What Works

Subcontractors and consultants can compete for a piece of the $640 million in new Alameda Corridor contracts that will come up for bid in the next few months.

The Alameda Corridor Transportation Authority plans to offer four new contracts for the $1.9-billion rail link, creating work for dozens of small businesses in planning, design, construction and related services.

More than 100 businesses have worked on the project, launched in 1989 to speed the movement of cargo between the ports of Long Beach and Los Angeles and the region’s central rail hub near downtown L.A. Planners say the 20-mile rail line is vital to helping the ports prepare for an expected twofold increase in cargo volume over the next 20 years. The ports now handle more than 100 million metric tons of cargo, valued at $157 billion, each year.

The upcoming contracts won’t go out for bid until next year, but officials advise small businesses to start preparing their bids now.

“You’ve got to believe your competitors have already started,” said Sheryl Monaughan, who oversees small-business outreach for the Transportation Department, which is helping to fund the project.

The first step, Monaughan and other consultants say, is doing the homework.

Businesses eyeing the Alameda Corridor and other public works projects should know what types of contracts are coming up and what subcontracting opportunities are most likely to spin off from them.

Michael Meyer, co-owner of a Los Angeles-based transportation planning company, advises businesses to scan the monthly meeting agendas of the governing boards of public works agencies to scout out upcoming contracts. Newspaper and trade publication classified advertising sections also list public contracts once they’ve reached the bidding stage.

The next step is to find out which prime contractors are likely to bid on the projects.

“You have to know who the primes are and what types of things they value in their subcontractors,” said Debra Esparza, director of the USC Business Expansion Network, which provides entrepreneurial training and technical assistance to small businesses at little or no cost.

Meyer urges businesses to become familiar with the mailing lists that agencies such as ACTA keep of prime contractors. Businesses should seek meetings to introduce themselves to the contractors, he said. Even if no work is available, meeting someone face to face is a good first step to establishing a long-term relationship.

It’s also vital for businesses to nurture those relationships, Monaughan said. “You have to network all the time, and even then it may take a year or two before a prime really recognizes you.”

For Jack Waldron, project manager with Greiner, an engineering company in San Pedro, qualifications are the best way to impress a prime contractor.

“We’ve been a prime in the past, and we usually look for firms that have a track record,” he said.

To begin building an impressive work history, John McCain, president of Owen Pacific roofing and waterproofing in Los Angeles, suggests logging a number of small commercial and even residential projects. “Once you get your feet wet and learn the business, you can move on to larger projects,” he said.

Another way to garner qualifications is to hire experienced personnel. Fifteen years ago, McCain expanded the scope of his business--which since 1916 had worked exclusively in roofing--by absorbing a waterproofing team with 20 years’ experience. Today McCain’s company is waterproofing the support girders of the Alameda Corridor’s first construction project: a $5.8-million railroad bridge across the Los Angeles River.

Just as important as qualifications, however, is having the financial wherewithal to see a project through.

“You really need to go through a thorough assessment of your financial health before you bid on a project,” Esparza said.

Not only do businesses need to gauge how much money they will need for a project, but they also should set aside a contingency fund, Esparza said. Businesses often don’t allow for schedule delays, cost overruns or expensive glitches on other jobs they might be working on. Experts also warn that public works projects are notoriously slow in paying for services rendered.

“Subcontractors are usually two or three places down on the food chain of payment, and often they don’t plan for that,” Esparza said.

To obtain a loan or a line of credit, companies need to have a business plan and accurate accounting records, said Reynold Blight, manager of the industrial development authority for the city of Los Angeles. Lenders and creditors, he said, want to see that businesses have viable operating and growth goals and that they regularly pay bills and other liabilities while maintaining a positive cash flow.

“Once they get themselves formalized, they can go into a bank and apply for a small-business loan,” Blight said.

Public works projects usually require participating companies to post payment and performance bonds, and having a sound financial history is generally the best way to get them, said Sepulveda-based bond agent J.R. Olsen. “We look at it like a loan application,” he said. “Bonding companies don’t like to take a loss.”

The Alameda Corridor, like other publicly funded projects, operates a program to encourage participation by women- and minority-owned businesses and businesses that gross less than a certain amount of money.

Although work is not specifically set aside for these groups, ACTA does require prime contractors to prove they have made a good-faith effort to include women- and minority-owned and disadvantaged businesses among the subcontractors they consider.

To make the list, however, such businesses need to be certified with the city of Los Angeles or the Metropolitan Transportation Authority. Although the process can require a fair amount of legwork, those who have become certified say it’s well worth it.

“It doesn’t win us any work,” said Vincent Jue, vice president of Paramount Metal & Supply, “but it has provided us with opportunities that we may not have had otherwise.”