Government contracts grow in importance
Northern Nevada companies report growing success with contracts from federal and local governments that keep revenue flowing during tight times.
And though the initial setup to begin bidding on federal work can be daunting, company executives say the bidding process is easy once the reams of paperwork are completed.
Dinter Engineering, for instance, avoided the brunt of the recession through extensive work at airports, which have received a boost in construction funding from the federal stimulus package.
The company, headquartered in Reno with offices in Phoenix and Coeur d’Alene, Idaho, has three engineering divisions mechanical, electrical and airport electrical. Its airport electrical division accounts for 60 to 70 percent of its recent work.
Dinter Engineering also has landed contracts at Fallon Naval Air Station, and it’s working on a $15.8 million heating, ventilation and air conditioning job under construction at the Veterans Affairs Medical Center in Reno.
Ginny Ganthner, Dinter’s senior marketing coordinator, says that federal work has helped tremendously, but the airport contracts kept the company going through hard times. Dinter even added a position to its mechanical team in Reno to work on the Phoenix Sky Train at Phoenix Sky Harbor International Airport.
Keller Hackbusch, chief executive officer of Dinter, says 2008 was the company’s biggest year, and 2009’s revenues aren’t far behind.
But Ganthner says the company’s executives worry about the future.
“We have avoided layoffs, and we keep hoping we won’t have to do that as long as the work keeps coming in,” she says. “But the forecast at this point is not so good. We definitely need more work, and we are trying very hard to get more federal work.”
Other regional companies say even modest federal contracts have helped during the slowdown.
Lux Dynamics, founded in Reno in March of 2008, is working under an $87,600 contract at the VA hospital to install an advanced electrical metering system.
“It was pretty key,” Vice President Tony Murillo says of the contract. “It came at a low during the normal dip in work.”
Jessica Williams of J&L Janitorial of Sparks says that the bulk of her company’s revenues these days stems from local government contracts.
And Josh Lee, general manager of Silver State Wire in Sparks, says federal work accounts for a mere 5 to 10 percent of his company’s business but those small contracts add up to substantial revenue over time.
Silver State Wire manufactures cabling and wire for the aerospace and military industries. Lee says the majority of federal work is driven by price, and customer service is a secondary factor.
The key for Silver State, Lee says, is not to bid federal contracts as a mere wire or cable provider profit margins are just too thin, he says but to get in on a project when it’s designed.
Silver State Wire receives much of its federal work by being specified in contracts as a preferred provider.
“If you are in and helping from the design stage, it can be pretty lucrative, but if you are just one of 50 people bidding, you are going to get chiseled down to nothing,” Lee says.
The paperwork requirement of government work is an initial headache, but it goes away.
“You have to fill out a certain amount of paperwork they want to make sure you are legitimate but once you get into the process it’s just a matter of submitting bids correctly and being the lowest bidder,” Lee says.
Lux’s Murillo agrees that getting set up to bid federal work is arduous, but once all the paperwork was complete the actual bidding process was gravy.
“There is a lot of preliminary setup, but once you get through initial stage, navigating all the different agencies and registration areas, what I have found is that the process is surprisingly smooth,” Murillo says.
“There is a huge initial learning curve, and there isn’t any one area that tells you to do all these particular things you have to kind of hunt and peck and discover that you have to be registered among many different federal agencies that all sum up to make a whole of a government contract.”
The Procurement Outreach Program office, a division of the Nevada Commission on Economic Development, provides assistance to companies as they seek government work.
But government contracts aren’t always the answer.
Wilson Construction in Gardnerville, a grading and paving company, recently finished a highway reconstruction job in Bridgeport, Calif., that it won from the Bureau of Indian Affairs.
Kathy Wilson, secretary and treasurer of Wilson Construction, says most road contracts tied to federal funding are simply too large for small- to mid-sized paving and grading companies.
As a result, Wilson’s revenues are down 75 percent this year because of a paucity of spending on local government projects near to the company’s home in Douglas County. The company has boosted its bottom line through trucking freight and plowing snow.
“We are getting creative to get work,” Wilson says.
“If you’re going to produce roughly 80,000 ounces (of gold) a year at $800 an ounce … and gold is at $1,900 or $2,000 per ounce, that’s going to create a tremendous amount of cash flow.”