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The Honolulu Advertiser
Posted on: Saturday, December 3, 2005

Local subcontractors score big

By Dan Nakaso
Advertiser Staff Writer

Jacobsen Labor Services employees Dioleto Campana, left, and Benito Laboy work on a project at Tripler housing. Local businesses are doing most of the subcontracted work for projects at military housing.

RICHARD AMBO | The Honolulu Advertiser

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ACTUS LEND LEASE CONTRACTS FOR ARMY AND AIR FORCE HOUSING ON O'AHU

Executed contracts for 2005 year to date: $170 million

Local contracts: $149 million, or 88 percent

Non-local contracts: $21 million, or 12 percent

Small business contracts: $135 million, or 79.5 percent

Large business contracts: $35 million, or 20.5 percent

ARMY WORK

Executed contracts: $144 million

Local contracts: $130 million, or 90 percent

Non-local contracts: $14 million, or 10 percent

Small business contracts: $108.5 million, or 75 percent

Large businesses contracts: $35 million, or 24 percent

HICKAM WORK

Executed contracts: $26 million

Local contracts: $18.7 million, or 72 percent

Non-local contracts: $7.2 million, or 28 percent

Large business contracts: None

Source: Actus Lend Lease

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Bruce Jacobsen looked around at a room full of hopeful subcontractors like himself nearly two years ago and worried about his chances of even getting a tiny slice of the biggest U.S. military housing project of its kind.

It wasn't just the other local businesses that concerned Jacobsen. They all feared that Actus Lend Lease would steer most of the subcontracting work to Mainland companies to help Actus renovate and build 7,894 Army and 1,356 Air Force homes on O'ahu and maintain and manage them for the next half-century.

"I got kind of scared," said Jacobsen, the president of Jacobsen Labor Services Inc. "We thought they were just going to give the work to the ACME construction company or ACME management company, some big Mainland conglomerate."

But as Actus and its project companies Army Hawaii Family Housing LLC and Hickam Community Housing LLC began operations this year, they so far have awarded 88 percent of their Army and Air Force work to local businesses.

Out of $170 million worth of contracts, Actus said they awarded $149 million to local companies. Non-local companies accounted for $21 million, or 12 percent of both projects, according to Actus.

For its Hickam project, Hickam Community Housing has hired 24 subcontractors so far and expects to add another 20 to 25 next year. Actus officials last week could not provide data on the number of subcontractors for its Army work, or estimates of how many subcontractors it will hire next year.

"It's great to see our local businesses stepping up to the plate and be part of this initiative," said Darryl Chai, asset manager for Hickam Community Housing. "From my vantage point, I have seen many of them who work so hard to deliver excellent performance and I am glad to see all that hard work pay off. We have started to see success stories of local businesses who have benefited from the contracts generated."

Harland Perry, president of Perry Management Corp., had a contract with Hickam to pick up trash and recyclable materials, which led him to meet Actus officials as they planned to take over Air Force housing.

Perry submitted a bid in November 2004 for trash and recyclable pickups for nearly 6,000 Hickam homes for Actus. And that led to an invitation to bid for the same work for 3,400 homes at Schofield Barracks.

"We didn't really know how to get involved," Perry said. "I guess we were just in the right place at the right time."

Perry's company won both contracts and quickly had to hire 24 new workers and bought $1 million worth of trucks and other equipment.

Like other small businesses that have won Actus subcontracts, Perry Management suddenly faced growing pains it had never experienced before.

"It was tough getting through those first couple of months of equipment financing, working capital and all of that," Perry said. "But it's getting a lot better. Our startup problems have been smoothed out."

Thanks to its work experience at Schofield and Hickam, Perry Management has since expanded to 111 employees and won similar military contracts in Michigan, Georgia, Mississippi and New Mexico.

"It allowed us to gain experience and gave us a history of past performance," Perry said. "It became a stepping stone for other projects. But we still give Actus priority. Actus gave us a chance and we decided to make the most of the opportunity."

Jacobsen started his business nearly 20 years ago as a one-man yard cleaning service, working out of a Toyota pickup truck in Kailua.

As his company slowly expanded over the years, Jacobsen got used to the old military process of awarding contracts to the lowest bidder.

"With Actus, we give them a price and if it's reasonable we'll work things out," Jacobsen said. "Price, of course, is a big concern. But they also want to see things like our past work history. A lot of local (contractors) will let things slide. But with Actus, you tell them you're going to do something and you better do it. Their 'okoles are on the line, too."

Jacobsen Labor Services bid on 13 Army and Air Force jobs for Actus and ended up winning six contracts for work ranging from tree trimming to light construction work, such as installing fences.

The contracts meant that Jacobsen had to go on a hiring binge and more than double his workforce to 135 employees. He also spent more than $300,000 on equipment like wood chippers, trucks, lawn mowers and weed trimmers.

"Imagine having to hire 40, 50 people in a week," Jacobsen said. "It was quite a race for us."

Like other subcontractors, Jacobsen will have to continually submit new bids to continue working with Actus. But with Actus' contract to manage and maintain the new homes for half a century once they're built, business people like Jacobsen hope their relationship will stretch for decades.

So Jacobsen hopes that some day his children will be able to finish the work that he began.

"I'm 50 years old now," Jacobsen said. "I may not be able to continue with the contract for another 50 years, but I hope my sons and daughter will."

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com.