Stimulus Spending: a Stream for Horizontal Projects, a Trickle for Vertical

Although the relatively brisk pace of stimulus-aided transportation work is evident on the highways very few non-transportation projects have been started with the help of Recovery Act dollars. To help break the logjam AGC of America called on federal officials to address critical shortages of contracting officials within key federal and state agencies overseeing stimulus construction dollars.

Some examples of the slow pace of spending:

  • The Army Corps of Engineers is responsible for $4.6 billion in stimulus construction funds yet has only obligated $715 million and paid out $84 million.
  • The General Services Administration has only obligated $656 million and paid out $12 million of its $5.9 billion in stimulus construction funds.
  • Only half of one percent of the $6 billion in stimulus funds available for the U.S. Environmental Protection Agency’s state clean water and drinking water programs has been put to use.

“The stimulus is clearly working” said AGC of America CEO Stephen Sandherr. “It just isn’t working fast enough for many construction workers in many communities.”

Sandherr said there was still time for the Administration to make sure the multi-year stimulus program delivers on its promise. In addition to bringing on more contracting officials the Administration needs to fully and finally clarify reporting and Buy American requirements included in the stimulus added Sandherr noting that many federal and state agencies are having difficulty interpreting the new mandates.

Sandherr said that five months into a federal stimulus program that has approximately $135 billion dedicated for construction projects there is little difference in hiring and purchasing patterns between companies doing stimulus-funded work and companies that aren’t.

For example he noted that while 36 percent of construction companies with stimulus-funded work report plan to hire new employees an almost identical percentage of firms without stimulus-funded work also plan to make new hires this year or next. He added that while 36 percent of construction firms with stimulus-funded work plan to purchase new equipment and supplies a higher rate - 43 percent - of construction firms without stimulus-funded work report plans to purchase new equipment over the same time frame.

The data is from a survey of almost 1000 construction firms nationwide conducted by AGC of America over the past three weeks. The survey results were combined with the association’s analysis of federal and state agency stimulus activities and a review of employment data from the Bureau of Labor Statistics.

On the plus side stimulus dollars for transportation is having a positive effect nationally and especially in Washington State. According to a congressional report Washington accounted for the most stimulus-funded jobs of any state or territory at 3481 with the bulk of those concentrated in highway repairs.

Plus WSDOT said that new employment data from state and local highway contractors showed Recovery Act work in Washington doubled from May to June as more projects get awarded and underway. Contractors have increased their hours worked with payroll and labor hours also doubling. The employment data shows workers on Recovery Act-funded projects logged nearly 58000 labor hours in June compared to just under 29000 hours in May.

The number of orange cones and barrels on the highways is a good indicator that we are delivering on the promise to get our projects moving quickly to get people working this summer” said Paula Hammond Washington Transportation Secretary.

As a whole WSDOT has obligated $244.5 million (71 percent) of $344.6 million with funds now obligated to 33 of 36 individual state projects. Local governments have obligated 84.4 percent of local funds or $128.4 million of $152.1 million. Agencies have until March 1 2010 to obligate the rest.

Washington State will deliver more highway projects with federal American Recovery and Reinvestment Act funds than first envisioned due to the recent trend toward lower construction bids. Between July 1 2008 and June 30 2009 WSDOT awarded 172 contracts 150 of which came in less than the engineers’ estimate. The average amount below the estimate for these 172 contracts was 17 percent. As of July 27 WSDOT has awarded 26 state stimulus projects worth $128.1 million. In total those projects have come in under the engineer’s estimate by 20 percent. Contractor bids on city and county stimulus projects around the state are also coming in lower than expected allowing local agencies to deliver an additional $20 million in highway construction projects.