The federal government reopened Nov. 12 with a continuing resolution ending the 43-day shutdown, and the U.S. Department of Transportation now faces a weeks-long backlog of stalled reviews and funding decisions. The deadlock further compresses the obligation timelines for billions of dollars in Jobs and Infrastructure Investments Act (IIJA) funds.
The DOT laid off more than 12,000 employees, roughly 20 percent of its workforce, during the shutdown, according to the American Highway and Transportation Builders Association (ARTBA).
The organization reports that federal reviews of several major transportation projects, including corridor and transit programs in densely populated regions like New York and Chicago, are on hold or slowed as environmental, grant administration and compliance staff return to work.
In California, federal coordination on the $2.3 billion SR-71/SR-57 interchange reconstruction resumes after being suspended, and in New York, parts of the Interborough Express overhaul work are restarting. The disruptions come as states finalize 2026 hiring schedules and prepare for next year’s hiring cycles.
The delay tightens the clock on the IIJA’s funding windows
The loss of federal labor market data also adds to the disruption. Construction companies, state agencies and policymakers rely on the US Department of Labor’s monthly releases to assess labor availability, wage pressures and regional demand, key elements in bid pricing and staffing plans.
RELATED
The big projects hold the reserve as the activity sheets of the small companies
With the Bureau of Labor Statistics halting data collection during the shutdown, the White House warns that some October jobs and inflation reports are never released. The September report is expected, but the missing indicators leave heavy civil sectors without benchmarks typically used to forecast delivery capacity heading into the construction season.
The consequences of the shutdown intensify concerns over the implementation of the IIJA. A July 2025 Government Accountability Office audit found that the DOT had obligated only 59 percent of the roughly $438 billion in IIJA grant funding available for fiscal years 2022 through 2025, with spending about half of those obligations.
In the audit, GAO noted that “as of April 2025, DOT has obligated 59% of its available IIJA grant funding and has disbursed more than half of that funding to recipients and awardees,” but also found that the department “has not communicated discretionary and formula grant amounts in a timely manner,” complicating congressional planning.
The GAO also identified specific challenges holding back the department’s ability to move projects to agreement. Awardees surveyed for the FY 2022 discretionary funding round most frequently cited inflation, budget definition, schedule definition, NEPA revisions, and Build America, Buy America compliance as moderate or major obstacles.
These challenges proved to be interrelated: GAO found that 82 percent of awardees who reported NEPA revisions as a major obstacle also reported serious impacts on inflation.
The audit further documented that approximately 23 percent of discretionary awardees selected for fiscal year 2022 still did not have a signed grant agreement when surveyed in early 2025, leaving those projects unable to commit to funding well before the shutdown introduced additional delays.
GAO concluded that DOT has not “thoroughly identified risks, fully assessed their likelihood and impact, and monitored them,” noting that the agency’s current project-level reviews fall short of a portfolio-wide approach necessary to manage the hundreds of IIJA programs now competing for limited administrative bandwidth.
These unobligated balances now have an added urgency. The first IIJA freeway distributions, issued in fiscal year 2022, reached the end of their obligation window on September 30, and the unobligated portions have since expired.
RELATED
The US DOT is eliminating one-third of the grant pool, worth nearly $10 million
The remaining formula funds will lose availability when the law expires on September 30, 2026, unless Congress extends or expands the surface transportation title. Delays in federal reviews and grant processes further reduce the time left for states to commit remaining funds.
Discretionary programs face even tighter deadlines. Competitive grants for bridge, resiliency, and multimodal projects are subject to appropriate budget authority that expire if not obligated within defined periods.
The GAO found that DOT also had not fully assessed the risks of these accounts, raising the likelihood that Congress will have to extend specific obligation periods or reschedule unobligated balances in the next surface transportation bill.
For agencies and contractors planning multi-year capital programs, uncertainty about the availability of IIJA funds beyond 2026 is becoming a central concern.
Uneven progress
The Urban Institute’s independent analysis finds that much of the IIJA’s apparent spending growth has been eroded by construction inflation, with capital investment in transportation and rail shrinking even as initial gains in highway spending declined in 2024 and 2025.
The findings underscore how states with heavier transportation and rail portfolios face even stronger pressure to move forward with remaining projects before the law’s authority expires.
States continue to show uneven progress. For example, California’s major capacity projects awaiting federal environmental clearance are now facing additional schedule pressure, while Pennsylvania is advancing bridge replacement packages that have already been designed and scoped.
Texas, one of the fastest moving states on IIJA leases, is evaluating possible sequencing adjustments on several corridor projects as federal reviews resume, including federally reviewed segments of the I-35 Capital Express North widening in the Austin region.
Industry data reflects a similar pattern. ARTBA reports that as of the end of August, states have committed about $230 billion in IIJA highway and bridge formula funds to more than 105,000 projects, a substantial volume but still leaving significant funding uncommitted.
The shutdown has added weeks of delay to federal actions needed to mandate the next round of formula funds and finalize competitive grant agreements.
Jake Scott, a litigation partner at Smith Currie Oles LLP who has represented federal contractors across the country, continues to track the shutdown’s implications for government contractors and has urged contractors to track shutdown-related delays and costs, even now that the government has reopened.
“Restarting the government will take time, and contractors will likely continue to suffer the effects of the shutdown for some time after reopening,” Scott said in an email.
As Congress begins to shape the next surface transportation authorization, which will replace the IIJA’s highway and transit title before it expires, the combined effects of the shutdown and delayed federal obligations will influence the initial debate.
The next few weeks will be critical in determining how quickly deferred federal actions are integrated into the 2026 schedules and whether remaining IIJA funding can advance construction before the law’s authority expires.
