Many make bid on water line

Wednesday, February 18, 2009

Reflecting economic conditions, an unprecedented number of contractors bid on the proposed water line extension along Lynnville Highway last week at Lewisburg Water and Sewer Department headquarters.

Several participants' comments confirmed it, saying contractors are submitting "at cost" bids to keep their crews working. Meanwhile, a successful bidder said the credit freeze stalled one of his projects and another is delayed because one city hopes stimulus funds will pay for its project.

However, the stiff competition for work was an advantage for the city utility here as utility Superintendent Kenneth Carr said "Never before" had so many bidders come for a city utility contract.

Contractors with headquarters in Michigan, Florida, West Virginia, Kentucky, Alabama and a dozen places in Tennessee filed bids on the 6.2-mile water line project that includes two pump stations and a water tank. The Highway 129 water system improvements go from Cornersville to just east of the Giles County line.

"Work is going too cheap," said Stephen Smith, operations manager for Hawkins & Price LLC in Wartrace, the firm that had the apparent best bid on providing and laying pipe.

His price was $560,124 and was one of 13 for that contract; one of three contracts that are subject to close examination before they would be awarded by the Water and Wastewater Board.

The highest bid for that pipe contract was for $1,866,779 from Global Construction & Engineering Inc. of Birmingham, Ala

Birmingham is where the Crom Corp. of Gainesville, Fla. won a $5 million project six months ago, but it hasn't been able to start work because the water authority hadn't been able to sell its bonds, according to Ryan J. Leisey, a Crom engineer working from an office in Murfreesboro. He's the area manager for Crom and was at Lewisburg's utility offices on Water Street for the bid opening on Thursday.

Crom intends to build a 100,000-gallon water tank for Lewisburg with pre-stressed concrete, Leisey said. It's to be 28 feet in diameter and 24 feet tall.

"We keep a lot of the money in the community," Leisey said. "We'll buy concrete from Irving Materials Inc." located on Rock Crusher Road.

The 110-cubic-yard order will be "one of the largest materials" purchase for what Leisey called "a fairly small structure" compared to the tank Crom will build in Nashville with 10,000 cubic yards of concrete.

Crom bid $150,000 for Lewisburg's tank. The highest bid for that job was $168,400 from Welding Inc. of Charleston, W.Va.

Lewisburg officials may expect work to start on their project in about 30 days, according to contractors' comments, but Leisey noted "There are people who have projects ready to go with bonds, but they're putting them off, hoping to get stimulus money."

Greg Davenport, Lewisburg's consulting engineer with J.R. Wofford & Co., acknowledged that situation exists, but reported he's also dealing with another utility's project for which bonds haven't been sold.

"They're not selling bonds because they're afraid of what interest rate they'll get," Davenport said. Rates aren't stable. The market "is all over the place."

When told of a Lewisburg Water and Wastewater bond problem with a bond insurer being downgraded (thereby increasing repayment rates,) Crom's area manager likened that to a performance bond problem.

What might have required a down payment previously, now needs more money for the performance bond, Leisey said. That's been done "retroactively and now utilities have to raise cash for projects they've got on-going," he said.

Such economic conditions might prompt another change, and in this other situation, it might be good news for local laborers. Crom has a "traveling crew" of laborers who are sent to jobs because a previously tight labor market made it hard to get workers.

Before the housing boom, one crew leader would go to a community and hire local laborers, but the boom made them scarce, Leisey said. With unemployment rates up, the labor strategy might go back to hiring locally to avoid travel costs.

The labor market was reflected in the number of bidders on Thursday.

"Two, three and four years ago," Smith said, "you'd have maybe five bidders on it... Your housing development was strong. (Contractors) had their plates loaded. Today, they're looking anywhere for work with the housing market off so much.

"Sixteen months ago, 80 percent of our work was for developers," the Wartrace-based worker said. "Now, it's zero."

Todd Warner of B&W Excavation submitted the second lowest bid for the project that Hawkins & Price apparently won.

"Too cheap," Warner said of the prices force by competition. "You just have to be in survival mode, I guess."

Lee Adcock, president of his own Shelbyville-based Lee Adcock Construction Co., is the apparent best bidder for the third contract subject to the bid opening Thursday.

He bid $244,648.24 for trenching. The highest bid for that was $536,576 from Global in Birmingham. Those are two of eight companies that submitted bids on that contract.

"The numbers are very competitive," Adcock said. "The water line went for below our cost."

He bid $756,051.07 for what Hawkins & Price plan to do for $560,124.

"I know Hawkins & Price," Adcock said. "They'll do a good line. They're good folks. They're trying to keep their people working."