailouts to try to keep jobs within the company. One of the recipients was Citigroup and they didn’t just receive one, but two bailouts in 2008 totaling roughly $45 billion.

Not all of the companies that received a bailout have turned a profit since the check came in. However, Citigroup did make a profit for the first time in five quarters. At the end of 2008, Citigroup declared that they had lost $8.29 billion in just the fourth quarter of the year. The government gave them a second chance. The first time around, Citigroup received $25 billion from the Troubled Asset Relief Program, TARP, which barely covers the total loss for 2008 or the five consecutive quarters that the company declared a loss instead of a gain. They got another $20 billion in November of 2008 from the government and yet, Citigroup still declared a loss by the end of the year.

However, the company acknowledged they needed change. Originally, Sanford I. Weill formed Citigroup in 1998 when he combined the insurance company Travelers Group and the nation’s largest bank, Citigroup Inc. It was a revolutionary idea that was supposed to combine insurance, Wall Street business, and traditional banking together; what most of its shareholders quickly found was that it was a flop. Since Citigroup merged, its stock price has fallen more than 76%. Due to its faults, whatever they may be, Citigroup announced in January of 2009 that it would split the company into two facets: Citicorp and Citi Holdings.

Since Citigroup announced the idea for splitting up its company, it has given the government more control over the stocks; the taxpayers technically own up to 36% of them. Before March 10, analysts were predicting that Citigroup would require another loan from the government down the line, but they might be changing their tune soon. On March 9, 2009, the company received an internal memo stating that the first two months of the year were at an $8.3 billion profit before taxes in February. Citigroup’s profit announcement caused the DJIA to soar on March 10 379.44 points to 6926.49; it was the largest one-day gain this year and one of the biggest since World War II.

The spike in Citigroup stock does not mean that their troubles are at an end. Like most companies, big or small, there are difficulties that we all must face. By splitting the company into two, making it easier to manage, and allowing the management to prune the unnecessary waste within the corporation, the company cut back on its early losses in 2009. Small businesses can learn from the big businesses failures. By accepting that what their company originally did wasn’t working, Citigroup took the help that the government offered and tried fixing themselves. They didn’t continue on the same downward path, but tried something a little different. Small businesses will not have as massive of a bailout as Citigroup received, but there will be more opportunities within the government contracting arena that weren’t there before. Taking advantage of what the government offers and implanting change might be the key lesson that needs to be learned by the business community.

Federal Contracting: Terrifying Prospect or Lucrative Opportunity?

The federal government is well-known as the largest purchaser in the world. It uses so many products and services that it is literally a market in and of itself – the range of things the government purchases for its needs is so diverse that many companies exist entirely to sell to the government. However, the labyrinthine sets of rules and procedures can make it a terrifying area of business for the uninitiated.

The first United States government purchase was performed in the 1770s, when General George Washington directed Philip J. Schuyler to buy weaponry from Major Duncan at Schenectady, with a guarantee to pay for the goods upon delivery. Since then, opportunities to sell to the federal government have expanded greatly; though a large portion of the federal contracting budget is still set aside for military and defense purposes, more money is spent on a much wider range of opportunities that most people realize.

Believe it or not, currently only about 5% of businesses in the United States actually do business with the government. This is despite the fact that it generally spends, on average, over a billion dollars a day, on everything from janitorial services to dog treats to IT services to research. Why is that?

The rules governing the federal procurement process are incredibly intricate. If the contracting field is new to you, you are going to find out just how difficult it can be – this is one of the most complex arenas that there is in business. Fortunately, there are plenty of people and businesses willing to help, and it is possible to acquire a working knowledge of the process, policies, and procedures that apply to your business and how to navigate the government contracting arena.

One piece of good news is that the government tries to do a lot of its business through small contractors. The U.S government has federally and legally mandated goals and procedures designed to favor small businesses. Every federal agency has a small business contracting goal – a percentage of its budget each year is ‘set aside’ specifically for a variety of types of small businesses, ranging in amount depending on the agency. Businesses are eligible for these set-aside goals if they fit the description, be it small, woman-owned, minority-owned, or any in a wide array of other categories.

Small contractors can work with the government without a large office staff or support system, but only if they understand how everything works. Unlike other customers, you cannot simply walk into a government office and make a sales pitch. There is a huge array of protocols that must be met before you can do business with the government – but if you know your rights and are familiar with government programs, contracting can be extremely lucrative for anyone willing to accept the time, effort, and expense of getting started. You also don’t have to do it alone – there are many companies out there willing to direct you along the correct path and to help you get going.

Everyone knows about the current declining economy, said by some to be the worst since the Great Depression. Small businesses should definitely consider utilizing government contracting as a source of income. The federal bailout means that there are going to be hundreds of billions of dollars of extra contracting money spent in the next few years. These dollars will have to be spent somewhere – and not all of them are going to be on the multi-million dollar contracts – the companies that win the large contracts started out winning small contracts. Your business sells products or services that the government buys, and the time to get started with federal contracting is now. In short, federal contracting is both: a terrifying prospect AND a lucrative opportunity. Navigating the maze can be dangerous but the risk is well worth the potential reward!

Working with Gateway to the Government, your business can penetrate the complex web of doing federal contracting. Through our partnership program, you gain access to everything – all of the advantages of the small business set-aside programs and the lucrative field of contracting – without having to accept the huge amount of time, effort, and expense of getting started.

Here's Hoping, Obama

Barack Obama has become a rock star with all the attention from the media. One of CNN.com hot topic links is “Obama’s First 100 Days.” CNN.com is even selling a shirt that says, “Obama raises a hand, lifts a nation. I just saw it on CNN.com 1.20.09.” CNN isn’t alone; Yahoo! News’s top story is Obama signing his first bill - the Lilly Ledbetter Fair Pay Act - and MSNBC, aside from the eight articles on the stimulus plan, has a political cartoon slideshow where out of twenty cartoons eighteen are strictly Obama. He’s everywhere and he’s been everywhere since he decided to run for President. Over a year ago, one of my friends went to see him at a rally and was convinced he was going to be the face of change. I know many individuals believe that; there is more hope in this President than there has been in a while. (I can’t help but wonder how George W. Bush feels!)

But where is all this hope going to get us? Good intentions are grand, but they’re just that… intentions. Action is what this country needs; Obama’s first hundred days are directly related. The trend for using the first hundred days as a benchmark for the rest of a presidency began with Franklin D. Roosevelt. The media loves to compare FDR to Obama, stating that the economy has reached similar lows as the 1930's and that the nation needs a President to push legislation through Congress to help stimulate the economy.

I wouldn't want this waiting for me.

There’s no arguing against the need for change in this country and Obama’s $819 billion economic stimulus package will hopefully bring some. Originally, it was $825 billion. So, what was cut out? Expanding family planning, re-sodding the National Mall, and a proposed tax credit for businesses for each job they create or save. Most of the money will go to help expanding the education sector, health care, tax breaks for individuals and couples, and energy.

But what does this package mean for small businesses? According to MSNBC.com, the business breaks include “…allowing [businesses] to claim tax credits on past profits dating back five years instead of two. It also would offer bonus depreciation for businesses investing in new plants and equipment; double the amount small businesses can write off for capital investments and new equipment purchases; allow businesses to claim a tax credit for hiring youths and veterans.”

His plan correlates with a statement he made back in February 2008 when the American Small Business League publicly supported him. Obama’s comments on the subject in the days following help shed light on how much he will promote small business growth through the economic stimulus plan and other ways in both the public and federal sector. "…98 percent of all American companies have fewer than 100 employees. Over half of all Americans work for a small business. Small businesses are the backbone of our nation's economy and we must protect this great resource. It is time to end the diversion of federal small business contracts to corporate giants."

Sounds great, right? One can only hope. FDR’s New Deal did boost the morale of the country and did create jobs, but as most of us know, it wasn’t the only thing that saved this country. A war economy helped the US recover. However, Ronald Reagan helped the US economy more than most people acknowledge. His trickle-down economic actions in the 80's helped the economy later - as late as the Clinton administration - flourish. Like most economic plans, and like this one will, it took time for it to work.

Yee of little Faith.

President Obama is trying. He is pushing legislation that he thinks will help the US economy over time, not overnight. All good things come in due time. If we rush fixing the economy, it's like putting duct tape over the leaky pipe in the bathroom. Eventually, it'll burst, and then it'll take even longer to fix. Obama isn't using duct tape; he's interviewing plumbers at the moment, hoping that what he chooses won't be a quick fix, but one that lasts for generations to come.