Dive Brief:
- Progress on infrastructure projects may hinge on the outcome of the 2024 election, members of President Joe Biden’s team told AP last week, as some leading Republicans have repeatedly tried to undercut the Infrastructure Investment and Jobs Act as part of an overall aim to lower federal spending.
- GOP members are again trying to reduce funding using the FY 2024 federal funding deadline on Nov. 17 as leverage, according to The Washington Post.
- House Republicans canceled votes last week on two party-line government funding bills that would have slashed Amtrak funding. “People were looking at [the bill laying out funding for Transportation and Housing and Urban Development] as a place to cut a bunch of things. So the Freedom Caucus guys are upset that we’re not cutting enough, and then you have folks like the New Yorkers, who are moderates, looking at it saying, ‘You’re cutting way too much, especially to Amtrak,'” a senior GOP aide told Fox News.
Dive Insight:
Biden has frequently emphasized the IIJA’s bipartisan support, but White House Infrastructure Coordinator Mitch Landrieu said the outcome of next year’s presidential vote increasingly matters, per the AP. Getting IIJA funding to projects has necessitated the hiring of thousands of officials and a high degree of cooperation that the outcome of next year’s election could put at risk, he said.
While U.S. infrastructure has suffered from years of underinvestment and the country has lagged other regions in the transition to clean energy, these sectors are an ongoing bright spot thanks to federal funding with an increased environmental focus from the Infrastructure Investment and Jobs Act, the CHIPS Act and the Inflation Reduction Act.
However, such projects come with unique challenges, according to the sixth annual Crux insight report on global construction claims and disputes.
“Public investment and infrastructure priorities are prey to the short-term political cycles of democracies,” the report noted. “Political imperatives distort other risks — from interest rates and public investment to labor laws and immigration controls. The tensions are most acute in the spheres of energy and the environment.”
One example of this political peril is the Gateway Tunnel project, known as one of the nation’s most critical infrastructure projects. Despite billing himself as a builder on the campaign trail and touting Infrastructure Week throughout his presidency, former President Donald Trump’s Transportation Department voided former President Barack Obama’s financing deal and blocked the federal grants and loans for the megaproject, putting it on ice. Now the project is moving ahead with support from the Biden administration.
Strings attached
The bureaucracy and funding rules associated with the IIJA and the Inflation Reduction Act put conditions on the money, per the report. For instance, federal agencies recently updated the Davis-Bacon Act, which sets the prevailing wages contractors must pay workers on federal projects, and finalized the Build America Buy America Act, which establishes a U.S.-made mandate for certain construction materials on all federally funded infrastructure projects.
There are other pitfalls for civil work as well.
“In the past, ‘shovel-ready’ projects have been awarded federal funds on the basis of conceptual designs alone, increasing the likelihood of budget and schedule overruns due to design failures and scope change,” said the report. “Skills under-capacity in the market, newly formed contractors and consortia, and firms diversifying into unfamiliar fields also increase the risk to these public projects.”
Overall, the report found that the top causes of conflict on a project in the Americas were changes in scope and incorrect design.
“Political uncertainty is intensifying in North America ahead of the U.S. presidential race,” according to Crux. “The construction and engineering industry must factor in not only changes in political priorities and the level of federal funding but also how provincial governments choose to allocate these resources.”