Expert Q&A: What the newly passed infrastructure bill really means to contractors

Kate Fox Wood, senior director, government relations, AEM

Congress took a decisive step forward with the passage of the bipartisan Infrastructure Investment and Jobs Act (IIJA), signed into law on Nov. 15. Now the focus is on what it will realistically mean to the American people, including construction contractors charged with doing the actual work. 

To get answers to many of the questions we all have about this potentially impactful piece of legislation, we talked with Kate Fox Wood, senior director, government relations, AEM. Based in the organization’s Washington, D.C. office, she oversees its federal government relations efforts.  

CONEXPO-CON/AGG 365: Tell us about the infrastructure bill that was just signed into law.

Kate Fox Wood: Right before Thanksgiving, President Biden signed into law the Infrastructure Investment and Jobs Act (IIJA). This is an enormous infrastructure investment bill, one of the biggest we’ve ever seen.

It spends roughly $1.2 trillion and touches every sector of infrastructure - transportation, water, energy, broadband, resiliency, rehabilitation of natural resources and more. It uses a broad definition of infrastructure, but that said, it is focused on physical infrastructure. This legislation does not deal with some of the social spending that Democrats are pushing for right now in their budget reconciliation bill.

CONEXPO-CON/AGG 365: How is this infrastructure package tied to the larger budget bill that’s still being discussed in Congress?

Fox Wood: It’s a tie that was merely political in nature. Essentially, Democrats and Republicans were leveraging it to score points against one and other. Our biggest fear over the last couple months was that the infrastructure bill, which is great policy and does great things for us, would get tangled up in this separate, partisan measure.

Fortunately, the Senate was able to move on this in the summer and pass it easily with a bipartisan vote. The budget reconciliation measure is still pending. It has passed in the House, but the Senate is still considering it.

The key here is that they are separate.

CONEXPO-CON/AGG 365: How much new money does the infrastructure bill contain?

Fox Wood: With the $1.2-trillion infrastructure package, $550 billion is new money. The other half is the general surface transportation reauthorization for funds that state DoTs have come to expect. That’s a five-year bill that provides predictability to contractors and state DoTs for general surface transportation projects - basic roads, highways, bridges. This is funding that already has a formula established to it.

The $550 billion in new spending is what folks are really excited about because it includes additional funding. Over half of the new spending is transportation focused, which is very exciting, but there’s a whole other segment that is focused on water, energy and broadband.

For example, $65 billion has been allocated for broadband, and that’s a huge amount of money. Of that amount, there’s about $42 billion that’s going to be focused on deployment and equity access, connecting unserved and underserved areas to the backbone of the system.

CONEXPO-CON/AGG 365: What determines which contractors will be awarded government contracts?

Fox Wood: It’s like everything else, the federal government comes up with a broad idea and then it’s up to the states and localities to get more specific and more prescriptive. The feds are going to establish the grant programs and the states and localities are going to figure out how to develop their own efforts to secure those funds, deploy those funds most effectively, and position themselves to be attractive grant recipients.

There is a huge focus on resiliency, essentially projects that are resistant to climate change and climate-related disasters.

Overall, I think the administration is very focused on making sure these public dollars are efficiently invested, they want to avoid waste. They’re also very focused on ensuring the public’s trust, so they’re looking at measurable outcomes to show the American taxpayer where their dollars are going.

Frankly, it’s a little early to tell just what these grant opportunities are going to look like. And that’s one of the things the industry really needs to keep in mind: This is a massive investment and this bill is going to take years to deploy. It’s going to take some time.

CONEXPO-CON/AGG 365: How much time before contractors will begin to see new opportunities materialize?

Fox Wood: The highway bill reauthorization was approved, so baseline funding will stay on schedule. We should not see any disruption in that process. The $550 billion above baseline funding is going to take some time. I would say end of 2022 or into 2023.

Departments and agencies within the administration are being pushed very hard by the White House to get their acts together and get this money out as we head into the mid-term elections that are going to be taking place in November of next year, not to mention the presidential election in 2024.

Quite frankly, we need to get this right. It’s critical for our economy. This is such a monumental generational investment. If we get it wrong, it’s going to be really hard to keep that public trust that an infrastructure investment is a worthwhile endeavor.

CONEXPO-CON/AGG 365: By getting it right, are you referring to the types of projects that get funded or how contracts are awarded from a logistical standpoint?

Fox Wood: All of it - timing, efficiency, making sure that high-paying jobs are created – we need to make sure that dollars are spent wisely. This is not a stimulative bill. We have the opportunity to focus on long-term, capital investment-related projects that could completely transform how we move freight and how we move people.

This bill is really meant to help communities across the country do some long-term planning for what infrastructure will look like, both underground and above ground. It’s really exciting.

CONEXPO-CON/AGG 365: What kinds of projects are likely to get funding first?

Fox Wood: Roads, highways and bridges are probably going to get the most attention, just because they’re the most visible.

CONEXPO-CON/AGG 365: Are there geographic areas that seem to be more in need of immediate attention than others?

Fox Wood: It’s a national bill, and I don’t really see it focusing on one area over another. I think it’ll be interesting to see how states and localities organize themselves and get their grant applications in. I think communities that get their ducks in a row faster will probably realize more funding than those which are a little slower.

CONEXPO-CON/AGG 365: The supply chain issues that we’re all reading about, and the shipping bottlenecks that are happening at certain ports... Would those types of problems be affected by this new funding?

Fox Wood: Absolutely, our ports, airports, inland waterways, locks and dams… those are all tackled in this bill.

CONEXPO-CON/AGG 365: Will the bill do anything about the skilled labor shortage?

Fox Wood: One of the things we wanted to see a little more investment in was the infrastructure workforce training piece. They’re tackling that a little bit in the budget reconciliation bill, but quite frankly, the workforce issue is something we’re all looking at.

It’s not just the folks that are going to build the infrastructure or build the equipment that makes the infrastructure who are needed, it’s budget experts, conservationists and engineers. It’s a whole breadth of folks who are going to be needed.

CONEXPO-CON/AGG 365: Are there construction specialties that will be in high demand as a result of the new funding?

Fox Wood: Anybody that has an interest in aggregating and analyzing data will be in demand. If the federal government is saying these dollars need to be spent efficiently to maximize their effectiveness, I think digital construction technology plays a critical role in making sure projects are delivered on time and under cost.

There’s going to be a push for measurable outcomes, because again, we want to maintain public trust in this infrastructure investment. Any career that helps quantify things for policymakers and people at the state DoT level will be in high demand.

CONEXPO-CON/AGG 365: You’ve mentioned maintaining the public’s trust a couple of times. How will that be done?

Fox Wood: We’re facing an uphill battle, at least in the short term, because folks have connected the budget reconciliation package with the infrastructure package, even though they’re very separate. We have a bit of work to do in the next couple of months to explain why the Infrastructure Investment and Jobs Act is such an important piece of legislation.

Most projects are not going to happen overnight, it’s going to take some time, and the next news cycle moves on super quickly, so we’ve got to reiterate what this bill will do so folks know they will see benefits from this legislation.

CONEXPO-CON/AGG 365: What is the profile of contractor that’s best poised to take advantage of government contracts coming down the pipeline?

Fox Wood: It’s going to vary widely. A lot of is going to be left up to states and localities, so if you if you have certain relationships at the state and local level, that’s going to work to your benefit.

Contractors should take a look at what departments and agencies in their area are going to be focusing on - things like resiliency, technologically focused programs - and consider bolstering their bona fides in those areas.

CONEXPO-CON/AGG 365: If an earthmoving contractor isn’t the most technologically savvy, but is efficient and has an established market, could they stand to benefit as much as other companies?

Fox Wood: Absolutely. Just the fact that we’ve reauthorized the highway bill for five years provides contractors with the kind of predictability that they need. We didn’t have that; we did a one-year extension to the bill last year, and that was very tough on state DoTs, they just couldn’t plan. But we now have a five-year bill, and it’s slightly higher than the last highway bill, so that alone is very encouraging.

CONEXPO-CON/AGG 365: How can contractors who’ve never pursued a government contract before position themselves to receive those bids now?

Fox Wood: It really is a local and state question, as it varies pretty widely, and rightly so. These are decisions that need to be made at the local level by people who are on the ground, rather than prescribed by a larger entity. The federal government is a partner, it doesn’t dictate how funds are deployed.

CONEXPO-CON/AGG 365: What can you tell our audience that might get them excited about this new infrastructure bill?

Fox Wood: This is the most important investment in infrastructure that this country has made in decades, probably since the interstate highway and transcontinental railroad. We need to be looking at this legislation and this investment as really changing the landscape of this country for the benefit of our kids and our grandkids.

We’re not just talking about Hyperloops and MagLev – although those are coming - we’re really talking about a level of investment that will finally get our infrastructure to the level we have been demanding.

The work is just starting and there’s a lot that needs to be done. Public input needs to be considered so if you’ve got an opinion, make sure you’re communicating that locally. I’m energized by the fact that this is the end of the beginning, basically. This is a legacy.

CONEXPO-CON/AGG 365: On a skeptical note, what’s the biggest threat to the success of this? What could go wrong?

Fox Wood: The lack of bipartisanship in DC and beyond right now, the inability to work across the aisle, is the biggest threat because these projects are going to require collaboration. It’s a struggle, but we’ve got to start somewhere, we’ve got to move forward.