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!

Budget Cuts and Penny Pinching – Why the Government Isn’t Like Everyone Else

March marks the first time that I have ever actually forced myself to plan a budget. I recently bought a car (Bambi thought my old one wasn’t hip enough and totaled it for me). I’m also looking for a home to purchase; if I stay in my apartment past May, rent increases almost by half! Over the past month’s I’ve found that with my car insurance spiking, rent payment, and everything else, I can’t afford to eat out as much or purchase frivolous items such as bottled water, funny shirts, or DVDs. So, I’m hunkering down, forcing myself to stay in on Friday nights to play monopoly, drinking lots of tap water, and watching cable that’s already paid for.

I’m not here to give finance advice – I’ll leave that to the experts. But I am noticing a trend amongst my friends and coworkers. We’ve all cut back on things that cost money that we used to do on a regular basis without thinking and are saving money as if it’s a precious commodity. Well, for many (and more each day) it is! I’ve been reading more and more in the news about middle-aged individuals losing their jobs and dipping into their 401(k) accounts early or draining their savings to make ends meet. Getting a job isn’t easy either right now, especially when I know people who have applied to dozens of jobs and if they get a response at all it is a rejection. Like many people, I’m planning for the worst and squirreling away anything I possibly can.

So why is the government implementing an economic stimulus package that entails spending nearly a TRILLION dollars instead of saving money?

Many conservatives on www.twitter.com frequently tweet about the stimulus package and how it “oddly” reminds them of the German attempt in the late 20s. I don’t agree. Even though the Obama administration in many cases isn’t putting in formal checks and balances to ensure that the money isn’t misappropriated or poorly handled, many Senators are doing what they can to increase transparency and oversight. Michael W. Brubaker (R-PA), for example, wants to create a nine-member panel in Pennsylvania made up of state officials to manage the economic stimulus money. His state alone is set to receive $10 billion of the money set-aside for state building. If his bill is passed, which hopefully it will be, this panel will help prevent corruption and boost the local economy within the state. However, PA is ahead of the senator and has created a website that will allow the public to monitor the spending.

One of the benefits of posting the spending online is the level of transparency it creates. The stimulus bill is something that the American people have heard about non-stop for the past several months. With the aid of the internet people have access to developing stories 24/7, letting those who are interested keep up-to-the-minute on the progress of governmental affairs, especially with www.CSPAN.com’s streaming feed to the House and Senate debates. This week some of the first expenditures from the stimulus package are happening, focusing mostly on information technology support and staff. Michael Carleton, Health and Human Services Department’s head officer, said, “There are provisions in the law that require the money in the Recovery Act to be subject to a higher level of transparency than is the convention.” Carleton thinks that these expenditures will help make that happen.

I like to compare the stimulus bill to Franklin Roosevelt’s New Deal, designed to create new jobs in the 1930s. Vast swaths of American infrastructure, schools, and even the Appalachian trial exist today because of that plan. States are spending wisely if they invest in IT first because in today’s society, information is the key to getting anything done. Without the necessary support of technology, the spending could in many cases go awry and unchecked. FDR focused on projects that kept the American public busy, while providing future generations with something free to enjoy when there is an economic hardship. We can still enjoy those trails today even though we are budgeting and that should make all of us happy. It makes me forget that I can’t see the latest movie, buy the newest computer, or eat out three times a week.

While it seems ridiculous to many people that the government is spending such tremendous quantities of money during a time when the general public has had to cut back, I think it’s necessary - as long as there is enough transparency with this act. It’s our money, we should see to it that it is properly spent on rebuilding our economy, eventually letting us spend our money as we wish again, hopefully leading us back into prosperity. Right now, the main reason we need the government to put money back into the public is that we can’t spend money to help other businesses out. As much as I would like to, I can’t go down the street to buy from the local farmer’s market; the huge grocery store chain is cheaper, and every penny counts. Businesses will benefit tremendously from the surge in money, especially those involved in government contracting. The more money the government spends on us, the more we’ll have to spend later, which will eventually boost everyone up, even those not involved in contracting who don't get it directly from the government.

The stimulus plan will work because we aren’t just printing money off and hoping for the best; we’re opening Excel, discussing, managing, and making everything transparent so the best decision is made. I’m glad the government is spending money, because I believe that it will lead to me being able to spend mine in the future on what I want, instead of what I need.

What’s Up, Doc?

If you’ve been watching the news at all lately, you have probably noticed the trend towards discussing the finer points of the stimulus package. The Obama Administration has successfully pushed their plan through both the Senate and the House in order to pump more money in the declining US economy. Among the issues many federal employees are fearing is that with the passage of this package their jobs will be outsourced, as the Bush administration did in 2003.

President Obama has stated numerous times that he will not outsource federal jobs. The stimulus package, for instance, is pumping money into repairing government buildings and facilities, actions that are traditionally contracted out and not completed by federal employees anyway. With that in mind, now is a great time to be a government contractor! However, on the flip side, it is also a difficult time to be one. As stated in The Washington Post by Joe Davidson, “The stimulus package will generate more business for government contractors at a time when government contracting is coming under greater scrutiny.” This scrutiny, which all contractors must face, is due to the past ten years of abuse that was allowed during the last administration. It is inevitable, but is much worse for companies that have already encountered difficulties within the field.

But how will the Obama administration fix and prevent the abusive tactics that many contractors have implemented? On Tuesday, February 24, 2009, President Obama discussed how lawmakers will be implementing different procurement processes for government contracting. The specifics have not been stated yet, but there is talk of cutting back significantly on overpaying individuals and on greater monitoring of award decisions and amounts.

There is a bright side to this scrutiny, though. For instance, bigger names have a harder time winning contracts, especially the smaller ones. Small businesses will be favored throughout the bidding process even more. However, and I cannot stress this enough, it is critical that contractors are aware of their market and product prices. In many cases, the federal employee goes into the negotiations with a set price range that he is allowed to purchase within that we the contractors are unaware of. One must ensure their price is competitive; if your price is above what the government is asking, they’ll automatically disqualify you and move on to the other bids. If it is too high, you may not even be eligible to compete on future contracts!

Recently, Senator Carl Levin (D-Mich) proposed a bill that would require defense contracts to be reexamined if they are over the original cost estimate by 25% or more. Many large contracts can be recalculated as needs change and over time, but the government wants to crack down on excessive increases. The Department of Defense awards contracts based mostly on weaponry and technology; if the government is taking a stand against overspending on DoD contracts, then ones awarded in other departments are undoubtedly soon to be significantly be cut back as well.

The government generally decides the price range based on what they feel the material and labor costs should be. Usually, the federal employee assigned to the contract has appropriate estimates. The government wants contracts to be done easily and cost-efficiently, however, they understand that there needs to be a profit or small businesses won’t work with the government any more.

While the Obama administration is cracking down on the problems typically associated with federal contracting, there is nothing stating they will stop hiring contractors. In fact, time and again they have explicitly stated they want to hire MORE small businesses. If anything, the process might involve more paper work or red tape, but for the most part, contacting will continue. So long as the small business contractor follows the bid guidelines and offers competitive prices, there will be no shortage of contracts for the small business owner!

Stimulus Plan Benefits Small Businesses

USA Today's expert, Steven Strauss, announced on February 16, 2009 that the Stimulus Plan will be helping out the Small Business sector more than most Americans thought. He actually had a"call to arms" for businesses to become contractors as soon as possible so they could benefit from the money being pumped in the state and local economies. He even outlined how much money is going where...

• $16 billion for construction and renovation of schools
• $2.4 billion for "family friendly" military construction projects — family housing, childcare facilities, etc.
• $500 million to secure dams, bridges, and tunnels
• $4.6 billion for water and hydro power projects

As he states in his article, it's not just construction businesses that can partake at the government trough; look at:—

High Tech

• $9 billion to increase access to broadband, especially in rural communities
• $ 5 billion to computerize health records

Transportation

• $8.4 billion for investments in public transportation
• $160 million for investments in maritime transportation
• $160 million for investments in maritime transportation
• $160 million for investments in maritime transportation
• $160 million for investments in maritime transportation
• $1.3 billion for investments in air transportation
• $1.1 billion for investments in rail transportation
• $160 million for investments in maritime transportation
• $830 million for repair and restoration of roads on park, forest, tribal, and other public lands

Housing

• $2 billion for redevelopment of foreclosed homes
• $2 billion for affordable housing

Green Technology

• $6.4 billion for environmental cleanup
• $6 billion for sewer, and drinking water systems
• $40 billion to for development of clean, efficient, "American" energy
• $6 billion for repair of federal buildings using green technology
• $613 million for energy efficiency upgrades and construction of alternative energy projects, including wind and solar

Now, as many as you already know, Gateway to Government can help your business take full advantage of this opportunity. Steve is right; there has never been a better time than now to join federal contracting. However, getting these certifications, the right connections, and all the other bits of red tape involved with contracting can take a lot of time. One of the many benefits of working with Gateway is that we take the hassle out of bidding. We can help your business get contracts NOW instead of later. Why wait? Gateway can offer your business a solution that will increase your profits. Don't hesitate; contact us TODAY to get your fair share of the stimulus plan.