Contractors report success and disappointment on projects funded by federal stimulus money.

McKinstry Co. will do the mechanical work on the $36 million modernization of the Henry M. Jackson Federal Building in Seattle. Photo courtesy of the General Services Administration.

Plumbing and mechanical contractors are working on construction projects funded by federal stimulus dollars intended to jump-start a sputtering economy. The number of jobs just underway or in the design phase, however, presents a telling sign the American Recovery and Reinvestment Act has not been as fast-acting as some had hoped.

“Stimulus to me means, ‘Let’s get something going,’” saysBob Kreutzer, who works in business development at Tatro Plumbing in Garden City, Kan. “The Kansas Energy Office has OK’d 15 building projects, and three are underway and funded at this time. The process takes so long with stimulus funds involved. Let’s get to work!”

ARRA, which was signed into law in February 2009, makes $275 billion available for federal contracts, loans and grants to local governments, school districts and others. Included in that amount is a major initiative to turn new and existing federal facilities into high-performance green buildings.

L.J. Kruse Co. in Berkeley, Calif., finished work last summer on the Advanced Light Source Research Facility at the Lawrence Berkeley National Laboratory.

“This was one of the first projects funded by stimulus dollars,” recallsDave Kruse, president of the plumbing contracting firm. “When it came about so fast after the stimulus act was passed, we were enthusiastic that we would see more of it, and we haven’t. We have seen a lot of public works projects for roads, bridges and infrastructure. It didn’t filter down to us too much.”

Meanwhile, McKinstry Co. in Seattle is at work on four projects funded by stimulus dollars. One is a new-construction job; the others are modernizations.

“Specifically for our projects, the federal stimulus act has been very positive,” saysMarco Navlet, business development, preconstruction and senior sales engineer for the mechanical contractor. “We’re going into existing buildings and improving their energy efficiency and the work environment for tenants. These projects comprise a sizable portion of our backlog right now.”

Common Objectives

New buildings and renovations funded by stimulus dollars contain a green element through the installation of energy- and water-efficient systems. Other conditions require contractors to install products that comply with the Buy American Act and pay their workers prevailing wage rates under the Davis-Bacon Act.

“When we put the pricing together for this job in 2008, we didn’t know about the stimulus package,” says Kruse, a former president of the Mechanical Contractors Association of America. “It was a challenge to make everything ‘Buy American’ down to every nut and bolt.”

The Advanced Light Source laboratory conducts sophisticated research on the world’s most powerful light. Construction of the standalone federal building, located on the campus of the University of California at Berkeley, began in 2008. Then work shut down for six to eight months when funding ran out.

L.J. Kruse Co. had installed the underground piping as part of its original design/build contract, Executive Vice PresidentAndy Krusesays. Construction resumed with the stimulus dollars paying for virtually all the plumbing and piping installed above the slab.

The $800,000 design/build contract covered the plumbing in the men’s and women’s restrooms, rainwater catchment equipment and piping for all the laboratory systems including nitrogen, natural gas and compressed air. At its peak, the job required a four-person crew from L.J. Kruse.

Once it resumed, the job took about a year to complete. The approval process to receive stimulus dollars probably added three or four months to the overall project time, Dave Kruse says.

L.J. Kruse Co. installed the plumbing piping in the Advanced Light Source Research Facility at the Lawrence Berkeley National Laboratory. Photo credit: Bruce Damonte.

Change in direction

Getting approval for stimulus dollars has not caused any delays for McKinstry Co., Navlet says. In fact, the government is trying to fast-track jobs at federal facilities.

“One reason why the government chose design/build as a delivery model was due to the fact these projects needed to be completed quickly,” he says. “They could not deliver these projects in time under traditional design/bid/build contracts. The integrated designer and contractor format is being utilized to meet their stimulus fund deadlines.”

With the construction market slowing down in the Pacific Northwest as it was elsewhere, McKinstry Co. learned the General Services Administration was funding projects to modernize aging federal facilities and to build new ones.

“Although McKinstry had limited experience contracting in the federal world, it has been in the business of bringing energy efficiency to buildings' mechanical systems for more than 40 years. So the GSA’s needs and our offerings were aligned,” Navlet says. “Add in the nation’s economic slowdown and construction slump for a company averaging $350 million to $400 million in annual revenue, and we had a choice to make - to scale back commensurate with the commercial market or look for opportunities in other markets to meet our sales targets.

“The GSA serves almost like the government’s landlord and was awarding several major projects based on best value and excellence in design. These are exactly the criteria we prefer to compete and win jobs. They made it through our opportinity filter. We were primarily a private-side contractor that shifted resources to attain funded federal projects.”

Another GSA stipulation has helped McKinstry rise above the competition, he says. The contractor with the winning bid must guarantee the building’s performance by hitting government-mandated energy targets.

“There’s a 12-month measurement and verification period where we’ll go in and monitor the building based on a predetermined benchmark,” Navlet says. “Taxpayers are getting some assurance the stimulus work is not just a lot of hand-waving.”

McKinstry, another MCAA member, is not at that stage yet. All four of its contracts for mechanical work are in the design or early installation phase.

With the design scheduled to be completed this month, construction of the new U.S. Courthouse in Billings, Mont., is expected to be finished by August 2012. McKinstry’s role on the project is for mechanical design assist and construction of HVAC, plumbing and fire protection systems.

The 147,000-square-foot facility will meet federal energy standards with a goal to meet LEED Silver rating requirements. The estimated cost of the job is $59 million, including a mechanical construction budget of $8.5 million.

Getting certified to LEED Existing Building Gold is the goal of the $36 million modernization of the Henry M. Jackson Federal Building, a 37-floor structure from the mid-1970s. The project will include upgrades to the electrical and HVAC systems and to the windows and lighting, all without disturbing the tenants.

The renovation will turn the building in downtown Seattle into a high-performance green building with a target of decreasing energy consumption by more than 30 percent, Navlet says. About 95 percent of the design is complete, he adds, with various conservation measures already being installed.

Similarly, the Thomas S. Foley U.S. Courthouse in Spokane, Wash., will be occupied during the $33 million renovation. McKinstry will replace and upgrade the building’s HVAC system as part of the $16 million mechanical contract.

The objective for the 300,000-square-foot, nine-story federal courthouse and post office is to achieve LEED Silver certification. The project’s design will be completed this month with construction scheduled to end in August 2012.

The Edith Green-Wendell Wyatt Federal Building in Portland, Ore., will be unoccupied during the renovation, which is expected to last 30 months. The $117.24 million modernization of the 18-story structure built in 1974 will be completed in September 2014. McKinstry’s $25 million mechanical construction contract includes the change-out of all HVAC, plumbing and fire protection systems.

“These four projects will employ 155 crafts people and generate roughly 300,000 man-hours,” Navlet says.

The geothermal system installed by Tatro Plumbing saves the school district in Ulysses, Kan., $31,000 in annual energy costs. Photo courtesy of Tatro Plumbing Co.

One that got away

Tatro Plumbing has been involved in two projects that applied for stimulus grants. Both are modernizations of elementary school buildings, one in Dodge City, Kan., and the other in Ulysses, Kan.

The two-step application and approval process required designs for both projects to be submitted to the Kansas Energy Office and U.S. DOE, says Kreutzer, a former president of the Plumbing-Heating-Cooling Contractors – National Association and member of PHCC’s Construction Contractors Alliance.

In January 2010, the Dodge City school district applied for a grant that will pay up to 25 percent of an $850,000 contract to replace its old steam-heating system and window air-conditioners with a geothermal system featuring ground-source heat pumps. While the Kansas Energy Office approved the project the next month, DOE took until September 2010 to OK it, Kreutzer says.

Unlike the projects at the federal buildings, this contract will be bid competitively, he says. Tatro Plumbing is not guaranteed the construction contract even though it performed the energy analysis and submitted the design for the project. The job must be finished by September 2011, within a year of the DOE approval.

Tatro Plumbing did win the construction contract on a $1.8 million geothermal project in Ulysses and started construction work last year as soon as the state energy office approved the grant application. The job employed more than 70 people including well drillers, plumbers and carpenters.

Unfortunately, the work commenced before DOE gave its approval for the grant, Kreutzer says. As a result, the school district did not receive $250,000 in federal stimulus money.

“The school district was very disappointed, as was the Kansas Energy Office,” Kreutzer says. “We were aware federal stimulus money was involved, but we were not aware of the time factor and approval process. We thought once the state approved it, it was good to go. We were disheartened by the amount of time it took for DOE to approve it.”

The silver lining is that the school district will see a $31,000 annual energy savings with the geothermal system vs. a conventional rooftop system, Kreutzer says.

As for whether ARRA has done its part to stimulate the economy, contractors say it still may be too early to tell.

“It’s hard to know the overall benefit,” Dave Kruse says. “It was probably needed at the time during the economic crisis, and we were fortunate to experience some of it.”