Feds Say Contractors Underbidding for PLA-Free Stimulus Projects

0 July 24, 2009  Federal Construction

An article by the Washington Business Journal reports that taxpayers have benefited from intense free and open competition on government contracts funded by American Recovery and Reinvestment Act (a.k.a the stimulus bill) (“Federal officials: Businesses underbidding for stimulus projects,” 7/21).

Businesses seeking stimulus funds are bidding 15 percent below expected costs, according to federal officials speaking at an event sponsored by the Greater Washington Board of Trade Tuesday.

Comments from GSA:

“Bids came in far lower than we expected, but the upside is that because of that, we have been able to fund more projects,” said Paul Prouty, acting administrator for the General Services Administration.

Comments from DOT:

Joel Szabat, deputy assistant secretary for transportation policy with the Department of Transportation told local business leaders that bids were originally 20 percent to 40 percent lower than expected.

“We have not officially measured why that is, but some contractors have said they bid at-cost just to get mobilized again after having layoffs earlier this year,” Szabat said.

He added that bids have started to climb, but are still lower than expected.

Szabat cited the Federal Aviation Administration as an agency that was able to fund more projects -347 projects instead of its anticipated 301 projects with $1.1 billion- because of the low bids.

Taxpayers may benefit from more projects for the same amount of money.

Officials said any funds leftover from low bids would be directed to counties and regions classified as economically disadvantaged areas (EDAs). The District and Prince George’s County are both classified as EDAs.

This is good news for U.S. taxpayers and the public interest of rebuilding America’s infrastructure. 

So why would the federal government encourage federal agencies to require the use of union-only project labor agreements (PLAs) via Executive Order 13502 if PLAs have a well documented history of reducing competition and increasing construction costs?

Don’t be fooled by Pro-PLA spindoctors! Let the record show that this cost savings occurred prior to implementation of PLAs on federal and federally funded construction projects.

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