Federal Stimulus Funds to Offer Electrical Market Huge Sales Opportunities

Dec. 4, 2009
When the 1,588-page American Recovery and Reinvestment Act of 2009 hit President Obama’s desk this past February with a resounding thump, electrical distributors, manufacturers, reps and contractors may also have heard the welcome tones of their cash registers starting to ring again

When the 1,588-page American Recovery and Reinvestment Act of 2009 hit President Obama’s desk this past February with a resounding thump, electrical distributors, manufacturers, reps and contractors may also have heard the welcome tones of their cash registers starting to ring again.

That’s because when the President Obama signed the bill into law on Feb. 17, he was waving the green flag for the start of one of the great gold rushes in the history of the electrical construction market. Other federal legislation on the books provides tax credits for the design or retrofit of energy-efficient buildings, bans the use of inefficient lamps and ballasts or encourages the use of energy-efficient motors, submeters and lighting equipment. But no other federal legislation will have more of an impact on the design, construction, retrofit, maintenance and operations of millions of square feet of offices, factories, courts, schools, hospitals and many other types of buildings, or slash as many watts.

That’s because a huge chunk of ARRA is targeted at upgrading existing federal buildings to the highest levels of energy efficiency and building new buildings to LEED standards. The numbers boggle the mind. An estimated $130 billion of the total $787 billion (16.5%) in ARRA spending is targeted at the construction market, and a big part of that chunk is intended for the renovation of lighting and other electrical systems in existing federal buildings. Billions more will be spent to encourage the research, development and use of LED and solid-state lighting, photovoltaics, wind turbines and other renewable energy sources and the smart grid, some of which are already starting to offer real-world sales opportunities. This month’s cover story in Electrical Wholesaling offers a broad overview of ARRA funding and directs distributors, reps and manufactures to the federal departments and online resources that will help them take advantage of this massive sales opportunity.

Historically speaking, relatively few electrical distributors have focused on federal contracts. According to data in Electrical Wholesaling’s 2010 Market Planning Guide, at 4.3 percent of distributor sales, government business will account for $3.3 billion in electrical sales. The margins in government business tend to be lower than in distributors’ sweet spots of commercial construction and MRO industrial business. Distributors get tangled up in miles of red tape just to bid on a contract, and very often choice federal contracts are set aside for minorities, veterans or other constituencies. That being said, some of the electrical distributors that focus on government contracts do so very quietly because they don’t want to attract more competition to what’s a nice niche market once you’ve got the hang of it. If you want to cash in on ARRA opportunity, first familiarize yourself with three key websites: www.recovery.com, www.fbo.gov and www.gsaadvantage.gov.The Electrical Wholesaling article offers several other must-visit online resources.

www.recovery.gov. This is the main gateway to ARRA funds. While it doesn’t offer much as far as specific opportunities to sell electrical products, it’s a good first stop because it introduces you to ARRA funding from 35,000 feet and then provides various paths to drill down into your areas of interest. One of the beauties of ARRA is that it tries really hard to make the funding process as open, transparent and timely as possible through online communication tools such as this website, webcasts, downloadable PowerPoint presentations and free and regular e-mail updates on bidding, funding and award opportunities. The site is very intuitive and gets you to where you want to go fast.

www.fbo.gov.While www.recovery.gov provides a good introduction to ARRA funding, you should spend more time on www.fbo.gov, which is a database of all federal government contracts in excess of $25,000 being funded by ARRA. First find your way to the web site’s “Advanced Search” function. For starters, plug in “423610” into the “Keyword” field. This is the NAICS code for electrical distributors (in government-speak “Electrical Apparatus and Equipment, Wiring Supplies, and Related Equipment Merchant Wholesalers”) and will take you to contracts of interest to electrical distributors. The North American Industry Classification System (NAICS) is the standard used by federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing and publishing statistical data related to the U.S. business economy.

You will find it even faster to get the information you need by scrolling down to “Opportunity/Procurement Type” and clicking on “Presolicitation” and/or “Award.” You can also look for contracts by state or zip code. Another useful data selection is to type “238210” into the Keyword field. This is the NAICS code for electrical contractors (“Electrical Contractors and Other Wiring Installation Contractors”). Once you register as a vendor or become a regular visitor to www.fbo.gov, you will quickly find yourself first sorting your data selection by “Posted Date” because you can save time by only pulling up the most recent contracts. Now let’s dig a little deeper and find out more about the specific government entities that provide the most potential sales opportunities for electrical distributors, electrical manufacturers and independent manufacturers’ reps.

www.gsaadvantage.gov.If an electrical distributor is targeting the government market, there’s a good chance they will go after business from the General Services Administration, which manages more than 11 percent of the government’s total procurement dollars and $30 billion in federal assets, including 354 million square feet in 8,600 government-owned or leased buildings and 213,000 vehicles. Founded in 1949, the GSA has been around a long time, but since ARRA stimulus funds came onto the scene, it has a much higher profile. The GSA is scheduled to get $5.6 billion in ARRA funding, including $4.5 billion for energy-efficient upgrades of government buildings.

To get a piece of this action, some electrical distributors are marketing their wares on GSA Advantage www.gsaadvantage.gov, which for the past 12 years has been a one-stop online resource for thousands of federal employees worldwide. www.gsaadvantage.gov functions much like Amazon.com and is searchable by vendor, product, price and a host of other variables. According to its website, “GSA Advantage offers the most comprehensive selection of approved products and services from GSA contracts.”

Several electrical distributors with a presence on www.gsaadvantage.gov includeBorder States Electric, Fargo, N.D.; Frost Electric Supply Co., Maryland Heights, Mo.; Graybar, St. Louis; W.W. Grainger Inc., Lake Forest, Ill.; and WESCO Distribution Inc., Pittsburgh. If you are interested in getting involved with GSA, go to www.gsa.gov and click on the “For Businesses” tab in the left column and then on the “Getting on Schedule” header that pops up.

You will also want to familiarize yourself with www.dla.mil, which is managed by the Defense Logistics Agency, the U.S Department of Defense’s primary purchasing and distributing unit, and www1.eere.energy.gov/recovery, run by the Department of Energy. The DOE has $36.7 billion in ARRA funds to spend and a huge percentage of that cash will be flowing right into projects of interest to the electrical market.

– Jim Lucy