The $787 billion American Recovery and Reinvestment Act enacted in February could prove a boon to contractors, as it provides immediate funding for government design and construction projects.
“The whole emphasis in this plan is on quick-start, shovel-ready projects,” says Jim Scott, construction lawyer for Greensfelder, Hemker & Gale, P.C.
Funding is available now for a wide range of projects, but contractors must first meet several requirements before they are eligible to bid on this work.
Smart Business talked to Scott about the conditions that contractors must meet to be eligible for ARRA-funded projects and what you can do to get a piece of the pie.
How much money is available through the American Recovery and Reinvestment Act of 2009?
It breaks down into the three principal categories: $144 billion in state fiscal relief, $288 billion in tax relief aimed at both businesses and individuals, and $355 billion in targeted spending.
The construction industry has focused on the $143 billion allocated for infrastructure and public buildings. There are also other important areas marked for spending, including $19 billion for Health IT and $11 billion for improving the stability of the electricity grid nationwide.
Contractors are working hard to understand the components behind the $143 billion number and identify discrete projects to bid on. And there are a number of ways to do that. The government’s Web site at recovery.gov will give you the gross amounts for spending, as well as a place for each of the 29 federal agencies responsible for spending this money. Each federal agency is tasked with the obligation to come up with a spending plan for the money it has been allocated.
As a contractor, if you want to focus on specific contract opportunities, there are additional government Web sites that are useful. The most useful is FedBizOpps.gov (www.fbo.gov), where you can search by agency, location, nature of services, nature of work or industrial business codes.
How can contractors become eligible for contracts involving this money?
Anyone who wants to perform a federal contract has to accomplish some online registrations that are required. The Central Contractor Registration is the first place that a contractor would go to register its business data with the government — what kind of firm it is, where it’s located, basic financial information about the business, and its goods and services classifications. Other registrations include ORCA or Online Representations and Certifications, which requires a contractor to annually answer certain questions regarding its ownership, status, past performance, compliance with various laws and the like. Another one is Data Universal Numbering System, which is operated by Dun & Bradstreet and provides numbering for the physical locations of the registrant.
If you’re in the construction business and you intend to bid on this work, typically you are going to be required to post surety bonds. That isn’t difficult for larger contractors, but for small contractors, it can be a problem. The Small Business Administration can provide guarantees, usually up to $5 million but in some cases up to $10 million, to help small contractors meet their bonding needs.
What kinds of restrictions are attached to the projects funded by this money?
There are a number of preferences and restrictions that are fairly straightforward.
The projects are expected to be job creating and support economic growth. Prevailing wages are required to be paid. American sourced steel and iron are to be supplied by contractors, though there are numerous exceptions to that requirement.
There are also some projects that the funding won’t support, such as casinos, golf courses, aquariums, zoos and swimming pools.
What obstacles do contractors face when they go after ARRA-funded contracts?
Many contractors are accustomed to working in the private sector, for private clients, often on a relationship basis under a negotiated agreement with somebody that they had worked for before.
In contrast, the federal contracts awarded under the Recovery Act are going to be competitively bid. In many cases, contractors that perform that work are not going to be familiar with the government regulations that spell out what is required and, in many cases, won’t be acquainted with the various pieces of paperwork that need to be completed.
There are a host of governmental regulations that flow with this work.
The Recovery Act also gives the government direct access to your employees and your contract records. There are provisions in the law that require quarterly reporting by contractors and, under certain circumstances, contractors can be required to disclose the compensation of their top five officers.
While these regulations can be troublesome, the projects that will be funded by the Recovery Act represent an important opportunity for contractors to deliver important work and turn a profit in a difficult time. At Greensfelder, we’ve formed a Stimulus Support Team to help clients navigate these issues.
The team draws from several practice areas and is intended to assist clients with their registrations, their contract issues, their work force concerns and their disputes. Properly managed, contractors can make this work a very successful part of what they do.
Jim Scott is a construction lawyer for Greensfelder, Hemker & Gale, P.C. Reach him at (314) 335-6853 or [email protected].
