CNBC reports that low bidding on stimulus projects may stifle recovery and threaten jobs.
Contractors may be bidding themselves out of business for highway and infrastructure projects included in the U.S. economic stimulus plan, as they low-ball their proposals in hopes of winning much-needed work.
For now, bids have come in for as much as 30 percent less than what state agencies had projected and been welcomed as examples of the $787 billion American Recovery and Reinvestment Act’s success, as the federal government spends leftover funds on additional projects.
On Wednesday, President Barack Obama said the low project costs, “means we can do more. We can create more jobs and launch more projects with every taxpayer dollar.”
That, in turn, could help realize Obama’s promise that the stimulus will create or save more than 3 million jobs, the bulk of them in a construction industry that has suffered tens of thousands of layoffs during a severe housing slump.
But the low bidding may have the opposite effect. Contractors could bid at such steep discounts that they are unable to cover the costs of completing projects.
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