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Friday, April 10, 2009

Stimulus Working: Lots of Competitive Construction Bids for Gov't Projects

Sometimes the promise of government contracts promote inflated bids from private forms hoping to cash in on government inertia and inefficiency. The stimulus money filtering down from Washington would seem to offer great potential for smart bidders to boost their bids and bring home the bacon.

But the Washington Post reports that, in this economy, that's not happening. Construction firms are so eager for work that bids on stimulus projects are coming in fast and low:

At Baltimore-Washington International Marshall Airport, a recent project to reconstruct the area around Piers C and D received six bids instead of the usual two or three. The result: The estimated $50 million project will be built for $8 million less than was budgeted, and the savings will be allocated to other projects. There were 21 bidders for a $200,000 drainage project in Carroll County, more than anyone could remember.

"Our bottom line is more bidders and better prices," said Maryland Transportation Secretary John Porcari. "This we like" [Eric M. Weiss, "Bids Pour in for State Construction Jobs," Washington Post, 2009.04.08].

Instead of the stimulus money simply inflating prices, we might actually get more work done for the money than we expected:

...Construction firms' hunger for work means that the $787 billion stimulus package passed by Congress could result in more paving for the buck. The stimulus is supposed to pay for "shovel-ready" projects to stimulate the economy, put people back to work and get needed projects done.

"What it's going to do is giving us value for the dollar," said John Horsley, executive director of the American Association of State Highway and Transportation Officials. "The two winners are the public, which gets more improvements, and a net gain in jobs creation. It's a win across the board" [Weiss, 2009.04.08]

And this trend of lots of competing bids is happening across the nation:

Kenneth Simonson, chief economist for the Associated General Contractors of America, said he is seeing the bidding trend across the nation.

In Connecticut, a project on the Merritt Parkway was budgeted at $75 million. The final bid amount: $66.6 million. In North Carolina, Pennsylvania and Rhode Island, bids are coming in 19 percent, 15 percent and 10 percent lower, respectively, according to data provided by the American Association of State Highway and Transportation Officials.

"Wherever I go, I hear of projects that used to attract two to three bids just a couple of years ago, now it's 20 or 30," Simonson said. "Many [contractors] are coming down on the minimum size of projects they will bid on, and ones who didn't do schools now are bidding on schools. Others are coming from out of state to a new region just to keep busy. And they are essentially giving away their services just to keep their key employees busy" [Weiss, 2009.04.08]

Let's hope we see that same trend with the stimulus dollars here in South Dakota.


  1. Don't these projects have to pay union scale wages? Do the bidders realize this?

  2. Evidently they do, and they're still able to bring in low bids. Workers get good wages, taxpayers get money's worth... can't beat that!


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