06/16/2009

By ANDRE STEPANKOWSKY  / Associated Press

For some time, Longview diking district officials had put off a project for a "trash rack" to prevent floating debris from clogging the drainage pipes near Lake Sacajawea. A similar project elsewhere in the drainage system had cost about $125,000 in 2007.

With contractors hungry for work, though, diking officials hoped bids would come in much lower this time.

They were in for a shock.

Last month, 11 companies bid on the work, which district engineers estimated would cost $104,000.

The project went to the low bidder, Spring Hill Construction of Woodland. The price: $35,300.

"We were very surprised," said Judi Strayer, diking district manager. "We did a full review of the bid and it appears reputable."

Several other bidders were in the same range, increasing officials' confidence the Spring Hill's bid is good, she said.

The contract is a small example of what public agencies across the region are experiencing: Bids on public works contracts are coming in well below agency estimates, even in cases were estimates were adjusted downward for the lousy economy.

It's one of the few ways taxpayers and public agencies are benefiting from the recession. If the trend continues, for example, the city of Longview may save millions of dollars on its new water system under development at the Mint Farm Industrial Park.

Contractors "are sharpening their pencils now. A lot of people are not taking any real profit margin," Kurt Henthorn, president of the Lower Columbia Contractors Association, said Monday.

"They're just trying to keep the doors open and people working. Everyone is just down to their core people. Those are the people who you really don't want to lose," Henthorn added.

Bart Gernhart, regional engineer for the Washington State Department of Transportation, said five recent road projects awarded in the region recently average 15 percent below state estimates.

The most recent such contract for paving and guardrail work on State Route 4 between Skamokawa and West Longview went to Lakeside Industries of Longview. Lakeside's winning bid of $6.5 million was 20 percent below the state's estimate, which already had been reduced to account for a favorable bid climate, Gernhart said.

"It's the competition" for contracts, Gernhart said, explaining that the sour economy has attracted contractors to state work who ordinarily dont bid on WSDOT work.

The public, he said, is getting a respite from high construction prices earlier this decade caused by soaring oil costs, foreign competition for building supplies, the hot housing market and the flurry of rehabilitation work that followed Hurricane Katrina.

Cowlitz County road projects also have been bid well below estimates, said Ken Cash, county public works director. A project to raise West Side highway and replace a bridge near Castle Rock High School came in 26 percent below county estimates, and that's been typical, he said.

One notable exception to the trend has occurred in Kelso, where the sole bid for a new skate park came in well above city estimates. Officials speculated that was due to the specialty nature of the concrete work.

Statewide, lower bids are allowing transportation officials to stretch federal stimulus dollars and undertake extra infrastructure projects, such as the Puget Island ferry terminal, state officials announced last week.

According to Gov. Chris Gregoire's office, as of June 1 WSDOT had awarded 15 stimulus-funded projects worth $64 million statewide, saving 21 percent off the estimates.

Between July 1 and April 30, WSDOT awarded 115 construction contracts, 100 of which came in an average of 29.5 percent below cost estimates, according to the agency. The others were at or above state estimates.

"The trend toward low bids reflects how difficult the current economy is for our contractors and reinforces how important our stimulus projects are to getting people back to work," state Transportation Secretary Paula Hammond said in June 5 written statement.

So far, though "we were real excited about it when it first came out," stimulus funding has not yet energized local construction trades, said Henthorn, the contractors association leader. "It has not seemed to get people off the dime like we thought it would."

Construction of a $200 million grain exporting terminal at the Port of Longview, expected to start this summer, should help, but Henthorn predicts it will take six months to a year for the industry to really rebound.

Though bad news for contractors, that could be good news for Longview utility ratepayers.

The city will be seeking bids late this year and early next year to drill the new water supply wells and build a new treatment plant at the Mint Farm. In addition, the West Longview sewer diversion project (which involves closing the old sewage lagoons) should got to bid early next year.

City officials estimate the water treatment plant will cost $27 million, and the sewer project is projected to run $19 million to $20 million, said Jeff Cameron, city public works director. Cameron said he has no way to know if the favorable bidding climate will persist. He's hoping so, and the city is doing what it can to expedite contracts in hopes of catching good prices.

"If bids are 10-15 percent below estimates, we would save millions."

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Information from: The Daily News, http://www.tdn.com