B2G Institute Blog – Government Contracting

According to officials from the General Services Administration and Transportation Department,  stimulus contract bids are 10 percent below what projects were estimated to cost, on average.

 Joel Szabat, deputy assistant secretary for transportation policy and co-chairman of the Transportation Investment Generating Economic Recovery team, said for the first month and a half after the stimulus’ enactment, the agency received bids 20 percent to 40 percent below engineers’ estimates.  Recently, those bids have settled down to around 15 percent below estimates, according to a Government Executive article.

 ”As taxpayers, you should be very happy with that, because we are stretching the dollars to get more work done while we succeed in our main job, which is to create jobs,” Szabat said.

 On July 9, Transportation Secretary, Ray LaHood, instructed governors to ensure money made available by low bids should be redirected to projects in economically distressed areas, in keeping with congressional requirements, Szabat said.

 While Transportation has not identified exactly why bids are coming in so low, but Szabat believes it’s one side effect of the recession. “Anecdotally, we have a strong belief it’s because of the very high unemployment rate in the construction fields … in parts of the country it can be as high as 19 percent or 20 percent,” Szabat said. “There’s clearly a huge underutilized and easy-to-mobilize group of folks out there.”

Some contractors he’s spoken with have been bidding at cost just to “get mobilized again,” he said. These contractors intend to bid closer to agency estimates as they’re able to get people back to work.