April 2002

Ran:  San Diego Union Tribune-Business
April 16, 2002

Mike Freeman
Staff Writer

S.D. contractors hit it big with military

Navy contract
Amount: Up to $600 million
For: Military apartments and barracks
Duration: Five Years
Winning contractors:
RQ Construction, Bonsall; Soltek Pacific, San Diego; Harper Construction, San Diego; Douglas E. Barnhart, Inc., San Diego
Maximum amount for each contractor:
$150 million

Think defense spending and what comes to mind:  Fighter Jets? Missiles?
How about housing?
In a military town like San Diego, construction for the U.S. Navy and Marine Corps is big business.
"The most competitive companies for some reason seem to come from San Diego," said Jim Summers, vice president of Soltek Pacific, another local contractor to make the cut.  "It's partly because the Navy does a lot of work here, and there are requirements that you have to stay on top of and understand."
The other two eligible contractors are Douglas E. Barnhart, Inc. and RQ Construction Co.
Under the MACC program, the military trims its list of contractors to just a handful.  Those companies then compete against each other as work arises.  To qualify for this apartment housing contract, the four San Diego contractors beat seven other companies.
The competition is cutthroat.
Putting together a proposal to get included in a MACC cost up to $50,000, contractors say.
RQ Construction won the first contract to design and build a $15 million, 200-room bachelor's enlisted quarters at the Camp Pendleton Marine Corp base.  The project is scheduled for completion in January 2004.
The four contractors already are squaring off for the second job -- and 11-story, $38.5 million bachelor's quarters at the 32nd Street Naval Station.  A winner for
the 258-unit complex is  expected to be named in June.
"With the $38 million and the $15 million, that's more than $50 million and it's only been two weeks," Golden said.
The four contractors in this recent MACC aren't the only ones in San Diego doing military work, RA Burch Co in Ramona; TB Penick & Sons in San Diego; Kvaas Construction of San
Diego; and Sundt Construction, which is based in Tucson but has a large operation in San Diego, are among the others who bid on Navy work.
These contractors tell similar stories.
Most started out constructing offices or strip malls in the '70's.  When San Diego's commercial construction industry collapsed in the early 90's, they began bidding in one of the few sectors still building anything -- public works.
The build schools, prisons, campus dormitories and military commissaries, Navy lodges and other buildings.
Though defense spending is expected to soar in the wake of Sept. 11, the current military building program has little to do with the terrorist attacks, according to contractors.
"The military plans way ahead," said Suresh Rayana, chief estimator for Douglas E. Barnhart, Inc.  "There has been a long-term plan to upgrade all the housing facilities for Navy personnel.  Most of their facilities are old.  So even before Bush was elected, there was a push to improve living conditions."
"The military over the last 10 years has really had a hard time competing against the private sector, particularly with their skilled positions," said Golden, the Harper Construction vice president.  "They're trying to increase the quality of life so there's an incentive to stay in the military."
Just ask the four San Diego-Area contractors that recently won the right to compete against one another for a five-year $600 million contract to build the military's version of apartments.  Work will be done on installations mostly in California, but also in Arizona and 10 other western states.
Certainly, it's a great opportunity and the contractors who got named are smoking big cigars right now,"  said David Golden, a vice president at Harper Construction Co., one of the four authorized bidders.
According to the contractors, this recent Multiple Award Construction Contract -- or MACC -- is among the largest they've seen.
It's part of an ongoing effort by the military to upgrade the quality of life for service members so they won't leave for higher-paying jobs in the private sector, contractors say.
"We refer to the contracts that were just awarded as Big MACC's because they attract the large contractors," Golden said.  "They're the ones that open everybody's eyes -- $150 million, $250 million, $600 million."
San Diego is a hotbed for so-called institutional contractors -- those that specialize in military construction, as well as building schools, prisons and other public buildings.

Back