Stimulus money coming in mostly goes elsewhere

NORFOLK

The largest business recipient of federal stimulus dollars in Virginia is located on the 16th floor of a downtown office building where it employs no one.

It exists primarily on paper, a shell to act as a conduit for defense contracts for its owners.

Atlantic Contingency Constructors LLC was created in April 2006 and registered in Louisiana, a joint venture between The Shaw Group Inc., a large national construction firm based in Baton Rouge, La., and the Los Angeles-based engineering giant AECOM. Shaw Environmental & Infrastructure, a unit of Shaw Group, is Atlantic Contingency's managing partner.

Such arrangements are not uncommon in defense contracting. Shaw Environmental Inc. pays the rent and employs the workers in the office on the 16th floor of the BB&T building in Norfolk.

Atlantic Contingency became Hampton Roads' largest recipient of stimulus dollars last summer when it was awarded $101.3 million to install solar-energy systems at Navy facilities around the country. The money came from the Defense Department's share of the $787 billion federal stimulus package approved by Congress in early 2009.

The award came under a previous $1 billion Navy contract that Atlantic Contingency and two other firms won in 2006, an open-ended, worldwide contract for providing services so broadly defined as to include just about anything.

Although the money is going to a Norfolk company, it mostly will go elsewhere. Of the $101.3 million, about $26 million will be spent at Navy installations in Hampton Roads. The rest - more than $75 million - will go to projects in Florida, Texas, Mississippi, Maryland, and Washington, D.C.

"A lot of people think one contract stays in one state, but often recipients will then subcontract it out to other states or other localities," said Sam Rosen-Amy, an analyst with OMB Watch, a Washington nonprofit that runs FedSpending.org., a website that tracks federal spending.

"It doesn't stay in one state; it moves around."

As of April 1, when the government last released stimulus-fund data, Atlantic Contingency had contracted out about $5 million to subcontractors, of which nearly $2 million went to its owners - about $1.7 million to Shaw Environmental Inc. and more than $221,000 to AECOM Government Services Inc.

Nearly $3 million was awarded to a North Carolina unit of Eaton Corp., a Cleveland-based conglomerate that supplies solar energy equipment, and another $104,602 to Conley Group Inc., a roofing company based in Irving, Texas.

A year after Atlantic Contingency was awarded the stimulus funds, the company is still sitting on more than $96.4 million and has invoiced the Navy for only about $1.1 million, according to FedSpending.org.

The money had generated no new jobs as of April 1, but that's on track to change.

Shaw is hiring in Norfolk, with a handful of jobs posted on its website, including one for a regional construction manager for a "photovoltaic and energy efficiency improvement project" that "involves installation of solar panel systems on 45 different Navy buildings at 19 different Navy bases."

The job description said the field work would be subcontracted and the manager would oversee the subcontractors. The work would begin in the field in August or September and continue into next May.

With $7.3 billion in annual revenues, Shaw Group is a construction conglomerate that specializes in industrial and infrastructure projects. A publicly traded company, it employs 28,000 people around the world and has a backlog of $21.3 billion of work, according to its website.

The company is working on several projects in Virginia and also has an office in Alexandria. AECOM, the other member of the joint venture, has two offices in Virginia Beach.

The Shaw Group, through spokeswoman Gentry Brann, offered little information about Atlantic Contingency or the contract.

Clyde Hoelzer, an engineer with Naval Facilities Engineering Command Atlantic, spoke about the solar projects at a recent Navy contracting conference in Virginia Beach.

"Things had to be quickly awarded; they had to be 'shovel-ready,' was the term," Hoelzer said. "A lot of this was actually handled through headquarters in D.C. We were pretty much told, 'Here's your projects.' That was February of last year. The whole thing happened pretty much in a rush. We received a list of projects and they were developed on paper at headquarters."

The projects largely involve roof- and ground-mounted solar-energy systems, for the most part "fairly small," Hoelzer said. The idea is to "relieve the load from individual buildings," so that they're pulling less from the power grid.

Such energy-efficiency work seems far removed from the description of the contract under which the funds were awarded.

In 2006, Atlantic Contingency and two other companies won the right to bid for up to $1 billion of work under a "global contingency contract" from the Naval Facilities Engineering Command.

The contract states that the bidders "will provide construction, design/build construction, and related engineering services in response to natural disasters, humanitarian assistance, conflict, or projects with similar characteristics."

One government contracting expert wonders whether the installation of solar panels at Navy bases in the United States falls within that mission.

"The newly awarded energy-efficiency orders appear outside the scope of the original global contingency contract," said Scott H. Amey, general counsel with the Project on Government Oversight, a Washington-based nonprofit that tracks government spending

"A construction contract involving natural disasters and emergency situations doesn't marry up with the newly awarded energy task orders," he said. "It's great that the Navy wants to be more energy-efficient, but it appears that, in this case, the Navy is playing fast and loose with recovery funds."

Officials at the Naval Facilities Engineering Command Atlantic in Norfolk said the solar work was a good fit.

"Our global contingency contract is used for a number of things," said Patricia S. Kellihan, the Navy contracting officer identified on the 2006 contract award. "We use the global contingency contract for humanitarian efforts, disaster recovery and often we use it as well when we don't have a clearly defined scope and we need a tool that we can have rapid response on.

"And in this case we felt like this particular project was well-suited for the global contingency contract and we competed this requirement among the firms, and Atlantic Contingency Constructors was the successful offer."

Robert McCabe, (757) 446-2327, robert.mccabe@pilotonline.com