The Great Race to August 2010

When I mention the Stimulus package, many small business owners aren’t thrilled. Consider the number of Tea Parties held throughout the US this past month; not many people are excited about how much the government is spending. While Uncle Sam is spending money, there are benefits that small businesses can receive, whether they realize it or not.


According to a recent study, only 14% of the small business owners interviewed felt that the stimulus ‘cash flood’ would affect them positively. 31% feel it will hurt their business, another 33% don’t think it will affect anything, and 22% aren’t sure what’s going to happen. With the multiple websites designed to help track how the money will be spent, it makes no sense to think that the cash flow won’t affect the economy somehow; the only real question is how. The US is pumping $787 billion dollars into the economy – SOMETHING is bound to happen.

Many are afraid that while money is being poured into the economy, the primary focus being government contracting, that big businesses will be able to snatch up all the good contracts. Since 1999, the Small Business Administration has been meeting their goal of giving 23% of all government contracts to qualified small businesses. However, there are a few loopholes, which many small businesses are concerned will ruin their chances at obtaining the lucrative contracts sure to be posted in the upcoming year. These loopholes, though, aren’t as easy to find anymore.

Originally, if a company started as a small business contractor and then grew, it wasn’t recorded and five years later could still be listed as a small business even though their profit margins and other considerations prohibited them from being classified as such. To combat this, the Small Business Administration passed a bill that would require a business to recertify every year, making sure that companies that grew no longer received the small business benefits.

In addition, there are plenty of set-aside programs associated with the government that can help any beginning government contractor to grow. One government contractor, Lani Hay, stated that the reason her company succeeded in the beginning was these programs. "It was initially the only value proposition we had to leverage as an unknown new business startup," Hay said. She got her “foot in the door,” by using these programs, allowing her company to grow and to create a name for the business within the industry.

Businesses shouldn’t be afraid of the massive spending of money; instead they should look to their state’s funding website and see where the local stimulus money is going. According to White House estimates, by August 2010, 75% of the stimulus contracts should be assigned - those business owners who don’t act now will be left out in the cold. There isn’t a fee for writing a proposal for a bid, excluding man hours and sometimes the required technical documents. Why not try to win one or two contracts in your home state - they’re available, and it might open new doors for your business that you hadn’t dreamt of before. The contracts are staying in the US to help stimulate your area; don’t be afraid to get your share!

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!