Whose Job Is It Anyway?

Arturo-Santiago-Blog

I recently saw something on a reputable news website that has me appalled. There allegedly is some wheeling and dealing going on, and I would like to hear from you. But first a heads up, I’m going to keep the names of people and businesses out, in an attempt to drop or set aside any political leaning from the discussion. This is not a political issue for me. This is about what is good for the country and the economy.

It’s being reported that an American businessman, with ties to extremely high-placed executives in the federal government, has made contact with a foreign business entity, in order to instruct that foreign company on how to win infrastructure contracts that are anticipated in the United States.

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Admittedly, I haven’t put much thought into the possibility of countries from overseas swooping in to win billions of dollars of infrastructure contracts, let alone an American teaching them how to do it. I assumed those contracts would automatically go to domestic contractors. If it’s not automatic, it should be. I would prefer that my tax dollars pay an American company to repair, replace, or refurbish American infrastructure, and that company then hires employees, who in turn will go out and spend their income on American goods and services, thus improving the US economy.

If the White House and Congress are somehow able to secure $1 trillion for infrastructure, if the contracts for billions of dollars’ worth of projects start getting awarded, and if foreign companies were being awarded a large amount of those contracts, how well would that sit with you?

If it doesn’t sit well, maybe we should start doing what some of these foreign-based companies are doing, and start learning how to win these upcoming infrastructure projects. Start lobbying that the work goes to US companies.

The ASCE’s 2017 Infrastructure Report Card says, “Smart investment will only be possible with leadership, planning, and a clear vision for our nation’s infrastructure. Leaders from all levels of government, business, labor, and nonprofit organizations must come together to ensure all investments are spent wisely, prioritizing projects with critical benefits to the economy, public safety, and quality of life, while also planning for the costs of building, operating, and maintaining the infrastructure for its entire lifespan. To do so, we must:

  • Require all projects greater than $5 million that receive federal funding use life cycle cost analysis and develop a plan for funding the project, including its maintenance and operation, until the end of its service life.
  • Create incentives for state and local governments and the private sector to invest in maintenance, and to improve the efficiency and performance of existing infrastructure.
  • Develop tools to ensure that projects most in need of investment and maintenance are prioritized, to leverage limited funding wisely.
  • Streamline the project permitting process across infrastructure sectors, with safeguards to protect the natural environment, to provide greater clarity to regulatory requirements, bring priority projects to reality more quickly, and secure cost savings.
  • Identify a pipeline of infrastructure projects attractive to private sector investment and public-private partnership.”

Do we need to chant “U-S-A, U-S-A, U-S-A?” GX_bug_web

Comments
  • Jane Cooper.

    Astute observations, Arturo. If contracts do not automatically go to domestic contractors, there should be a phenomenally compelling reason for choosing another contractor, they should still be required to use U.S. labor for implementation, and we should as part of the agreement get continuing access/rights to whatever technology made that firm uniquely qualified to win the bid.

    Reply
  • Clint Ormond.

    Federal infrastructure money already goes to multi national companies or their subsidiaries, so it would be naive to assume that it won’t continue to, it is too difficult to determine the level of foreign interest in a large corporation. Use of domestic materials is already a requirement for projects, and even domestic companies are going to hire workers with work visas or legal resident immigrants to complete the work, so any contractor interested in the work should be contacting this businessman or one of his competitors to ensure that they are ready to compete.

    Reply
  • Don Miller.

    The only reason an infrastructure project or material for such projects should be awarded to a non-U.S. company would be that no U.S. company or supplier is capable of providing the service/material.

    Reply
  • John Salonich.

    If anyone is shocked about this I suggest they read “Confessions of an Economic Hitman” by John Perkins. In this case it is the reverse.

    Reply
  • Richard W Goodwin.

    IMPLEMENTING PRESIDENT’ TRUMP’S ONE TRILLION DOLLAR INFRASTRUCTURE PROGRAM
    BACKGROUND

    – Supposedly delay until 2018 – not acceptable USA skilled workers need jobs now
    – Too Costly – based on traditional ways of govern funding programs based on President Roosevelt to President Obama i.e. federal spending without proper Project Management and Engineering Control
    SUGGESTED APPROACH
    – Combine Public Private Partnership [P3] with Design Build [DB] and, where applicable, Own Operate [OO] e.g. Merchant Power Plant
    – Fast Track – DB projects by avoiding time-consuming RFP [Specification] and Bid Process and combining Engineering Design and Construction [two firms joint venture or one firm with both capability e.g. Bechtel, Jacobs, AECOM]
    – Avoid cumbersome federal, state and local regulation by prioritizing permitting and siting via Preliminary Initial Regulatory, Municipal and DB entities reviewing salient requirements and receiving preliminary approval. DB firms must agree to meeting schedule, estimate and performance guarantees
    FINANCE
    – Self-Finance if DBOO or use municipal bonds with interest rate 200 B.P above average as incentive for Tax-Free Investment – Underwriting by Investment Bankers and investment by PE and VC firms
    – Bond Debt Service paid by Municipality based on revenue sharing program [user fees] or local taxes
    – In some instances funding can be provided by private sector while federal government should expedite the permit approval process to ensure minimal inflation to material and labor costs
    NOTE: I have reviewed President Trump’s top ten infrastructure projects and have developed funding for at least eight that do not require federal funding and that can be implemented via fast-track Design-Build project management.
    MUNICIPAL BONDS WITH 200 BASIS POINTS HIGHER INTEREST RATES USED TO FUND – ISSUED BY STATE AUTHORITY [DEPT. OF TRANSPORTATION, REGIONAL SEWER DISTRICT]

    Projects No.’s 1, 2, 5, 6 and 10 can be financed via municipal bonds either general obligation or revenue bonds. The federal government could serve as the insurer . The Debt Service or Bond Holder Interest Rate would be developed for each project as a part evaluating Design Build Bid. The Engineering Construction Firm [either Joint Venture or Full-Service Firm] would submit a Revenue Sharing formula for the municipal entity.

    DESIGN BUILD
    To fast-track these projects a Design Build [DB] approach should be applied. Design-build collapses two contracts — one for design and one for construction — into a single project. It puts in place a team, composed of architects and engineers with builders, who can sit down together, review designs, think about how best to execute them, make changes early when they are less costly, and end up with an accurate estimate of cost and schedule.
    When problems arise, there is a single point of accountability. On large-scale projects, design-build has been shown to shave years off the schedule and millions off the bill.

    DB projects are contractor by a Design Build Contractor [capable of providing both engineering and general contractor services] to deliver a ‘Turn-Key’ Project to the owner or Municipal Funding Agent. This approach relies on a single point of responsibility contract and is used to minimize risks for the project owner and to reduce the delivery schedule by overlapping the design phase and construction phase of a project

    CONVERTING FROM DESIGN-BID-BUILD TO DESIGN-BID
    For those projects in the Engineering and Permitting Stage there are two options to convert from DBB to DB: (a) Engineering Firm solicit Contractor Bids some a Joint Venture Partnership (b) DB firm assume responsibilities of Engineering Firm including a buy-out ot the latter’s contract

    Reply

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