Agency officials: Stimulus bids coming in far under estimates

Bids for contracts under the Recovery Act are coming in far below estimates, officials from the General Services Administration and Transportation Department said on Tuesday. Acting Administrator Paul Prouty said GSA has seen bids 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. Now those bids have settled down to around 15 percent below estimates, he said.

"This may not be good news for you, but it's very good news for us," Prouty told industry representatives during a Greater Washington Board of Trade conference.

Prouty said the low bidding means GSA likely will be able to complete more than the 254 significant projects officials originally submitted to Congress for stimulus funding. The downside? More work for already overwhelmed federal employees.

"When I tell people in audiences such as this that there's going to be more work, they get really excited. When we tell our people who are tasked at levels they've never imagined that there's going to be more work, they start passing out," Prouty joked.

Szabat said Transportation has seen very low bids for everything from highway to airport projects, and that he imagines the experiences of GSA and Transportation reflect those of other agencies receiving stimulus funds.

"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.

Transportation Secretary Ray LaHood issued guidance on July 9 instructing governors to ensure money freed up by low bids is redirected to projects in economically distressed areas, in keeping with congressional requirements, Szabat said. Transportation has not looked systematically into 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.