Miscellaneous RamblingsWhy is government so expensive?

August 9, 2015by Jerald Sargent0
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I think most Americans recoil at how the military can be charged $650 for a hammer or a toilet seat and I’m no different. We expect our leaders to get the best deal they can for our hard-earned tax dollars so why does this type of thing happen?

In addition to many residential jobs and commercial work we also do a fair bit of municipal work including work for school districts. The nature of the bidding process itself can be problematic. In the state of Washington, most communities, housing authorities and school districts require that contractors pay what is called the “prevailing wage” most of us would assume the word “prevailing” to be “the going rate” – in most of our markets general labors earn roughly $10-$15 an hour, however the current “prevailing wage” according to the department of labor and industries for general laborers is $34.01 – that’s right, up to triple what many contractors pay.

In addition to the doubling or more, of the labor cost on the vast majority of municipal jobs, current bidding stipulations on most of these jobs does not allow for any type of surcharge for material overages. Raising concrete by its very nature makes it difficult to determine exact materials needed. (We can’t see voids under the concrete) as a result we have to assume a worst case scenario in the bidding process which greatly drives up the cost of projects.

Lastly, many contractors simply do not have any desire to deal with all the paperwork, requirements, stipulations, slow payables and hoops to jump through for the possibility of getting a job with the government. As a result many jobs go to just a few regular bidders who are very familiar with the process and have made municipal work their specialty, this is unfortunate for the taxpayer who is continually overpaying for those projects.

What could be done to reduce the cost of municipal construction? First, eliminating the costly prevailing wage laws would greatly reduce the cost of many projects, construction by its nature is highly dependent on labor. Second, allow up to 20% above the estimate for material surcharges on certain work. Slabjacking is a prime candidate for this exemption. Finally, a much simplified contract on jobs under ten or twenty thousand dollars would generate more interest from contractors who don’t have an office staff to contend with the large contractual requirements.

If these things were done more work would be completed and the taxpayer better served.

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