• EFCA – Amidst all of the controversy, three mega-retailers proposed an alternative to the currently pending EFCA act. Those retailers?   Starbucks, Whole Foods and Costco.
• Green building law blogger Shari Shapiro went to a green building conference and asks the question:  Is construction law Where The Boys Are…and The Girls Aren’t.
• The Business Pundit reports that the Knauf Drywall Fiasco could be the Biggest Home Defect Case In U.S. History.  The question then becomes…are you prepared for that?  Wolfe Law has been blogging on Chinese Drywall here, and they have published an Avvo Legal Guide titled:  What To Do If You Installed or Supplied Chinese Drywall.
• The Stimulus is still in the news.  Here is a searchable spreadsheet published by the Contractor’s Blog of the 18,000+ Infrastructure projects.
• Wolfe Law Group news?   Check out an interview with founding member Scott Wolfe Jr. on New Orleans’ Fox 8 about Chinese Drywall.   Also, the firm announced a new practice group to represent, advise and defend builders, contractors, suppliers and other construction industry participants who are implicated by the imported drywall crisis.

A story released by the Seattle Times, indicates that the bulk of funding will be distributed for military projects, including a new water-distribution system at Whidbey Island Naval Air Station, a training facility at Fort Lewis, replacement of a Tacoma pier that supports the Army Reserve Boat Mission, and installation of advance metering systems at Navy hubs that will help monitor energy consumption.

Additional funds will be earmarked for public housing and transportation. One highly anticipated project will likely be the new Amtrak maintenance facility at King Street Station. That project is likely to exceed $40 Million. Ongoing restoration of King Street Station is costing the City of Seattle, its new owner, over $26.5 Million.

In related news, the State Legislature released its $4.3 Billion transportation plan. Under the plan, the State will be able to pay for the new Alaskan Way Viaduct, Highway 520 bridge, and purchase new ferries.

There has been some recent distaste for the laboring that has ensued over the Viaduct and 520 projects. Senate Transportation Committee Chairwoman Mary Margaret Haugen, D-Camano Island probably said it best:

“I really probably shouldn’t say this, but I hope those people building those megaprojects would make some decisions and move forward, because the Legislature’s only going to have so much patience.”

“We’re really delighted that a decision has been made on the viaduct. We hope it can be made on 520 also.”

The projects continue to come for Seattle. Its hard to imagine more public building – in a city where projects are ever present.

Since then, however, we’ve sworn in a new President, Congress passed an aggressive (albeit controversial) “Stimulus Package,” and the dead of winter has bowed to a new Spring – typically a more productive time of the year for construction.

So where are we?

Well, the news for the construction industry carries mixed messages.

Let’s start with the bad news:  McGraw Hill Construction reports that February construction dropped 8% from January, and Reuters predicted that construction jobs will continue to report weak throughout 2009.

In an interview with Reuters, Chief Economist for the American Institute of Architects (AIA), Kermit Baker, had this to say about the economy and the stimulus:

The Obama stimulus will put some people to work as soon as next month, but it will not be a major factor until the third quarter, Simonson said. Even then the stimulus will have little visible impact on payrolls, since contractors will use existing workers before they bring back people who have been laid off or start to hire new people.

The good news, of course, is laced within the forecasted bad news: the stimulus.

No one is certain of how large the impact will be, but many in the construction industry are already sizing up the stimulus opportunities and other available government work.

Ken Simonson, the chief economist for the Associated General Contractors of America, had a positive outlook for business and employment in the construction industry and the benefits of the stimulus.   During a talk to association members, he said:

It’s not going to be enough to bail out construction right away…but it’s a start.

Already stimulus money is being allocated towards real construction projects and creating jobs.  See this story about $101 million in transportation work in Oregon, or the Larose bridge project in Louisiana.  Even Monster.com has published an article about how the stimulus package will spark construction jobs.

The stimulus certainly gives the construction industry optimism, but from all accounts, it appears to be cautious optimism.

Despite rashes of optimism that new building is up, the figures tend to tell a different story. Both private and public investment in new building are both on the decline. The drop off indicates that there is certainly a lack of funding and construction “players” who drive the industry.

But some states tell different stories. Some actors seem to be driven by falling costs in the construction market, and secured future sources of funding.

Take the State of Washington for example, who has recently experienced a bounding growth in publicly managed and publicly subsidized projects. Here is a peak at what is going on in the Northwest corner:

• Pave Those Highways – Try to drive anywhere in the Seattle area and you cannot miss the traffic. Recent highway projects have taken over Interstate 5 with the intention of improving drive quality for commuters. The state estimates that over $2 billion of repairs are needed to improve I-5 in the Seattle metropolitan area. Unfortunately, the state has earmarked on a small fraction of that amount in order to complete reconditioning. Luckily, Department of Transportation administrators are not backing down, despite potential funding issues. DOT said that 2009 will be “one of its most intense and complicated construction seasons in its history.”

• Beacon Tunnel Acceleration – The Beacon Tunnel has become one of Seattle’s most anticipated projects. The tunnel was funded initially in 2003 by voters who wanted faster transit from the sprawling Tukwila area, north into downtown Seattle. With fears rising about missing the projected opening of the Seattle Light Rail project, lawmakers sought to accelerate the completion of the projects,adding contractors around the clock to complete the final testing stages of the tunnel. Sound Transit, the project’s managing agency, is spending millions in order to ensure that the work is completed timely. But recent reports indicate that the $2.4 billion project is on schedule and $125 million under budget.

• Clean Energy Money to Spur Wind Power Growth – Klickitat County is a small rural area in the South of Washington state. At times the county had one of the highest unemployment rates in the State of Washington – over 12% in January 2009. However recent trends toward “clean energy” have shown vast investment in the area and resulting job growth. The main reason for this growth, is the influx of wind energy farms, no doubt assisted by the promise of over $129 billion in financial incentives for clean energy. In Klickitat, the incentives are pushing further investment in wind farms, especially for San Diego developer Cannon Power Group. The CA company has invested in two farms which will stretch 26 miles of ridgeline on the north shore of the Columbia River, capable of producing power for 250,000 homes. The projects are expected to produce over $15 million annually in property taxes as well as over 500 jobs.

• Microsoft Building with Stimulus Bucks – The Seattle Times reported that Microsoft will use around $11 million of federal stimulus funds to build a bridge over Highway 520 in order to connect its westside and Redmond campuses. The funds are being disbursed by the Puget Sound Regional Council, who has been earmarked to receive over $214 million of those stimulus funds. Some are not too thrilled about the use of these funds to assist a multi-billion dollar company, who recently cut around 5000 jobs. Regardless, the project is certain to spur some growth in an otherwise stagnant building industry.

• Puget Sound Rebuilding – There has been quite a bit of coverage about the battle of development versus the Puget Sound. Several ecologists are gearing up for the Summer of 2009 with an open eye towards educating builders and local officials on conservation techniques. One interesting technique pays landowners to preserve their land, by making public officials competitors with developers looking to build on land abutting waterways. Unfortunately, the substance missing from all of this reporting is the alternatives – how do builders continue with growth, without disturbing the wilderness?

Construction on jails, police and fire stations, playgrounds, theaters and mixed-income housing developments — all battered by the 2005 floods — has started or will start this year, as public federal funds finally were unleashed from bureaucratic tangles, Mayor Ray Nagin said in an interview with USA TODAY.

“You’re going to be able to see, touch and feel it,” Nagin said. “We’re really headed into a year of unprecedented construction.”

Certainly this is exciting news for contractors in Southeast Louisiana, who experienced a surge of work in the aftermath of Hurricane Katrina, but has since succumbed to the rigors of the national recession.

The news of Katrina-related aid coming to the region is icing on top of the cake for the Louisiana construction industry, who is looking forward to a large amount of stimulus cash being spent in the state’s infrastructure.

Just this weekend there was news out of Baton Rouge that despite previous resistance, Governor Bobby Jindal would likely be accepting all stimulus aid.  The state launched a stimulus spending website, http://www.stimulus.la.gov/, and identified the first LA project to use stimulus funds (the long awaited Larose bridge).

How Do You Take Advantage of The Stimulus?

If your company is interested in taking advantage of the planned stimulus projects it must get familiar with public contracting, Davis-Bacon prevailing wage requirements, the public bidding process and more.

A great resource to learn more the requirements and strategies of public contracting is Mike Purdy’s Public Contracting Blog.

With more than 29 years of public contracting and procurement experience, Mike helps government agencies and businesses develop contracting strategies, solve contracting problems, and get better informed on a wide variety of public contracting and procurement issues.  His consulting company, Mike Purdy & Associates, is based out of Seattle, WA.

Here at the Construction Law Monitor, we provide commentary and insight on the legal components of government contractor (state and federal).  You can read posts related to public contracting through the category Public Contracting here.

Last month (Feb. 2009), we posted a particularly helpful article for businesses unfamiliar with the public contracting process called “The Stimulus Package and Your Construction Business.”

The article briefly breaks down the legal and practical differences between public and private work, and outlines the basics for contractors interested in preparing their company to bid on public jobs.

“Greening the economy” sounds like the US government is trimming hedges, planting bulbs and whacking weeds.  In all seriousness, the focus is on improving the current economic situation while simultaneously reversing the damage done to the environment. Genius! Obama’s goal is to create 2.5 million new jobs in the green sector of the economy by 2011.

Obama’s green stimulus package will also likely include tax breaks for clean tech projects like solar panels, wind farms, biofuels, and carbon capture and sequestration.  Therefore employment opportunities that are categorized as “green- collard jobs” such as green building, LEED certified construction professionals, wind turbine mechanics and jobs pertaining to energy efficiency and production will be in high demand.

All over the world from London to Hong Kong, governments are coming to the realization that “going green” is a necessity for creating jobs and saving the economy. You can read more about the world wide efforts to “go green” at the UN News Centre.

Right here in the the United States of America, states are adopting laws that provide individuals and developers with tax incentives to incorporate Green Building standards into their homes and/or commercial properties. The more emphasis placed on Green Building in the near future, construction professionals with knowledge and certification in Green Building will find themselves at the forefront of an upturned economy.

There are many opportunities for former construction workers in the green sector. In fact, the number of jobs in “renewable or energy efficient” industries is climbing at a fast rate and government support is only going to boost the speed!  Going green on a construction job encompasses using both renewable resources and energy efficient methods. Wolfe Law Group published a series of blog articles relating to Green Building for contractors. To read the Green Building article series click here.

• Engineering News Record highlights the winners and losers to the stimulus bill.    AGC’s SmartBrief reports that the stimulus could mean 670,000 jobs for construction workers.
• The Washington Post is already asking what if this stimulus is not enough?  Will there be a Sequel?
  
• Does the Stimulus package impact green building at all?  See what Chris Cheatham has to say in The Stimulus:  Green Building Provisions.
• With all the talks of recovery, there is still some talk of recession.  Kean Miller’s Louisiana Law Blog reports on How Chapter 11 Can Affect Your Business if a Customer or Vendor Goes Bankrupt.
• The celebration of Mardi Gras 2009 is only days away in New Orleans.  Visit Nola.Com’s Mardi Gras website, or learn about its history at wikipedia.

While the private contracting business has suffered setbacks in the current economy, one bright spot has remained:  the growth of public and federal construction spending.

The passing of the new stimulus build with large investments into America’s infrastructure and other public works promises to put even more money into the public contracting business.

ConstructionBusinessOwner.com published two very informative articles about how your business can take advantage of the increased public spending.

The Differences Between Public and Private Projects

The first article, titled Three Key Steps for Shifting To Public Works Projects, explains some the key differences between private works and public works, and identifies common mistakes made by companies when entering the public sector.

The article encourages companies to consider bidding for and taking on more public work, but warns against doing so without proper preparations.  Here is a revealing quote:

Making the shift to prevailing wage jobs takes preparation. Without proper planning, contractors run the risk of underbidding jobs-and, subsequently, losing money-or getting slapped with steep penalties for improper recording keeping. Establishing protocols for certified payroll and AIA progress billings and having solid audit trails for each transaction are vital if you want to succeed in the government-financed construction market.

So what are the 3 Key Steps to shifting from private to public work?

• Get Educated
• Automate Your Accounting Practices
• Bid on Projects Based on your Strengths

How To Get Federal Work

The second article, Claim Your Share Of Rising Federal Construction Spending, was published immediately after passage of the new stimulus package, and really explains how businesses – and especially small businesses – can intervene in the federal works bidding process and claim some work.

In its discussion of why small or minority owned businesses have a dog in the federal contracting fight, the article states as follows:

Unfortunately, far too few small businesses take advantage of federal contract opportunities, even though the federal government is required by Congressional mandate to direct 23 percent of its contracts toward small businesses. Despite this mandate, the latest figures from the Small Business Administration indicate that the federal government fell short of this figure.

Although there are various factors behind this shortfall, two things are pretty clear. First, if more small businesses were competing for these contracts, more would win them. And second, small business owners who are savvy about the process of securing government contracts are the ones most likely to land them.

Summary of the article’s tips for preparing to bid on federal projects:

• The government will want basic information and methods of Identification.   Get a DUNS number (free from Dun & Bradstreet), a Federal Tax ID number (EIN), understand your NAICS and SIC classification, and have accurate financial routing information for your business available.
• Create a profile on the Central Contractor Registration database. The CCR is where all government agencies and prime contractors turn when they are looking for potential vendors.
• The federal government is obligated to award a certain percentage of its contracts to various underrepresented and disadvantaged groups. If you think your business may qualify, you should register with the U.S. Small Business Administration (SBA), whose Small Disadvantaged Business (SDB) and 8(a) programs are designed to help specific groups secure federal contracts and subcontracts.
• Consider Subcontract work.  Getting your foot in the door is sometimes the hardest part in landing government contracts. First-time bidders can be at a disadvantage because the government often relies on established relationships when selecting contractors. Fortunately, large construction projects often depend on a host of subcontractors, which could be your ticket in.

See also Industry Week’s article, Your Best New Customer May Be Uncle Sam, for other helpful information.

Now that the parameters of the “economic recovery” package have been set, the construction industry can step back to determine whether and how the stimulus can help.

It’s no secret that the construction industry has been closely monitoring the economic stimulus legislation.    With residential construction spending sinking to new lows each month, organizations like the Associated General Contractors of America have been lobbying the legislature to “invest in the country’s infrastructure” as an attempt to equalize some of the woes of the private sector with growth in the public sector.

Notwithstanding the lobbying efforts of trade organizations and the monitoring of the stimulus bill, it’s nearly unanimous among commentators on the subject that construction companies will likely be the biggest beneficiaries of the stimulus deal.

The clear next question, of course, is “how?”

Frost Brown Todd, LLC published a blog article about “What Contractors Need To Know“ about the House version of the stimulus package.  While not a direct analysis of the final bill, the article is still very relevant to it, explaining a number of details about the bill, where stimulus money will be allocated and why the construction industry may benefit from the spending.

Perhaps the best break-down of information comes from The Associated General Contractors of America website, which provides a state-by-state stimulus impact chart.

The AGC’s website also provides PDFs for each state, with a detailed status-briefing of the construct industry and an explanation of how the stimulus package may help.   You can download the reports on Washington here, and Louisiana here.

The AGC’s summary of the Economic Impact of the Stimulus Investment in Louisiana is as follows:

An additional $1 billion in nonresidential construction spending would add about $2.2 billion to the state’s Gross Domestic Product (GDP), about $698 million to personal earnings and create or sustain 23,000 jobs.

The AGC’s summary of the Economic Impact of the Stimulus Investment in Washington is as follows:

An additional $1 billion in nonresidential construction spending would add about $2.4 billion to the state’s Gross Domestic Product (GDP), about $753 million to personal earnings and create or sustain 20,000 jobs.

This article has discussed the stimulus package and how it may impact the construction industry.  Tomorrow, we’ll discuss how the stimulus package may affect your construction business….and give you tips on how to take advantage of the increase in public construction spending!

Now, for some comic relief, here is a clip of Mr. Stephen Colbert’s discussion of the Stimulus debate: