Architect Testifies: Contracting Laws Hurting Small Architectural Firms

AIACurrent federal contracting laws are harming the livelihood of small architecture firms and costing the government money by increasing the number of firms competing, while discouraging small firms from entering the market, according to recent AIA testimony.

Testifying before the House of Representatives Small Business Committee, AIA First Vice President Helene Combs Dreiling, FAIA, called for reform of the design-build contracting process so that design and architectural firms can bid on federal contracts without fear of bankrupting themselves in the process. The federal market has been a key for architecture firms’ survival in the recession, and increased competition has forced many small players to stop participating in federal contracts.

“When teams are shortlisted in two-step design-build, an architecture firm spends a median of $260,000 to compete for a design-build project, by making plans, models and other materials,” Dreiling testified. When approximately 76% of firms make less than $1 million annually, this creates a “Hobson’s Choice” on spending limited capital for the chance to win a federal contract.

“In almost 87 percent of federal design-build competitions, there are no stipends provided to the architectural firm,” she said. “The firm must hope that they win to make up the costs they expend in competing for the job.”

Dreiling said there is a great need for Congress to reform federal contracting laws so that small businesses can both survive the bidding process and bring quality work to the federal government. “We ask the Committee to look at tightening the statute so that all firms can accurately determine the risks and rewards of participating in this market,” Dreiling said.

MD Governor Signs Landmark Geothermal Heat Pump Bill

Flag of MarylandMaryland Governor Martin O’Malley (D) has signed the Renewable Energy Portfolio Standard – Geothermal Heating and Cooling bill (SB 652) into law, making Maryland the first state in the nation to allow utilities to claim credits for the installation of geothermal heat pumps. The measure passed the state legislature on April 13.

The legislation makes GHPs an accepted technology for utilities to use toward earning Renewable Energy Credits (RECs) under the state’s Renewable Portfolio Standard (RPS).

Geothermal heat pumps address one of the biggest consumers of U.S. energy – buildings. Buildings account for more than 70 percent of the nation’s electricity usage, and geothermal heat pumps have the potential to reduce energy use by as much as 40-70 percent in a typical building.

The Maryland RPS stipulates that electricity suppliers (utilities and competitive retail suppliers) use renewable sources of energy like wind, solar and biomass to generate a minimum portion of their retail sales, in annual percentage increments to a level of 20% by 2022.

Electricity suppliers demonstrate compliance with the RPS by accumulating RECs that are issued by the state for the renewable power they provide to their ratepayers. With the new law, GHPs offer yet another option for utilities to meet their renewable energy purchase requirements and earn RECs under the state’s RPS mandate.

Maryland and regional government and industry stakeholders are now forming the Mid-Atlantic Geothermal Industry Consortium (MAGIC) to educate surrounding states about the value of GHPs a compliance measure for their renewable energy purchase requirements.

California Carpet Stewardship Bill Signed Into Law

Carpet recycling efforts took a step forward recently when California governor Arnold Schwarzenegger signed into law the Carpet Stewardship Bill (AB 2398). The bill, which was sponsored by Assembly Speaker John A. Perez, (D-Los Angeles) rewards entrepreneurs and inventors who produce marketable products made from post-consumer carpet. This makes it different from other Extended Producer Responsibility (EPR) legislation.

The bill generates revenue through an assessment of five cents per square yard of carpet sold in California. This assessment will start on July 1, 2011 and run through January 1, 2013.

The bill requires manufacturers—either singly or as a group—to establish a carpet stewardship plan with the state. Stewardship plans will include consumer education efforts, the assessment of fees, and progress measurement and reporting.

The assigns Carpet America Recovery Effort (CARE), a third-party nonprofit carpet stewardship organization, to serve as the carpet stewardship organization until April 1, 2015. After that date, a carpet stewardship organization appointed by one or more manufacturers, may submit their own plan.

Stimulus money for buildings?

One of the questions posed in my July/August issue editorial:

When are we going to see stimulus money spent on something other than roads?
   Not soon, according to a survey released July 30 by the Associated General Contractors of America, Arlington, VA. According to the report, “the stimulus plan appears to be having little influence on construction companies’ ability to expand payrolls to date. The disappointingly slow pace of construction spending outside of the transportation sector is one of the main reasons for the relatively small impact on new hiring.”
   Association CEO Stephen Sandherr said that we are five months into a federal stimulus program that has approximately $135 billion dedicated for construction projects and there is little difference in hiring and purchasing patterns between companies doing stimulus-funded work and companies that aren’t. He stated that while 36% of construction companies with stimulus-funded work plan to hire new employees, an almost identical percentage of firms without stimulus-funded work also plan to make new hires this year or next.
   Why? Very little of the stimulus dollars have resulted in actual construction work. The Army Corps of Engineers has $4.6 billion and has only paid out $84 million. The General Services Administration has $5.9 billion and has paid out only $12 million.—Gary L. Parr

DOE needs to lead by example

Often mentioned as part of the Obama Administration’s economic-stimulation program is a plan to invest money to improve the energy efficiency of government buildings. Based on a recent AP story, the President needs to have a meeting with the U.S. Dept. of Energy (DOE) management personnel. Clearly, the organization charged with implementing our energy policies has the wrong concept of what we’re trying to do with that energy. According to the story, DOE auditors reported that they waste enough electricity to power more than 9,800 homes a year by failing to turn down the heat or air conditioning when workers leave for the day. “In spite of its energy-conservation leadership role, we found that the department and its facility contractors did not place adequate emphasis on reducing energy consumption” by adjusting their after-hours thermostats, wrote inspector general Gregory Friedman.
The auditors found temperature “setback controls” lacking, broken, or unused in 35 of 55 large buildings at the Oak Ridge National Laboratory and the Y-12 nuclear weapons plant in Tennessee; the Los Alamos National Laboratory in New Mexico, and the Pacific Northwest National Laboratory in Washington state. That’s roughly two out of three buildings sampled, including some of DOE’s newest buildings in Oak Ridge.
The Oak Ridge Y-12 plant’s $154-million, privately financed, LEED certified, Jack Case Office Building and New Hope Visitors Center, wastes energy because no one bothered to buy software to make its setback system work.
The auditors, using DOE’s own energy-saving formulas, projected that enforcing temperature setbacks on heating, ventilation, and air conditioning throughout DOE’s more than 9,000 buildings could save more than $11.5 million on the energy agency’s $300-million annual electric bill.
Why is this happening? Wayne Roquemore, spokesman for owner-developer Lawler Wood LLC, Knoxville, TN, said the Oak Ridge buildings actually came with manual setback controls and Lawler Wood has purchased $2,200 in software for automatic controls in response to the audit. “But the setbacks are still not being used because the occupancy policy has not changed,” he said. “The operating policy has been to keep those buildings suitable for occupancy 24 hours a day, seven days a week.”
If we had that kind of energy policy in our house, my wife and I would both have to get second jobs. If this kind of waste continues, we may have to anyway, just to pay the tax bill.—Gary L. Parr

USGBC offers reaction to Clean Energy Act

usgbclogoThe U.S. Green Building Council (USGBC), Washington, in a July 1 release supporting passage of the American Clean Energy and Security Act of 2009, stated “The U.S. Green Building Council (USGBC) commends the House of Representatives for passing landmark energy and climate legislation Friday that includes several significant provisions to incentivize and accelerate the benefits of green building across the country.”
“From programs that would generate billions of dollars to spur and scale green retrofitting of our existing building stock to inclusion of the GREEN Act, which would create new opportunities for green affordable housing, this bill recognizes that green building is a major part of the solution to our economic and energy challenges,” said Rick Fedrizzi, president, CEO and founding chair. “With this federal commitment, green building can help propel the new green economy by creating enormous energy and cost savings for millions of Americans, while accelerating unprecedented job creation.”
According to the release, the act includes several initiatives or provisions supported by or developed in consultation with USGBC, including:

  • The Retrofit for Energy and Environmental Performance (REEP) program, which supports the creation of retrofitting initiatives throughout the country for residential and nonresidential buildings that may offer a variety of incentives, including credit enhancements, interest rate subsidies, and initial capital for public revolving-loan funds.
  • The Building Energy Performance Labeling Program, which directs the Environmental Protection Agency (EPA), Washington, to create model building energy performance labels for new construction, establishing a meaningful and consistent basis for evaluating the energy performance of residential and commercial buildings.
  • EPA’s WaterSense program, which receives permanent authorization to designate products as water efficient, as well as funding for state incentive programs for use of water-efficient products.

The USGBC release also tells us that green building is critical to the nation’s future economy, energy security, and environment—buildings account for 40% of U.S. energy consumption, 39% of CO2 emissions, and 13% of water consumption. Also, greater building efficiency can meet 85% of future U.S. demand for energy and a national commitment to green building has the potential to generate 2.5 million American jobs.
To download a 10-page pdf file that presents the USGBC’s summary of the act, click here.—Gary L. Parr

H.R. 2187 a drop in the bucket?

In a May 14 blog item, I discussed legislation H.R. 2187, the 21st Century Green High-Performing Public School Facilities Act, which, that day, was passed by the House of Representatives. The bill, should it be enacted, would authorize $6.4 billion for school districts to do green-oriented renovation work in 2010. To me, $6.4 billion seemed like a ton of money that would make a significant difference.
   It became obvious to me that I have absolutely no concept of how far a billion dollars will go when I received a press release a few days ago for the Green California Schools Summit (Dec. 9 to 11, Pasadena). That release refers to H.R. 2187 and then states, “There’s lots of work to be done. The American Federation of Teachers estimates it would cost just short of $225 billion to fully renovate and repair schools across the country.”
   If my calculator is accurate, that puts us $218.6 billion short of the needed funds! H.R. 2187 doesn’t even get us in the parking lot with the heavy equipment.
   Who is going to provide the rest of the funding? I’ve not recently heard of any states being flush with cash, particularly California, so that’s not a source. I don’t know of one U.S. citizen who will vote for anything that resembles a tax increase and any legislator who supports a tax increase is likely signing his/her own political death warrant.
   I still hope that H.R. 2187 gets enacted, but it’s going to take a few more of those $6.4-million payouts to truly make a difference.—Gary L. Parr

U.S. House passes H.R. 2187

According to a CNN report late today, bill H.R. 2187, described in an earlier blog post, has been passed by the U.S. House of Representatives and is now moving onto the Senate. Click here to read the CNN story.—Gary L. Parr

H.R. 2187 to feed “green” in schools?

The funding river flowing out of Washington these days is wide and deep. It still remains to be seen how much of that water will nourish the commercial-construction industry. One indicator of this potential nourishment is H.R. 2187, the 21st Century Green High-Performing Public School Facilities Act, which just passed out of the House Education and Labor Committee. The bill would authorize $6.4 billion in 2010 for school districts to take “measures designed to reduce or eliminate human exposure to classroom noise and environmental noise pollution.” The bill was introduced by Rep. George Miller (D-CA).
   The funding can be used to repair, replace, or install roofs, wiring, plumbing, lighting, windows, doors, floors, and/or ceilings. It also can be used for HVAC systems, to bring schools into compliance with various building codes and ADA requirements, for removal of hazardous materials, and to reduce or eliminate classroom noise. In other words, this is funding to improve the overall educational environment and to cut energy costs for school districts.
   I live in the Chicago area and can assure you that there is a mountain of schools here that can use this type of funding. The number of such schools across the country has to be enough to make a large mountain range. Needless to say, this bill will also put a lot of people back to work, either producing building products or installing them. Let’s hope it passes for the sake of our industry.—Gary L. Parr