Building Nevada - May 2006

Building for Government

by Kathleen Foley

Many commercial contracting and subcontracting firms in Nevada have considered building for a government agency at some point, and some make it their primary source of income. For others, it’s a good way to diversify income streams, balancing private jobs – which can usually be completed more quickly and with less paperwork – with government contracts, which offer more job security.

Just how big is the government pie, and how do contractors go about getting a piece of it? Jeff Fontaine, P.E., director of the Nevada Department of Transportation (NDOT), said his agency currently has 52 active construction-related contracts, with a dollar value exceeding $600 million. In fiscal year 2005, contracts for construction at Nellis Air Force Base and related bases such as Creech Air Force Base (formerly Indian Springs) totaled $106.1 million. Clark County School District construction contracts have averaged $300 million a year for the last five years.

And those are only three of the many agencies involved in building projects to keep up with demand generated by the state’s ever-growing population. The Nevada State Public Works Board, the airport authorities for Clark and Washoe counties, the Nevada System of Higher Education, the Regional Transportation Commission, Fallon Naval Air Station, local water authorities and counties and cities, both large and small, together generate hundreds of millions of dollars worth of construction contracts each year.

Laying the Foundation

“Companies interested in building contracts with state, federal or other agencies should go straight to the Internet and get on the entities’ resource lists, so they will be notified of projects that might meet their criteria,” said Hank Pinto of the Nevada Small Business Development Center (NSBDC), a statewide business assistance outreach program supported by the University of Nevada, Reno and the University of Nevada, Las Vegas. It provides free and low-cost information, assistance, counseling and training for Nevada businesses, including those seeking government contracts.

For federal government work, contractors can sign up with Central Contractors Registration (CCR) at www.ccr.gov. A DUNS number, provided by Dun & Bradstreet, is required to register. States, school districts, municipalities and counties may each have their own bidders’ lists, so it is advisable to inquire at each entity that might issue building contracts.

Becoming certified as a Disadvantaged Business Enterprise (DBE) can give a leg up to companies wanting to build for the government, said Pinto, who heads NSBDC’s DBE program. Once they pass review and are certified, companies become part of the state’s Unified Certification Program (UCP), allowing them to bid on federally funded projects, including highway construction, school and airport contracts, where they get special consideration as a DBE. Pinto said getting certified by the federal government is a lengthy process, but UCP certification takes a shorter time, usually about three months.

Each state’s Department of Transportation administers the DBE program for that state. In Nevada, the DBE liaison officer is Roc Stacey at NDOT. Complete instructions for registering as a DBE are available at a Web site set up specifically for that purpose: www.nevadadbe.com/.

Whether a firm is a DBE or not, a small subcontractor or a large general contractor, certain guidelines apply when dealing with government agencies. Preparation is key, said Pinto. “Make sure you’re ready to perform the contract,” he advised. “You need all the proper licenses, a sound financial situation that includes the ability to be bonded, and sufficient staff to handle not only the physical work, but also the paperwork.” Advisors at the SBDC can give contractors an idea of what’s involved and whether a government contract would be good for their company. “What you don’t want to do is to underbid in order to get the job, and then lose money on the deal,” said Pinto. “That can be the kiss of death, especially for a small company.”

Another state-sponsored source of help and advice is the Nevada Procurement Outreach Program (POP), a cooperative agreement between the state of Nevada and the federal government. The program works to increase the flow of contract dollars to Nevada businesses by providing the necessary training and technical assistance to find, bid on and acquire federal, state and local contracts. Its Web site is www.nvoutreachcenter.com.

Road Work Ahead

“This year, our contracts range from $62,000 to replace a drainage pipe, to $95 million to widen U.S. 95,” said NDOT’s Fontaine. “A limited number of contractors are qualified to work on the larger projects. You have to demonstrate that you have the financial backing and resources to do the job. We pre-qualify contractors every year. Part of that process is their past performance, as evaluated by NDOT engineers. Based on all those factors, including their ability to be bonded, contractors are qualified for certain levels of work. Some are limited to the dollar amount of contracts they can bid on, while others are unlimited.”

Fontaine said on state-funded projects NDOT gives a 5 percent bidders’ preference to in-state companies. However, on any job financed by federal funds, it is not allowed to distinguish between companies based on their home state.

Building Nevada’s Schools

Clark County School District has built 170 new and replacement schools since 1990, according to Fred Smith, director of construction management for the Clark County School District (CCSD). Smith’s department supervises the entire construction process for the district, from awarding contracts, to overseeing construction activity, to preparing new schools for move-in.

Each of the school district’s projects is advertised in the local newspaper, and a notice goes out to everyone on CCSD’s pre-qualified bidders’ list. In order to get on the list, contractors download forms from the CCSD Web site and submit the completed forms and back-up documentation. A three-member panel then reviews the materials and decides the dollar value of the contracts companies can bid on, and also the type of construction (either new or remodel).

CCSD has no quotas or set-asides for minorities or woman-owned businesses, Smith stated. “However, we do track that information, and it shows that our percentages are healthy. We also ask our general contractors to pass on information about their subs.”

He continued, “Contractors wanting to bid on a specific project must attend a pre-bid meeting, where they give us a package of updated materials, including current personnel, available bonding capacity and other jobs they’re working on. They are then granted an approval to bid on that project.”

Smith offers the following advice to people considering working for the school district: “Make sure you have someone on your staff at project manager level or above who has done public works before. Public works is a different animal because of the paperwork and bureaucracy required by statutes. You also need to be aware that we cannot accept excuses for being late. All our jobs are need-driven, and the schools have to open on a particular date, period.”

Contractors Give Their Point of View

Martin-Harris Construction, a general contracting firm based in Las Vegas, has completed projects for several public-works clients, including the Clark County School District, the State Public Works Board and the Army Corps of Engineers. “Every public entity has a different way of doing business,” explained the company’s president, Frank Martin. “Some procedures are almost the same, but for the most part, each time you take a job with a different agency, it’s a whole different set of rules.”

Martin-Harris has completed three projects over the last five years for the Nevada System of Higher Education (NSHE), including the $13 million Science Building on the West Charleston campus of Community College of Southern Nevada (CCSN). At CCSN’s North Las Vegas campus, Martin-Harris was part of a team that constructed the Telecommunications Building, which was the first design-build project for a user organization within the State Public Works Board (SPWB).

“The difficulty with that job was that some of the Public Works Board staff didn’t make the transition from design-bid-build to design-build. There’s a big difference,” said Martin. “On the plus side, they did a very fine job keeping us running on the job. The design-build delivery system means we are designing as we’re building, but we need the building officials’ approval on each change. They kept those approvals rolling right through, so as a result we shaved about 13 months off what the delivery time would have been for a project going through the standard design-bid-build process.”

Martin-Harris also builds three to five schools each year for the CCSD. “Overall, it’s been a pleasant experience,” said Martin. “We have had our ups and downs. In 2000, Fred Smith (of the CCSD), myself and several other AGC (Associated General Contractors) members sat down and put our heads together to try to make the process work better, and made some improvements. Fred runs a good department. We’re still having a degree of difficulty in getting change orders approved, but it’s not like it was five years ago. Frankly, we like building for CCSD. There are still challenges, but every construction project is a series of challenges.”

Despite difficulties dealing with government regulations, Martin expressed an appreciation for the system. “One thing I like about dealing with both the State Public Works Board and CCSD is that the Nevada statutes are very clear about the rules you have to adhere to as a bidding general contractor. If you don’t adhere to those rules, you don’t get an opportunity to do the job. It does create heartache sometimes, but on the other hand, by forcing people to be responsible, it creates good businesspeople, and it levels the playing field by giving everyone a chance to bid.”

But public works projects also have their pitfalls. At Nellis Air Force Base, Martin-Harris won a $23 million contract to construct the Visiting Officers Quarters building for the Army Corps of Engineers, acting as a subcontractor for another company that handled most of the construction documents. “In our experience in building at Nellis, it seemed like the paperwork was more important than actually putting the building up,” remarked Martin. “In September 2004, we put in three requests for equitable adjustment (REAs), which function like change orders for government work. We turned the building over to the owner in October 2005. As of this date (mid-April 2006), the REAs still have not been resolved. I don’t think we’ll play in their sandbox anymore – not when there are so many other places we can go and get paid on time. We don’t have to tolerate that kind of activity.”

Frehner Construction is the largest contractor doing work for NDOT on its roadway and bridge projects, and has specialized crews for underground work, earthworks and asphalt. Frehner has worked on the Rainbow Curve project on U.S. 95, as well as the I-215 Beltway. It just finished the Auto Show Interchange in Henderson and is beginning work nearby on St. Rose Parkway. Frehner’s president, Mike Pack, said, “Public works is a whole different animal. Folks who do primarily private work, like our other company, Southern Nevada Paving, really dislike doing public work. People who do primarily public work dislike working for private owners. It’s a different mentality and attitude. Companies who are really good on private jobs often flounder when they try to take on public works projects, and the transition from public to private is equally risky.”

Pack, whose companies bring in a combined total of about $250 million a year in public works projects, said the best part of working for the government is, “They pay their bills. On state projects they pay every two weeks, compared to a private owner, who may pay every 45 or 60 days.” He said this helps balance out the challenges of dealing with the public entity’s tougher specifications, more regimented processes and need for more approvals during the course of work.

“In public jobs, relationships don’t really matter like they do in private jobs,” said Pack. “In the private sector, it’s important to develop relationships with clients, so they know you are reliable and can perform within a given timeframe. Time is money for private owners. But in public jobs, the low bidder gets the contract, and that’s all there is to it. If he doesn’t complete the contract within the specified time, he pays liquidated damages, but that doesn’t do the road users much good – they’re still stuck in traffic. On private jobs, bids are decided by a combination of both price and performance.”

Louis Primak, area manager for Northern Nevada and California for PENTA Building Group, said his company is currently working on two large jobs for the university system. In Las Vegas, PENTA is completing Phase I of a new student union building for UNLV. Phase II of the $40 million project is slated for completion in June 2007. It just began work on the $46 million, four-story Joe Crowley Student Union building on the UNR campus, and also built the Brian J. Whalen parking garage for UNR.

Working for a public entity means there’s little chance the building’s owner will go broke before it’s completed. “One good thing about public entities is that funds have already been allocated for the job,” Primak said. “In private projects, the owner may run into a cash flow problem that holds up his payment schedule, but that’s one worry you don’t have with public works projects.”

“There’s a lot more good than bad in building for public agencies,” said Primak. “There’s an extensive pre-qualification process that ensures you’re only competing against your peers. It’s a very structured process, with everything out on the table and no guesswork, and you find out the results of the bid right away. The building process, change orders and payment schedules are very straightforward and work well, as long as you play by the rules.”

Kathleen Foley
Kathleen Foley is a freelance writer based in Southern Nevada.