Competition at Work in Stimulus Process

The supply of more money for infrastructure projects from the stimlus package is apparently working just as the economics text books say it should.

American Association of State Highway and Transportation Officials (AASHTO) says its President, Pennsylvania Secretary of Transportation Allen D. Biehler, told a House transportation committee this week that competition for stimulus projects is helping drive down bids for the work, offering an added benefit from the American Recovery and Reinvestment Act.

“With the unemployment rate for construction workers higher than 21 percent, companies are struggling to survive and are competing fiercely for recovery projects,” Secretary Biehler said. “The result should be that states will be able to stretch these investments even further than expected and will deliver more projects and the associated jobs generated by the added investment.”

An AASHTO survey found that some states are reporting project bids coming in from between 5 and 27 percent below estimates. Wednesday, at the first oversight hearing on the American Recovery and Reinvestment Act effort, conducted by the House Transportation and Infrastructure Committee, Biehler testified that the lower bids will help states whittle away at the backlog of projects which “far exceeds the available recovery dollars.”