The recent passage of the Infrastructure Investment and Jobs Act represents a tremendous opportunity to modernize the nation’s decaying infrastructure and bring long-outdated systems into the 21st century. This landmark piece of legislation will introduce $550 billion in new spending over the next five years to bring long-overdue updates and expansions to roads, airports, rail, power, water infrastructure and more.
In addition to improving infrastructure, the bill represents a tremendous opportunity for the construction sector and is estimated to create 883,600 jobs, according to an analysis by S&P Global Ratings.
At 2,700 pages, the IIJA outlines a detailed plan for bolstering the United States infrastructure and economy for generations to come. As with any piece of legislation, how and when these funds will be distributed and spent is a complicated and lengthy process.
Key takeaways
Transportation makes up the bulk of the spending. $284 billion has been allocated to transportation, with $110 billion for roads and bridges. The remaining $240 billion will be for utilities such as power and water infrastructure, with $15 billion put aside for replacing lead pipes and an additional $8 billion to help the Western United States deal with ongoing droughts.
The funds will be distributed one of two ways: By formula or competitive grant. Formula funding will make up 61% of the bill’s distribution, using Congressionally approved formulas that decide how much funding each state receives. The remaining 39% will be decided by competitive grants, which both state and local governments can apply for.
State governments will decide how most of the funds are spent. While the federal government provides the funding and a general outline of what funds are for, state governments will determine how and where the money is spent.
Funds will take several years to be released. New spending means new programs which must be created and approved by government officials before they can be carried out. Funds designated for upgrading and improving existing infrastructure will likely come first.
Government work can be a lucrative business for even smaller contractors. The federally backed funds guarantee payment, and contracts are often several years in length, providing contractors with ongoing work. However, government bidding is far more complex than your typical commercial bid and typically comes with more stringent terms. To succeed in government work, contractors must complete the correct registration, demonstrate a thorough understanding of the agency and job they bid on and be very efficient at managing their resources.
The right construction management system can provide transparency and insight into your team’s productivity and help manage resources and labor more efficiently.
Where to register your business
Registering for government work varies widely at each level of government, with each having its own rules, requirements and listing platform. Whichever level of government holds the contract decides where it will be listed for bidding and how a contractor qualifies. For federal contracts, contractors must register with the System for Award Management (SAM). Each state has its own procurement agency and bidding platform for state-level contracts, which are listed on the National Association of State Procurement Offices website. Local governments need to be researched individually. The General Service Administration is also a good place to start and acts as a government marketplace for goods and services across multiple government levels.
Remember, the majority of the infrastructure bill’s funds will be distributed through state and local governments, so contracts will primarily be issued on a state and local level.
Demonstrate your value
As with any RFP, it is important that you carefully read through the proposal before bidding. Infrastructure projects are generally considered high risk, and on top of that, government contracts often require additional reporting and compliance measures. In addition, failure to complete a government contract to its outlined specifications can result in serious legal action and possible license suspension. Make sure that your team can handle the project before you make a bid.
When you’re ready to start your bid, first research the overseeing department of a contract to better learn their goals and priorities. Keep this information in mind when crafting your bid. You will want to be as detailed as possible in demonstrating your team’s skill level and experience. Provide a list of names of your best workers for the project and any relevant certifications or licenses. Include metrics like team productivity, safety management, hazard mitigation, equipment manifests and maintenance to create the most complete picture possible of the project. Be sure to leverage data from similar past work to support your proposal and provide demonstrable evidence of your team’s experience.
Have the right tech
The funds from the IIJA offer contractors the perfect opportunity to evaluate their use of technology in the field and search for tools that help them work more efficiently and effectively. In fact, $100 million of the bill’s funds have been set aside for states to adopt “advanced digital construction management systems.”
The right construction management system can provide transparency and insight into your team’s productivity and help manage resources and labor more efficiently. And in an era of labor shortages, equipment scarcity and fewer resources, resource management can make or break a job.
Incorporating a construction management system into your job site can provide your team with real-time data regarding worker and equipment availability, safety management, labor hours and many other site stats. You’ll be able to manage your team and resources more effectively by having all your relevant data in one place. Real-time messaging and mobile device compatibility can help streamline communication efforts between the job site and the office, while field data collection provides contractors with deeper insights into their day-to-day operations and opportunities for increased productivity and efficiency.
Government work can be intimidating at first, and there are many rules, regulations and procedures to work through. But the long-term work and lucrative contracts that come with it provide a golden opportunity for contractors to grow their businesses. In addition to giving the country’s infrastructure a much-needed upgrade, the IIJA is meant to boost the economy and set the nation up for long-term success in the decades to come.
