Local governments getting creative on using stimulus funds

  • By Peter Sachs
  • Staff Writer
  • March 09, 2009 @ 2:00 PM

Confusing rules surrounding how federal stimulus money gets doled out and spent has many local governments getting creative so that their projects count as “shovel-ready.”

One tactic being used by the City Colleges of Chicago and some other local agencies: pre-approving a set list of contractors to do the work so that projects don’t have to go through a lengthy bid process and can instead start right away.

That’s an unusual tactic that’s new to Ed Smith, a senior director at the Illinois Community College Board. Giving the green light to contractors when the City Colleges don’t know how much money it will get is “not normal,” Smith says – but then again, neither is the stimulus funding process itself.

“Perhaps they’ve worked with their legal counsel to think that something they’re doing is within the confines of the bidding requirements,” he says.

James Reilly, the district’s general counsel, does not comment to the media. Smith says the process for getting and spending federal stimulus funds leaves plenty of unanswered questions.

“All local government entities are trying to being as creative and flexible as possible to help Illinois be in a position to spend these stimulus funds,” he says.

Last week the City Colleges’ board approved allowing up to $85 million in contracts to 12 companies without requiring another vote. It would be up to those companies, all general contractors, to issue bids to subcontractors to do things like paving or electrical work.

The 12 companies the City Colleges has approved working with are Robe, Inc.; Chicago Commercial Contractors; F.H. Paschen, S.N. Nielsen; K.R. Miller Contractors; Meccor Industries; Speedy Gonzalez Landscaping; Pacific Construction Services; Paul Borg Construction Co.; Wight & Co.; Old Veteran Construction; FHP Tectonics; and Leopardo Cos.

City Colleges officials say they need to act fast because the normal bid process can take so long.

But the news angered open government advocates last week because the City Colleges hasn't publicly said what projects it would fund with stimulus money.

The slow place of getting projects ready to go is a fact of life for other governments, like the city Berwyn.

“We can’t have contractors lined up,” says Michael O’Connor, the mayor of Berwyn. “We have to go out to bid.”

And that process can take six months or longer because there are so many steps involved, he says.

The City Colleges aren’t the only government agency making it easier on themselves to hand out contracts to pre-approved companies. Last month the Chicago Park District lifted caps on the six companies it keeps in an “on call” list of contractors who can do work with the district without having to bid each project. The cap is normally $3 million per year.

“They just want to have some vendors set up to expedite the process,” says Jessica Maxey-Faulkner, the spokeswoman for the park district.

“The current version of the legislation indicates that any qualifying project must be bid and contract executed within 90 days of receipt of project funding,” a park district document says. “In other words, as soon as funding is received the (park district) must bid the project immediately.”

But there is a way that local governments can meet the tight deadlines and still operate above-board, Smith says.

“In theory, they could commit their local funds to going out to bid for the project and paying their architect, going out to bid, entering into a contract with the contractors, and at some point in that process having the funds,” Smith says.

In other words, local governments can start a normal bid process now, in anticipation of getting funds handed down to them in a couple of months. If the money doesn’t come, the government can cancel the bid without losing much money. But if the money does arrive, then projects are well on their way when the 90-day clock starts ticking.

“There are certainly a lot of unanswered questions in terms of who’s going to get money, how much are they going to get, and then the mechanics for the accountability of the funds as well,” Smith says.

Daily News Staff Writer Peter Sachs covers higher education. He can be reached at 773.362.5002, ext. 18