GCA Construction News Bulletin February 2012

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Guam Contractors’ Association


Vol.53 Issue 02 FEBRUARY2012

Reasons to be Optimistic



Update C ommittee S.A.M.E.

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C ommittee Update Headline C onstruction VSE Corp.


Story F eature Horizion Lines


Story F eature Optimistic

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P hoto Highlights S mall Business C rane Critique Corner Headline C onstruction NDT Testing

The Chamorro phrase for “To Raise; To Build; To Erect” is: Man Hat'sa brought to you by "Learn Chamorro" www.learnchamorro.com

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PRESIDENT James A. Martinez, GCA CHAIRMAN William “Bill” Beery, Tutujan Hill Group VICE CHAIRMAN Robert Salas, Landscape Management Systems PAST CHAIRWOMAN Chit Bathan, Ace-Builders SECRETARY/TREASURER Tom Anderson, Black Construction ASSOCIATE DIRECTORS: Edward Untalan, First Hawaiian Bank Paul Calvo, Calvo’s Insurance Vincent Davis, Hawthorne Pacific Corp Ray Yanger, Matson Navigation CONTRACTORS DIRECTORS: Tom Nielsen, Maeda Pacific Corporation Juno Eon, Core Tech International Mike Venezia, Hensel Phelps John Robertson, AmOrient Art Chan, Hawaiian Rock Louis De Maria, dck pacific guam LLC

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Guam Contractor’s Association (GCA) in conjunction with AdzTech and Public Relations, Inc. publishes the Construction News Bulletin (CNB) monthly. Reproduction of materials appearing in this publication is strictly forbidden without written permission by GCA. While we always strive for accuracy, we will from time to time overlook mistakes. In order to help us improve the quality and accuracy of this publication, we ask that you take the time to look at the information provided and notify GCA of any corrections as needed. Opinions and editorial content of this publication may not necessarily be those of the publisher, staff, GCA members, GCA Board of Directors and advertisers. For more information about advertising in the GCA Construction News Bulletin contact the advertising department at (671) 477-1239/2239 or email at adztech@teleguam.net. Distributed to GCA members or can be obtained by stopping by the Guam Contractors’ Association office located at 718 N. Marine Corps Drive, Suite 203, East West Business Center, Upper Tumon, Guam. To find out more about how you can become a GCA member contact Chantel Cruz, Guam Contractors’ Association at (671)647-4840/41, or fax (671) 647-4866 or email to gca@teleguam.net. Postmaster. Send address changes to Guam Contractors’ Association, located at 718 N. Marine Drive Corps Suite 203, East West Business Center, Upper Tumon, Guam.


THETEAM PUBLISHER: James Martinez SALES & MARKETING DIRECTOR: Geri Leon Guerrero AD SALES: Marty Leon Guerrero June Maratita PRODUCTION: Geri Leon Guerrero Christopher “Taco” Rowland Bill Tenorio PHOTOGRAPHERS: Marty Leon Guerrero EDITOR: Adztech CONTRIBUTING WRITERS: James Martinez John Robertson David F. Macaluso Dave Barnhouse Jason Scott VSE News Release GCA STAFF: Chantel Torres-Cruz Francine Arceo Desiree Lizama COVER: Four men remaining at Horizon Lines: Hugh Healey, Ray Cruz, Frank Duenas, and Eucy Villanueva.




Society of

MILITARY, GOVERNMENT & LABOR RELATIONS UPDATE American Military Engineers The Guam Military Buildup is Still On

At time of this writing, conflicting reports

were coming from various American and Japanese wire services concerning impending changes to the force realignment plan for the Asia-Pacific Region. It appears certain that changes are being made that will have an impact on Guam. There should be greater clarity by the end of February. Meanwhile, this is what is known: 1. The Commandant of the Marine Corps did release his preferred laydown plan in January but it has not been made public. 2. A Marine Corps base will be built on Guam. It will be home to something less than 5,000 Marines. It is not clear whether it will include a headquarters unit or only ground troops and/or air units. There will be rotational units and It is not clear whether that number is included in the foregoing or whether it will be in addition to that number. It is also not clear the extent to which family members will accompany the Marines to Guam. 3. Marine Corps elements will be dispersed to additional locations in the Asia Pacific Region including Australia, the Philippines and perhaps other locations where there are existing military camps with some infrastructure already in place. 4. The linkage between the military buildup on Guam and closure of the Futenma Marine Corps Air Station is being dropped as a prerequisite to moving forward. Each program will be allowed to proceed at its own pace. The governor and people of Okinawa will decide when to proceed with building the replacement air station. Meanwhile, the Futenma facility will continue to be used as in the past.

5. A revised masterplan is being produced at the present time and details are known only to those closely involved. A new or amended Environmental Impact Assessment may have to be produced to take into account the differences that are expected to emerge.

The Bigger Picture

The military situation on Guam is part of what is happening elsewhere in the world. We have to remember that the military earlier agreed to about $487 billion in defense cuts over the next 10 years, starting in FY2013. Guam will be impacted in ways yet to be determined. When the Congress begins consideration of the NDAA for 2013, each Senator and each Congressman will be fighting for spending in his or her state or district. Guam has no representation in the Senate and a Delegate without voting rights in the House of Representatives. To make it more interesting, we are in an election year. Although the Obama administration is not planning on releasing its fiscal 2013 budget proposal until 13 February, some details about the planned cuts to Dept. of Defense spending have been trickling out. Perhaps of most interest to construction and engineering firms, Defense Secretary Leon Panetta has said that the president will ask Congress to reinstate another round of the Base Realignment and Closure (BRAC) program. Also, according to the Defense Dept. (DOD), some military construction projects will be deferred “to align our facilities more closely with the size and posture of our future force.” Specific details on what projects, or types of projects, will be put on hold are not yet available, says a

DOD spokeswoman. In a January 26th news conference, Panetta said the DOD would request $525 billion for its base budget in fiscal 2013, compared to $531 billion in fiscal 2012. Additionally, the DOD will request an additional $88.4 billion for overseas contingency operations to maintain support for troops in combat, compared to the $115 billion enacted for contingency operations for fiscal 2012. The cuts are part of the DOD’s new strategic direction, spurred by the 2011 Budget Control Act’s requirement that the DOD reduce spending by approximately $487 billion over the next decade, or $259 billion over the next five years. The requirements will impose a new austerity on DOD, and the agency hopes to create a smaller, more agile cadre of armed services, DOD officials say. With a smaller number of service men and women in the armed forces, infrastructure needs will change, Panetta said. “We’re going to have to be able to reduce that infrastructure, and the best approach to reducing that infrastructure politically on Capitol Hill has been to work it through the BRAC process,” he said. Industry sources say a new round of base realignments and closures could provide a surge of work for engineering and construction firms, as it has in the past. Mike Pavlides, vice president and director of federal services with the Beltsville, Md., office of Brown and Caldwell, says that base closures typically generate a significant amount of environmental assessments, work related to the shutting down of facilities, and modernization at bases and facilities where forces may be reassigned. But he notes that if Congress does authorize another round of BRAC, the amount of work for A/E/C firms will be largely dependent on where the bases are. “If they are closing smaller bases or

To join SAME Guam Post, logon to SAME.org and proceed to New Membership. 8 | FEBRUARY2012



S.A.M.E. UPDATE bases overseas, for example, it will mean less work for firms that work in the sector than previous rounds of BRAC, he says. Moreover, the question remains: will Congress really support another round of BRAC when closing bases usually has a negative economic impact on cities and towns in their districts where the bases are located? A portion of the foregoing was adapted from the 6 February on-line edition of Engineering News-Record.

The U.S. Economy Appears to be Rebounding

An improved American economy will take the pressure off of the deficit spending of recent years that led to the drastic cut in military budgets. There are early signs of a moderate rebound in the nations’ economy but it is too early to know whether it is sustainable. Of course the local Guam economy is going the other direction because of the pause in the military buildup. The U.S. economy added more jobs in January than in any month since early last year, pushing down the unemployment rate to a level not seen since President Barack Obama's first full month in office. Employers added 243,000 jobs last month, the Labor Department said, notching gains across a wide swath of the economy. That marked the fastest pace of job growth since April and brought the unemployment rate down to 8.3%, from December's 8.5%—the fifth consecutive monthly decline. This, according to an article in the 3rd February issue of the Wall Street Journal. The healthier-thananticipated labor picture propelled stock prices higher from the opening bell, extending a rally that has surprised many investors.

Associated General Contractors of America chief economist. January also marked the 16th-straight month in which construction’s jobless rate was lower than its year-earlier figure. The BLS industry rates are not adjusted for seasonal variations. Construction’s rate generally worsens in winter months, when the volume of building drops. Nearly all construction sectors posted gains in jobs last month (January). Heavy and civil construction was the lone exception, recording a decline of 1,400. Another encouraging note came in architectural and engineering services, which added 6,900 jobs last month. Design services numbers are not included in the BLS construction category. AGC's Simonson said the construction’s industry’s two-month 52,000 job gain is “great news,” but cautioned that the increase came during periods of unusually mild winter weather. He said, “It will take another month or two to see if the recent job growth reflects a sustained pickup or merely acceleration of homebuilding and highway projects that normally halt

when the ground freezes in December and January.” Simonson noted that construction employment is up by 116,000, or 21%, over the past 12 months, but is still down 28% from April 2006’s peak of 7.7 million. Anirban Basu, Associated Builders and Contractors chief economist, said, "Clearly the recovery in private construction has been accelerating." Basu said job growth was especially strong in the manufacturing, commercial and power industries. But he noted that "the impact of strained public finances also continues to be apparent," pointing to the reduction in heavy-civil construction jobs last month. There were other negatives in the BLS report—construction’s jobless rate was the highest among major U.S. injury categories and also was more than double the overall U.S. level.

Senseramente, John M Robertson, Committee Chairman

On the other hand, the Construction industry's unemployment rate increased in January to 17.7%, from December’s 16%, but it was much lower than January 2011’s mark of 22.5%, the Bureau of Labor Statistics has reported. BLS's latest monthly employment update, released on Feb. 3, also showed that construction gained a further 21,000 jobs in January, after adding 31,000 in December. That brings the industry's total employment to its highest level in two years, according to Ken Simonson,



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From left, University of Guam President Dr. Robert Underwood, Connie Maluwelmeng, Roggie Mark Vitug, Evelyn Quiel, and SAME Guam Post President Capt. John Heckmann. Photo courtesy of the Pacific Daily News.

Military, Government and Labor Relations Update (February 2012) SAME Scholarship – Mid Year Awards

As many of you are aware, the 2011 SAME Charlie Corn Golf Tournament was a big success under the leadership of board member Wayne Cornell and due to the generosity of our many sponsors. As a result of the tournament financial success, the Guam Post Board decided to award 4-mid-year scholarships in the amount of $1,250 each to worthy applicants. As it turned out, we received 4-applications and found them all to be complete and deserving of the awards. The scholarship awards went to the following students: Evelyn Quiel, Pre-Engineering – University of Guam Connie Maluwelmeng, Pre-Engineering – University of Guam Roggie Mark Vitug, Pre-Engineering – University of Guam Joseph Claveria, Civil Engineering – University of Portland

SAME Scholarship Program

The Guam Post has continued its annual Charlie Corn Scholarship Program for many years. The intent of the program is generally to provide financial assistance to students from Guam and Micronesia who are attending accredited schools and studying Engineering, Architecture or a technical major and that plan to return to begin their professional careers in the region. The scholarship program has been active for many years and consistently awards 3 – 5 scholarships each year. As this is written we are issuing the regular scholarship program applications for the next school year (2012 – 2013). Interested individuals may obtain applications at the following: • • •

TG Engineers, PC office in Tamuning University of Guam website SAME Guam Post website

Applications must be received by the end of business (5:00PM) on Friday, April 27, 2012. The selection process will be completed in early May and we will again invite the scholarship recipients to join our May monthly membership meeting for the official awards and presentation.

UOG 4-Year Engineering Program

We were fortunate to have the University of Guam (UOG) President, Congressman Robert Underwood and Engineering Professor Dr. Shahram Khosrowpanah attend the January monthly membership meeting and assist with presenting the scholarship awards. They were also the guest speakers and gave an entertaining presentation on the new 4-year engineering program starting at UOG. The president’s vision for the 4-year accredited program was established beginning back in October 2009. In the past 2.5 years much has been accomplished. From the presentation we learned of milestones in the progress of the program. • The engineering advisory group was established. • A new building is planned for the College of Engineering. • The university has started hiring engineering faculty and will hire additional professors. • The 4-year program curriculum is being developed. • The university has finalized a general cooperation agreement with the University of Iowa and Mapua Institute of Technology (Philippines) to enhance our relationship with them, and is in process of establishing a similar relationship with University of Hawaii at Manoa. • The best news is the number of students in the Pre-Engineering program has increased 25% and the amount of interest from the community indicates the program will continue to develop and expand concurrently with increase in industry opportunities.

Tor Gudmundsen PE, Chairman of the SAME Scholarship Committee

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VSE Corporation Retains U.S. Naval Sea Systems Command 5-YEAR, $1.5 Billion Contract After GAO Denies Protest Alexandria, Virginia (January 30, 2012) VSE Corporation’s (NASDAQ GS: VSEC) GLOBAL Division has retained a one-year $277 million cost-plus-award-fee, indefinite-delivery, indefinite-quantity contract by the U.S. Naval Sea Systems Command as a result of the U.S. Government Accountability Office (GAO) having denied a protest to the award of the contract to VSE. VSE originally announced the award on October 3rd, 2011 prior to the protest. VSE’s performance of the awarded contract can now proceed. The five-year maximum potential $1.5 billion contract is for continuous lifecycle support of naval vessels bought, sold, or otherwise transferred to Foreign Military Sales customers through the International Fleet Support Program. VSE will lead its Naval Ship Transfer and Repair (N*STAR) team with services to foreign customers and allies to include design, configuration management, field engineering, maintenance planning, maintenance, spare parts support, training, casualty, and depot-level repair. The VSE N*STAR team will also provide engineering, technical, procurement, logistics, test, inspection, calibration, repair, maintenance, equipment upgrade installation, and overhaul support services, including reactivation to safe-to-sail status. "We are pleased that we can now commence our N*STAR team’s services under the new contract to NAVSEA,” said VSE CEO/President/COO Maurice “Mo” Gauthier. “VSE’s N*STAR team is poised to leverage our experience and past performance to ensure NAVSEA and its international clients will continue to receive exceptional service.” VSE has been performing Ship Transfer and

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Follow-on Technical Support (FOTS) work for the Naval Sea Systems Command since 1995. During that time, VSE has managed the successful transfers of 44 ships ahead of schedule and under budget, and provided service to 24 nations on six continents. VSE is currently supporting the transfer of the Coastal Mine Hunters ex-USS Oriole and ex-USS Falcon to Taiwan. N*STAR Team members Raytheon; Science Applications International Corporation (SAIC); Thales Naval, Inc.; Lockheed Martin; Computer Sciences Corporation (CSC); BAE SYSTEMS; General Dynamics; DRS (a Finmechanica company); Gibbs & Cox, Inc.; CDI Marine Co.; American Systems Corporation; Propulsion Controls Engineering; George G. Sharp, Inc.; Colonna’s Shipyard, Inc.; McKean Defense Group, LLC; Phoenix Group of VA; Sullivan & Associates, Inc.; Atlantic Ordnance International; 3Phoenix, Inc.; Logistics Support, Inc.; Delex Systems; The GBS Group; Gryphon Technologies; Valkyrie, Inc.; The McHenry Management Group; HEBCO; Walashek, Inc.; Detyens Shipyard Inc.; Engineering Services Network, Inc.; Guam Industrial Services, Inc.; and Orion Solutions, LLC, Arab Shipbuilding and Repair, and Egyptian Service Company. VSE International Group VSE’s International Group provides global field engineering, logistics, and program management services to the U.S. military and other government agencies. The International Group also provides total program support for surface ships and system’s transferred to foreign countries under the U.S. Navy's Foreign Military Sales program, ship modernization, refurbishment and repair; and aircraft sustainment for all U.S. Department of Defense services. Through its work with the


U.S. Department of Treasury, the group provides seized and forfeited material management that generates revenue for various government agencies. For more information about the International Group’s services please see our website at www.vsecorp.com or contact Spence Miller at (703) 329-4601. About VSE VSE is Federal Services Company of choice for solving issues of global significance with agility, integrity and value. VSE marked its 50th year as a government contractor in January 2009 and is dedicated to making our clients successful by delivering talented people and innovative solutions for program management, logistics, engineering, IT services, construction program management and consulting. For additional information on VSE services and products, please see our web site at www.vsecorp.com or contact Randy Hollstein, Corporate Vice President of Sales and Marketing, at (703) 329-3206. VSE encourages investors and others to review the detailed reporting and disclosures contained in VSE public filings with the Securities and Exchange Commission for further information and analysis of VSE's financial condition and results of operations. The public filings include additional discussion about the status of specific customer programs and contract awards, risks, revenue sources and funding, dependence on material customers, and management's discussion of short and long term business challenges and opportunities. News Contact: Sylvia Gethicker (703) 329-4610 Investor Relations: Christine Kaineg (703) 329-3263



by: David F. Macaluso

by: David F. Macaluso

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Through good times and during typhoons and other major catastrophes, Horizon Lines has been operating on Guam, providing a valued service to the island and its customers. On March 31st of 2012, Horizon Lines will shut its doors and turn off its lights one final time on Guam, ending over 25 years of service to the island. “This is a very unfortunate time for the Horizon Lines’ family, “ said Hugh G. Healey, Horizon Lines General Manager of Guam and the Micronesian area. Healey has been the GM on Guam since April 2008. His mission for the first few years was to prepare Horizon Lines for Guam’s much anticipated military buildup. He helped Horizon Lines execute and bring in cranes, pole cranes, get an additional 100 chassis, and procured different leases. But now the military build up is uncertain. Healey said, “ Since we don’t know when the build up is expected to take place, a decision was made by Horizon’s board in Charlotte, North Carolina to shut down its operations on Guam. If there’s uncertainty in Washington D.C. on the expected time line for this build up, then how can a successful business model be built on that information, it just can’t be done.” If Guam was in the beginning stages of the build up, Horizon would have to make


a very difficult decision whether or not to pull out of Guam, especially if the company began to see growth. But Horizon’s volumes of 2011 dropped compared to its 2010 figures. Healey said, “When our overall 2011 pie dropped compared to our 2010 numbers, that was a little scary. That means less is coming into the port. If the military build up was coming, we would certainly start to see signs of it by now.” The delay of the military build up was a contributing factor why the nation's leading domestic ocean shipping and integrated logistics company decided to exit Guam. There are two other factors why the home office in Charlotte decided to discontinue its services here. The first reason involves the Chinese market and the second element includes the rising cost of fuel. During the first quarter of 2011, Horizon Lines expanded and opened two offices in China. This allowed them to become a stand a lone service into Shanghai and Ningbo. Horizon Lines could now sail straight from the west coast of the United States, bi-pass Hawaii, and go directly to Guam then into China. Later in 2011, the Department of Justice finalized their investigation into Horizon Lines. The charges stem from the improper use of an oily water separator and related inappropriate record keeping on the Horizon Enterprise, a container ship that sails between Tacoma, Oakland and Honolulu. Under the agreement, Horizon Lines will

pay a fine of $1 million and donate an additional $500,000 to the National Fish & Wildlife Foundation for environmental community service programs. The company also has agreed to be placed on probation for three years and institute an environmental compliance plan. During that investigation, Horizon Lines had to report its earnings. The report outlined the financial stability of the company and it showed a looming debt payment. This became a concern to Horizon’s new international customers feeling that the shipping company would not be able to refinance their debt on time to those outstanding loans. According to Healey, “This was a kind of down hill snow ball affect. The Chinese customers got nervous and their confidence dropped in our company.” Almost at the same time, the fuel prices started escalating. Horizon was trying to restore customer confidence, rates were lowered as they struggled to compete with the other international carriers in China. The freight rates from China to the United States had fallen more than 37% in one year, going from $2,400 per 40-foot container in October 2010 to approximately $1,500 in October 2011, the lowest level since the worldwide recession of 20082009. At the same time, the average price of bunker fuel climbed more than 40% since the launch of the service. Healey said, “Although the Horizon’s vessels were filled with containers, they were not able to meet their cost. I’m not intimately involved with the rates or operations in China, but that’s what has been explained to me. So Guam got


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caught in the cross fire from the Chinese market and became collateral damage.” Once Horizon Lines made the announcement that we were going to pull out of Guam, they made an attempt to work with Maersk Line, another U.S. Flag carrier. At first , it appeared that Maersk might come in and help save Horizon’s employees. Maersk sent a team to Guam to see if they could bail out the sinking company. Maersk looked at Guam, the port, Horizon’s facilities and its employees. But unfortunately they decided that they didn’t have enough time to analyze everything in full detail. With that decision, Horizon had to unfortunately leave Guam. Healey remains optimistic, “ Just because Maersk didn’t come here now, does not mean that they wouldn’t be here in the future.” Currently Matson is the only container vessel that comes from the U.S. mainland. But Healey believes it’s important to have another U.S. Flag carrier come to Guam. “It’s never good to have a monopoly, If another carrier comes to Guam, it will benefit the island because there will be competition,” said Healey. “Competition is good because if there are two carriers, it will ensure that the service levels will remain high. Plus another carrier may offer different ports of call or different services.” Healey quickly adds, “ Matson has done a great job in keeping the service levels high on Guam. I also believe their service levels will continue to excel.” As the March 31st deadline slowly approaches, Horizon’s original team that was once comprised of 27 employees, has drastically been reduced to a small group, 4 to be exact. This group consists of Ray Cruz, Eucy

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Villanueva, Frank Duenas and Healey. The small team has been kept together to finalize the assets, transfer assets or to sell Horizon’s remaining assets on island. According to Healey, “There is still a lot of work that has to be done before our deadline. There are still Horizon containers throughout the Micronesian area that need to be collected and there are still a few agencies in Saipan that has to be shut down. Once this is down, we will be totally exiting Guam.” Matson purchased all of Horizon’s equipment on island which includes their 100 chassies, transformers, generators, all their tools and shop material but not their vessels. The vessels are currently laid up in a typhoon free refuge in the southern part of the Philippines (Davao, Mindanao). The vessels are leased from Ship Finance International Limited through 2018 to 2019. Horizon is now deciding what to do with those vessels, they are exploring sub-chartering the vessels as either a U.S Flag or a foreign flag carrier. But they will have to get their vessels moving in order to minimize the expenses, to mitigate ongoing charter expense and maintenance costs. As Horizon Lines slowly sails into the sunset. Healey hopes people will remember the shipping company as the ultimate customer service provider and a fan of the customer. We did everything for our customers. Without them we would have nothing. I think as soon as a company forgets why they are there and who they are servicing, that is the time they will have a lot of problems. Guam’s office was one shining star. I hope the customers will always say Horizon Lines provided an excellent service.” Healey pauses briefly, “That’s how I would like people to remember us” Healey reflects on the Guam Contractor Association, “ We are not contractors, but we developed a customized service team to help the contractors become more familiar with our services. The more the contractors knew about us, it increased our chances to help them. It was important for us to be apart of the GCA not only to sell our services, but also to provide an education to their members. I think it was a win win situation for all of us. We appreciate being a member of the



GCA and it was a lot of fun. The GCA is an organization that is very hands on and they do a lot of things throughout the island all year long. We are sorry we have to leave our friends on Guam.” This is an unfortunate event for all the diligent workers who were the heart and soul of this company. It will be a sad day and an end of an era when Horizon Lines’ doors finally close. Its hard not to think about all the people, the hard work and sweat that has gone into this company throughout the years. Horizon’s operation was a microcosm of a large shipping company. They had operations, trucking, maintenance, reefer support, customer service, sales, admin, a management team, and vessel operations. Their employees did everything from the paper work to the delivery. The Horizon Lines Family on Guam did all with only 27 hard working people. Most were crossed trained in multi functions, to help save the company money. When asked, what can be said about the Horizon Lines family who worked on Guam during these years, Healey said, “It speaks for itself when folks have been with this company since day one. This was a unique dynamic and a pleasure to work with everyone. The staff is well trained well, dedicated, loyal and a hard working group. Our group is made up of special people who have been with us in good and difficult times. Healey pauses briefly and slightly smiles, “I hope they think most of the times were good. Any future employer who gets one of our family members is going to be very fortunate.”


Shortly before this article was sent to the publisher, Healey sent me this statement, hoping to have this published so all of Horizon’s friends and family members would see it.

“On behalf of Horizon Lines and myself, I’d like to thank all of our dedicated employees and their families that supported them. We would not have been successful in Guam for 25 years without the daily unselfish, teamwork, and constant quest to take care of our customers and ensure our part of the critical supply chain was complete for our customers and the people of Guam who rely on fresh goods and stocked inventory. I’d also like to thank our loyal customers in Guam, Saipan, CNMI, and Micronesia that have rewarded HL with their trust to carry their business week in and week out. I’d also like to thank our partners Kyowa Shipping Lines, Seabridge, Saipan Shipping/MSA, Port User’s Group, and Matson with respect to both tough competitors working together to deliver the gantry cranes to the Port Authority of Guam. Good luck and God Bless”. Thanks, Hugh


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We Have Reasons to Be Optimistic Hafa Adai! As the Guam Contractors Association looks forward to the year ahead, we anticipate many opportunities for the construction industry across all sectors of the local economy. Funding for capital improvement projects, incentives for affordable housing, and developments in the tourism industry all contribute to a positive economic outlook for construction in the coming years. We remain optimistic that the military buildup will go forward, albeit at a slower pace and a slightly reduced size than what we initially projected a few years back. Military construction projects will continue to be a major source of opportunities and revenue for Guam’s construction and supply companies in 2012 and beyond. What some people don’t realize is that the transfer of Marine personnel from Okinawa to Guam is only part of the bigger military picture. There are other military construction and maintenance work that is happening right now and sustainable for as long as our military bases still exist on Guam. Our focus now should be on projects that we know are in the works and funds appropriated for its implementation. Local Government Construction As announced at the start of fiscal year 2012, nearly $500 million in federal funds have been earmarked for local government capital improvement projects for FY2012 through FY2014. Over the next two fiscal years, we’ll begin to see new construction projects for the Guam Power Authority, the Port Authority of Guam, the Department of Public Works, the Guam Waterworks Authority, the University of Guam, and Guam Community College break ground. Among these capital improvement projects are port infrastructure and security enhancements, power distribution system and generation

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improvements, roadway rehabilitation, water and wastewater infrastructure construction, a new DNA Forensic Lab facility, and expansions of the university’s Student Center and School of Engineering Annex. Such federally funded projects will provide excellent opportunities to the local construction industry in the immediate future. Military Construction While the $83 million appropriated in the National Defense Authorization Act for FY2012 is less than we anticipated in overall military construction funding, it still represents valuable construction opportunities for the local industry. We remain confident in our long-term expectations for the military buildup. We believe that the underlying necessity of satisfying the U.S.-Japan Accord and maintaining a strategic U.S. military presence in the Pacific will outlast the roadblocks outlined in this year’s NDAA. Guam’s status as a U.S. territory also makes the island a natural solution in the Pacific Realignment. We believe that what we’re experiencing is a hiccup in the process of realigning armed forces in the Pacific. The FY-2012 NDAA restrictions on funding for the buildup, in their requirements for further detail and planning on the part of the Department of Defense and other federal departments and agencies, are largely temporary hurdles in nature. Once those conditions are fulfilled, we expect that military construction funds from the U.S. and Japan will be released. As is the sentiment from the majority of our membership at the Guam Contractors Association, the buildup may happen at a slower pace, but it will happen. We can also look to funds coming from the various Multiple Award Construction Contracts, or what we call MACC. MACCs are comprised of small groups of prime contractors who


were pre-qualified and selected through a bid process for a seed project under that contract. These selected contractors will then compete with each other for task orders within the scope of the larger contract. In 2010, Naval Facilities Engineering Command Pacific awarded a 5-year, $4 billion “Mega MACC” contract to seven U.S. construction companies for construction projects based in Guam and elsewhere in the Pacific. The Small Business MACC is a 5-year, $500 million contract awarded to six companies, and the 8(a) MACC is a $100 million contract awarded to six construction firms. There are about 39 companies under the various MACC contracts for Guam and contact with those firms can open up opportunities for specialty subcontracting projects. Other sources of military contracts include the SRM (Sustainment, Restoration, and Modernization) which covers regular maintenance of the base facilities. This is done every year and includes building/roof repairs, painting, renovations, road and airfield paving, etc. In FY12, SRM is projected to be roughly about $140 million. The bulk of those dollars will go to the MACC awardees, and while these prime contractors compete for task orders among their MACC groups, other construction firms and suppliers on island can participate in those projects as subcontractors. Local contractors and suppliers can contact these prime contractors to find out about upcoming bids and submit proposals for specialty contract work. In spite of the delays in the Marine relocation, there is still a lot of work being done on the bases. Andersen AFB for example, still has their Guam Air Strike program in progress. There are also energy and environmental projects being planned, which will be executed by MACC contractors, and speculation that we may yet see the Mamizu MACC and the Apra Medical Clinic released this year.



Residential Construction We expect that first-time homeowner incentives signed into law this year and administered by the Guam Housing Corp. will stimulate the market for affordable housing. Public Law 31-166 provides 4% in financial assistance for the purchase or construction of a new home for real estate transactions of up to $250,000, removing financial barriers for willing buyers and spurring further investment in affordable housing construction. Governor Eddie Calvo’s 2011 goal for 3,000 new affordable homes by 2017, along with other affordable housing initiatives undertaken by the local government administration, further contribute to a healthy outlook for residential construction in 2012 and beyond. Commercial Construction: Tourism In November 2011, the Department of Homeland Security granted parole authority for Russian citizens to travel to Guam visa-free, effective January 15, 2012. With the approval of the visa-waiver program for Russian tourists, we hope to see investors interested in developing the Russian tourist market here in Guam. We’ve also noted the continued efforts made to urge DHS to grant parole authority for Chinese nationals visiting Guam, and we see promise for potential future renovation and construction related to the expansion of Guam’s tourist market. Hotels may renovate existing properties or build new facilities, and shopping and recreational facilities connected to tourism may be revitalized in response to a growing tourist market. Training Opportunities We anticipate higher demand in coming years for carpenters and masons on Guam, especially once larger military projects are underway. We have noted that the electrical trade and the HVAC (heating, ventilation, and air conditioning) trade are highly pursued on Guam, but that carpentry and masonry, which are essential trades for new construction, tend to be bypassed. Training and opportunities continue to diversify and expand on Guam, providing the means for capacity building


among trades and other professions related to the projected economic growth on Guam. The GCA Trades Academy has recently implemented the curriculum for Construction Craft Laborer under the National Center for Construction Education and Research (NCCER). This curriculum introduces the trainee to a variety of trades, including carpentry, masonry, ironworking, electrical, welding, heavy equipment, and cranes. Upon completion of this two-level course the trainee will have the basic knowledge needed on any job site. The Construction Craft Laborer curriculum covers such subjects as Site Layout, Reinforcing Concrete, and Electrical Safety. This would be a great start for those pursuing a career in construction, with future opportunities for growth in their specialty areas. At the Guam Contractors Association, we remain optimistic about the diverse sources of opportunity to be found in military construction and throughout the local economy over the next few years. Though we’ve come across some bumps in the road with the military buildup, we’ve already seen the local construction industry benefit from MACC contract vehicles established in anticipation of the buildup and the highway and other infrastructure improvements that are ongoing. We feel that the slowed pace of the realignment will help the industry prepare more effectively for the growth that will come. Our GCA Board Chairman, Bill Beery who happens to be an engineer, has always reminded me that he is an optimist by nature. I’m guided by his wisdom and years of experience in this industry and this has prompted me to write this optimistic view of the industry for 2012. In closing, I would like to share a humorous quote that is befitting our chairman and hope that his optimism rubs off on our members as well. “An optimist will tell you the glass is half-full; the pessimist, half-empty; and the engineer will tell you the glass is twice the size it needs to be.” ---Author Unknown Photo courtesy of University of Guam (Cathleen Moore-Linn, Director of Integrated Marketing)

James A. Martinez President, Guam Contractors Association


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GCA Luncheon

Jan. 18th, 2012 Holiday Resort & Spa

Guam Contractors Association donated 20 pcs of Safety Vests to FB Leon Guerrero’s Hawks Eye on Crime Group February 9, 2012 Attending Hawks Eye on Crime group, Carla Masnayon, Principal, Keith Quiambao, 8th Grade Asst. Principal, James Martinez, GCA President, and Mary Bais W.A.V.E. Coordinator

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Simpson Strong-Tie Workshop

Feb. 18th & 9th, 2012 Sheraton Laguna Guam Resort

Hensel Phelps Construction Co. and Joint Venture Partner Granite Construction Co. hosted a Small Business Subcontractor/Supplier Outreach Jan. 31st, 2012 Hilton Resort Guam Spa

Ground Penetrating Radar (GPR) and Unexploded Ordnance (UXO) Device Demonstrations Jan. 13th, 2012

Oyo Corporation, Pacific, Belanger & Associates, Inc., Allied Pacific Drilling Inc. (APDI), and Allied Pacific Environmental Consulting, Inc. Demonstration of Ground Penetrating Radar (GPR) and Unexploded Ordnance (UXO) devices. These machines are useful in soil and subsurface investigations prior to excavations for all construction projects.



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A SMALL BUSINESS OWNER In some ways, it has been a difficult flat year for business owners on the island, both large and small. We have seen large contractors associated with the buildup leave the island and small businesses close. For the majority of us, we have been wrestling with the implications of a delayed buildup, wondering what form the buildup will take, and even questioning whether it will occur at all. There continue to be a lot of unknowns as federal contracts have been delayed with indefinite deadlines, more rhetoric, and few updates. Surprisingly, it is in times of turmoil that a true entrepreneurial spirit will thrive. Small business owners by nature are leaders and risk takers, energized by challenges that demand creative solutions. This is exactly what most of us have been doing for quite some time. In our own business at Isla Paint and Roofing Supply, we charted a course by creating a new strategic business plan. We first looked at the fixed costs of overhead. Overhead related to power increased this year, so we focused on energy. We eliminated all vampire energy, turning off all work stations (not just letting them “sleep�), unplugged our credit card machine, phone chargers, power strips, and put our freezer on a timer. We increased the efficiency of our fleet, invested in a Pup Truck for smaller deliveries, and reserved the one ton truck for use as required. Our staff is our most important asset, as we are very much a family in our business. We reassured them there would be no layoffs, even as we were all aware of staff reductions in other

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companies. Instead, we chose to leave an open position unfilled and the owners reduced their own salaries. Simultaneously, we maintained a laser focus on debt reduction, reducing costs associated with financed debt. We looked at shortening our cash cycle, enhancing our cash flow, and most importantly, avoided acquiring new financed debt such as bank lines and credit cards.

by: Jaylene Kent President Isla Paintand Roofing Supply by: Robert Francis Mendiola

Simultaneously, we developed a new strategic marketing plan focusing on maintenance contracts rather than military projects, and developing our market niche. We changed our product mix to emphasize those areas in which our company excels, which is in high performance coatings and technical support. We kept our eye on ARRA funds at all levels, including DPW, GPA, UoG, DOE, even though our historical work was primarily inside the gate. We encouraged our employees to do more networking and put money in their pockets to do it. We broadened our prospecting in the CNMI and FSM and sought deeper penetration into mainland prospects by joining the International Roofing Association and the newly formed National Association of Women in Construction (NAWIC). As a business, we have achieved remarkable goals in a tight climate. Even more importantly, we have seen creativity and solutions only possible when the demands are high. In summary, we are hanging tight, fighting back, and plan to continue to reap the reward of our work with or without the buildup!






by: Dave Barnhouse

A monthly crane and rigging informative column for all personnel directly or indirectly involved with crane safety. Each month we will attempt to explain a different technical issue pertaining to crane operations here on Guam, addressing the sometimes overlooked or misunderstood topics by management and operators alike, by Dave Barnhouse Synthetic slings are popular for two, primary reasons: they are user and load friendly. While synthetic slings are available for most any capacity lift, they also protect loads from damage that wire rope or chain may cause making the same lift. However, though the load may not be damaged, often the sling is damaged, even if minimal. This is where inspection criteria of wire rope and synthetic slings differ greatly and the end user must be aware of these differences. ASME B30.9 (Slings) Para 9-5.10.2 (d) states: Sharp edges in contact with the sling should be padded with material of sufficient strength to protect the sling. OSHA states in 1926/1404 (r) (2): When rigging is used for assembly or disassembly of cranes: The employer must ensure that synthetic slings are protected from abrasive, sharp or acute edges, and con-figurations that could cause a reduction of the sling’s rated capacity, such as dis-tort ion or localized compression. Actually, this rule applies whenever using synthetic slings, not merely when assembling or disassembling a crane. This paragraph may have been added to the new crane ruling with emphasis on crane assembly after the New York tower crane incident where a synthetic sling failed while placing a wall tie tower bracket. The bracket slid down the tower breaking the next bracket loose and continued breaking all the lower brackets until an unsupported tower crane remained well over the height limits for a free standing crane. What resulted was the entire crane lying in the street with several fatalities and millions of dollars in damages. All of this because of a non-protected synthetic sling from a sharp edge. The effects of a sharp edge on a tensioned synthetic sling cannot be overstated. This is perhaps the number one way synthetic slings are abused. In the classroom I demonstrate this by comparison of pack-aging tape and a sling. Packaging tape is also a synthetic material, very thin, and very strong. When taping up a package to mail we tension the tape and then poke it with 28 | FEBRUARY2012

Besides the improper use with low horizontal to sling angle and tip loading the hook, this sling should be taken out of service because of the damaged webbing. a pen and a clean break results. If you poke the tape without tensioning first it just doesn’t work the same. This is the same principle of synthetic sling failure when tensioned over a sharp edge. The edge does not need to be particularly sharp to damage the sling, nor does the load need to be particularly heavy. I have a 17,000 lb. capacity web sling in the classroom for demonstrative purposes that was cut into half while in a four-leg bridle configuration and lifting a 4,000 lb. air conditioner. If you do the math it is easy to see if all legs were equal this hitch should have had 1,000 lb. tension on each leg. With the 5:1 safety factor calculated this sling should have close to 85,000 lb. breaking strength. How did 1,000 lb. tension break a sling with

85,000 lb. breaking strength? The answer is the sling softener fell out, the operator nor the rigger noticed it and resulted in the sheet metal acting as a knife. The rigging 5:1 safety factor exists for this reason, however, even this is not enough to prevent a knife-like cut. No operator or rigger should ever have witnessed a sling failure other than testing to destruction which is not very likely. If a broken sling, whether wire rope or synthetic, is found on a job site broken and discarded, a thorough investigation should be made because this sling has been abused and/or overloaded. There is a weak link in the lifting chain and this creates a definite hazard. It must be

This month’s test quiz addresses: Working near Power Lines

May a crane operator ever intentionally work closer than Table A Zone (10 feet) to an energized power line?



CRANECRITIQUECORNER Answers to last month’s test quiz: Wire Rope Safety Factors What is the maximum allowance of a crane hook throat opening in relation to the original dimensions and how is this determined? TASME B30.10-Hooks, 10- Throat Opening. Any distortion causing an increase in throat opening of 5% not to exceed 1/4 in. (or as recommended by the manufacturer)… (shall be removed from service until repaired or replaced).

This is measured and documented during the periodic crane inspection with calipers either by measuring the minimal actual throat opening or the tram marks usually placed in the base metal of the hook tip and shank with a center punch. The measurements are com-pared with the previous year and an evaluation is made if any increase in the throat opening exists and if so is it acceptable? When the hook is placed into service, these

marks are placed at even inch or 1/2 inch measurements if possible for ease of measuring. Some hook manufacturers may place casting marks in the hooks when forged or casted. If there are no tram marks on the hook the inspector should measure the opening rather than create new tram marks as a deep punch mark may induce stress points in the base metal and possible starting points for cracks. edge other than a reasonable radius. Though the ‘tell-tale red thread’ shown in photo at left is an indication of wear and is cause for rejection, it by no means is the sole indicator of worn stitching or webbing. ‘When in doubt, throw it out’.

We will discuss the answers to these questions in next month’s edition of GCA Construction News Bulletin, please be sure not to miss it.

recognized and eliminated, whether poor rigging, operating, or inspection practices. In the comparison of wire rope and synthetic sling inspection criteria the main difference is wire rope may have deficiencies such as broken wires or metal loss and still be acceptable. Synthetic slings are less forgiving as any deficiencies found will take the sling out of service. Synthetic slings cannot be down rated if ‘slightly’ damaged. The prevailing rule is ‘go’ or ‘no go’, the sling is either good or bad. Any of the following findings will take a synthetic sling out of service; acid or caustic burns, melting or charring of any part of the sling, snags, punctures, tears or cuts, broken or worn stitches, distortion of fittings, missing, illegible or incomplete tag, knots in any part of the sling, ‘excessive’ abrasion, other visible damage that causes doubt as to the strength of the sling. Round slings shall be removed from service if any of the above mentioned conditions are pre-sent, and if any of the following conditions are visible: snags, punctures, tears or cuts which expose load carrying yarn, broken, cut or damaged load carrying yarns, broken or worn stitches in the sling cover which causes the load carrying fibers to become exposed.


Please consider the above when your crane operators or riggers request replacement of a synthetic sling. This is one of the major concerns of classroom discussions, after learning proper inspection methods and the importance of rejecting damaged slings, no matter how slight, the feedback I receive is there is much resistance in replacing the seemingly good slings. The obvious reason being cost, but do not forget the alternative. A frequent level of inspection should be done by the sling user before each and every use. The entire sling should be thoroughly examined and removed from service if damage is detected. The sling user should also determine that the sling is proper for the hitch and load such as bunching up of the webbing in too small of a shackle or hook. One of the most beneficial outcomes of a thorough inspection would be the realization of repetitive forms of damage and the analysis that would lead to specific rec-om mend at ions, improving the life of re-placement slings and the overall safety of the sling users. Such recommendations should include the use of softeners when the sling is in contact with any material

I will attempt to test your knowledge of crane operations each month in this column with a few questions relating to one of the mentioned topics. These questions will address the weak areas more frequently noted during my classroom operator training and/or the more common discrepancies noted during crane inspections. If your company or subs utilizes cranes whether as owner or renter I invite you to look for this column each month and test your crane knowledge. Please e-mail any comments, questions, or specific topics you would like to see addressed in this column to certs@ite.net and we will certainly attempt to accommodate your requests Dave Barnhouse resides in Yigo and has been involved with operations, maintenance, operator training, and/or inspections,of cranes since 1969. He is a Certified Environmental Trainer, CHST, NCCCO certified crane operator and practical examiner for all types of mobile cranes and the only OSHA accredited crane inspector on Guam.


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Non-Destructive Testing Explained NDT is the method of testing a product /component without causing damage to it. It is done on typical products such as a casting, a weld, or a forging, for which performance and structural integrity are critical as these components form part of the infrastructure in our everyday lives. In particular are welds on high pressure pipelines, bridges, storage tanks or parts of aircraft or other structures that we depend upon each day. Playing a critical role in everyday living, NDT is used during manufacturing stage as part of the Quality Assurance process and during the service life of components to monitor stresses (caused by pressures, loads, corrosion, erosion, etc.) that would have detrimental effect on components that could lead to disastrous consequences. It can also be conducted on the raw material, in fabrication, installation and throughout the service life of the components to ensure that things around us perform in a reliable and safe manner.

• Qualification Examinations – Successful completion of an examination An NDT Certificate is a document issued to indicate that the individual named has demonstrated the competence(s) defined on the certificate in accordance with the applicable standards. The reader should note that the Certificate of Examination is only part of the qualification process. The whole process of qualification must be considered by the employer and it is the employer’s responsibility to authorize the individual to work. A certificate alone is not a certificate of examination that qualifies the individual to work in NDT.

The technologies used in NDT include Ultrasonic Inspection, Magnetic Particle, Liquid Penetrant, Visual Inspection and Radiographic inspection (can be likened to an x-ray at an hospital). There are other more advanced technologies available which SGS also provides.

Types of Certification Available The Employer-Based Certification is a system whereby the employer is responsible for producing, approving and maintaining a document called 'Written Practice'. A written practice details the responsibilities for each certification level available, as well as detailing the required training, experience and examination requirements (i.e. level 1, 2 or 3). The advantage of a company-based certification scheme revolves around the specificity to the method of NDT used by the employer AND in the processes, procedures and products relevant to the employer’s operations.

The Vital Need for NDT Certification The certification of NDT inspectors is essential as NDT inspectors often make critical judgments that may have significant safety and/or commercial consequences; and, generates confidence among employers, manufacturers, owners, and the general public on the NDT inspector’s competence and professionalism. NDT certification is a process of providing written testimony that an individual is qualified to conduct NDT tests and is a confirmation that qualification requirements have been fulfilled. In general, certification is based on the following requirements: • Training – Minimum pre-qualification examination training has been provided • Experience – Minimum amount of Industrial (work) experience being met

Documents that provide recommendations or requirements while establishing a written practice are available. The American Society of NDT (ASNT) publishes such guidelines in a document called SNT-TC-1A. The current version of this document is 2011. This recommended practice provides the guidelines for employer to establish their written practice and the details that may be contained in it. However, it only provides recommendations and are not mandatory requirements. Under this certification scheme, certificates of examination are invalid once the employment ends as the employee can no longer work under the company’s written practice. A former employee who joins another company should be re-qualified under the new company’s written practice.

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This scheme when implemented as per the guidelines, offers a cost-effective method of certifying NDT operators with training and examination focused on company’s written practice or procedures. It is often referred to as “in-house certification”, as in most cases the certifying Level 3 works is utilized by the same company as the employee being certified. Unfortunately, this scheme is open to abuse and the competence levels are not consistent. Some companies/authorities are forced not to accept company-based certificates such as SNT-TC-1A as the levels of competence cannot be trusted. Personal Central Certification is founded on the ideal that certification can be obtained from a central certification scheme that is recognised and accepted by the industry. Central Certification Schemes are administered and controlled by independent certification bodies with responsibilities such as curriculum development, approval of course notes and exams, marking of examinations, issuing of certificates, appeals and the monitoring of authorised qualifying bodies (AQB’s), under a single certification body. The Personnel Certification of NDT (PCN) was developed by the British Institute of NDT (BINDT), with an initial implementation in the aerospace industry in 1985 and was extended into general engineering in 1998. The PCN certification scheme is recognised and well-respected around the world. Also accredited by UKAS and a member of the International Accreditation Forum (IAF), it meets the requirements of many international standards which include EN 473, EN 45013 and ISO 9712 Level 3 Certification. PCN Level 3 and ASNT Level 3 are both central certification schemes with examinations conducted independently. There is also an employer-based SNT-TC-1A Level 3 certification and is often mistaken (or miss-represented) with the ANST level 3 central certification. How to become a Certified NDT Inspector Once a certification scheme is selected,



the next steps will depend on individual circumstances (i.e. experience and choice of certification scheme). If central certification such as PCN is chosen, the individual should contact an AQB that will advise the individual on the requirements and provide step-by-step guidance through the application process. If individuals already hold the required work experience, they should attend a pre-examination approved training course provided by an Approved Training Organisation (ATO) – this may also be the same organisation as the AQB (i.e. the training and the examinations may be provided by one company). The PCN scheme provides an option in taking an examination without holding the required experience (as discussed above). The AQB or PCN can provide further information, advise and guidance. NDT Qualification Examinations Regardless of which certification scheme is chosen, and under normal circumstances, the completion of an approved training course, and subsequently, a Qualification Examination, should follow. The examination structure is usually based on: • General Theory – covering the basic principles relating to the NDT Method.


• Specific Theory – covering the equipment, procedures and test techniques applicable to the Method. • Practical examination – a selection of practical tests to demonstrate competence using the test equipment and the ability to detect, size, and position known defects Jason Scott began his career in NDT in England in the 1990’s, gaining NDT certification while working for a company in his hometown of Sheffield. Jason became a lecturer and examiner for an NDT training school and travelled around the world providing various training courses. Jason joined SGS in 2004 as an NDT Projects Manager on large LNG projects in Nigeria, West Africa. Moving to China in 2008 he designed and opened a new Global NDT training centre in Shanghai, taking the position of Director for this new business. In 2010 Jason relocated to the Philippines with his current role as Strategic Operations Development Leader, a global role with a specific focus on the South East Asia region (including Guam) reporting to the NDT Global Director. The SGS Group is the global leader and innovator in inspection, verification, testing

and certification services. Founded in 1878, SGS is recognized as the global benchmark in quality and integrity. With more than 70,000 employees, SGS operates a network of over 1,350 offices and laboratories around the world. NDT is a sector that forms part of the Industrial Services division (one of the 10 SGS business lines). Under this sector SGS provides both employer-based and PCN certification at levels 1,2 & 3 to individuals and companies around the world. Even with a purpose-built facility in Shanghai, China SGS can also offer on-site training and certification anywhere in the globe. In addition, SGS also provides training courses for basic understanding and overviews of NDT for managers, engineers and Quality Assurance people as well as a wide range of NDT services ranging from the basic conventional methods to the latest state of the art technologies For further information, please contact Jason Scott, NDT Strategic Operations Development Leader through mobile number +63 917 858 4905 or through email address jason.scott@sgs.com


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