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Congress bought infrastructure contractors more time, but it didn’t buy them much certainty.
Lawmakers extended federal surface transportation programs under the Jobs and Infrastructure Investments Act through Dec. 11, avoiding a Sept. 30 expiration that had many construction companies on edge. The Law of continuous credits and extensionssigned by President Donald Trump on September 2, enacted the short-term extension.
Funds are key for the construction sector, especially as infrastructure works remain one of the few reliable sources of construction activity projects outside the data center.
But the roughly 10-week hold is far short of the multi-year funding security contractors were hoping for, according to construction trade associations. Some state transportation departments had already begun reducing bids earlier this summer, said Alex Etchen, vice president of construction advocacy and risk management for the General Contractors Association of America.
“A short-term extension, it’s not a long period of time,” Etchen told Construction Dive. “We heard from some of our chapters that their state DOTs were pulling back on leases because of concerns that the IIJA would expire and having some doubts that Congress could get a longer-term bill done in time.”
The price of the extension
In addition to delaying leases, the process by which an agency solicits competitive bids, short-term extensions can also cause agencies to make projects smaller, said Michael Clark, a partner at Smith Currie Oles, an Atlanta-based law firm specializing in construction.
“When that happens, the costs go up,” Clark told Construction Dive. “From a legal perspective, contractual clauses that are normally already found in the contract documents are activated, such as contingencies, termination, suspension, conditional payment and delay or suspension.”
Construction companies make decisions about labor, equipment, bonding and subcontractors long before a project goes public, said Josh Leonard, senior director of legislative affairs for the Associated Builders and Contractors. With a long-term agreement in place, state agencies have a clearer funding bottom line for programming, and that visibility flows throughout the construction market, he said.
“A multi-year authorization gives state transportation departments more visibility into federal funding and helps them maintain more predictable schedules,” Leonard told Construction Dive. “An extension of approximately 10 weeks preserves the current framework but does not provide the same planning horizon.”
The extension also does not cover all of IIJA’s funding.
The money left behind
The IIJA used a unique funding structure, Etchen said. The Highway Trust Fund has historically funded road and bridge work.
Several sources of revenue feed the HTF, including the gas tax, diesel tax and federal heavy truck tax, he said. Over the last 20 years or so, Congress has made a blanket transfer of funds to the HTF to ensure that they meet the needs of the system. The IIJA kept those historical revenue streams, but also included what were called “advance allocations,” Etchen said.
Congress, this time, however, did not include those early appropriations in the extension, Clark said.
“It’s not a clean extension,” Clark told Construction Dive. “The deadline moved, but not all the money moved with it.”
The omission has been of particular concern among precast producers who supply bridge construction projects, Nick Rhoad, CEO and president of the National Precast Concrete Association, told Construction Dive.
“Without action by Congress, bridge funding will cease immediately, limiting states’ ability to plan, bid and begin new projects,” Rhoad said. “They have failed to provide the multi-year certainty states need to plan and deliver critical transportation projects.”
For example, the $1.2 trillion IIJA included $5.5 billion the Bridge Formula programa federal initiative on bridge rehabilitation, Rhoad said. The absence of additional advance appropriations will affect contractors waiting for states to put new projects out to bid, he said.
“These projects take years to plan and bid, and without the certainty that funding will be available, new work will come to a complete halt immediately,” Rhoad told Construction Dive. “We need to block long-term surface transportation reauthorization, not just extensions.”
The need for a long-term invoice
The construction industry is now seeking BUILD America 250, the surface transportation reauthorization that has been proposed for several years.
La Casa Transport i The Infrastructure Commission approved the law 62 on May 2. Even so, the House has not yet voted on it. The Senate, on the other hand, has not released its highway reauthorization proposal, Leonard said.
Etchen added that the House Ways and Means Committee must also provide the bill’s fiscal title before it moves to the full House for a vote.
Paying for it could be another headwind, Clark said.
BUILD America 250 is trying to fix that problem with a fee for electric and hybrid vehicles, Etchen said. The move would provide the first new source of revenue to the HTF in 30 years, he added.
“Ultimately, we would have preferred they had a full long-term bill, but we appreciate that they approved a short-term extension to keep that funding through December 11,” Etchen told Construction Dive. “We’re hoping they can wrap it up in the lame duck session of Congress.”
