Bipartisan Infrastructure Law Status—Where’s the Beef?
It’s been over a year now since the Bipartisan Infrastructure Law (or BIL, also known as the Infrastructure Investment and Jobs Act, or IIJA) was signed into law by President Biden in November 2021. But while the numbers are gargantuan, the government is struggling to administer the massive program.
Last week, I caught up with Dave Anderson, president of Proviamo Enterprises LLC—a federal infrastructure consultancy that provides business development, federal solutions, and investor services to a wide variety of organizations—to get his take on where BIL funding currently stands with the U.S. Army Corps of Engineers, one of his team’s specialties. Here’s how our conversation went:
Dave, thank you for contributing to Morrissey Goodale’s Word on the Street!
I’m honored to be included!
Tell me a little about the Corps.
The Corps is the primary engineering force for the federal government. It employs roughly 38,000 civilians and military personnel to deliver engineering services in more than 110 countries around the world. The main components are the Engineer Regiment (which includes combat engineers), military construction (military works and lines of transport and communication), and civil works (critical infrastructure systems, including navigation, water supply, flood and storm risk reduction efforts, emergency response, and aquatic ecosystem restoration projects). The civil works program is the largest and fastest-growing program with 1,900 projects across the country. The Corps doesn’t have the only engineers in the federal government, but they are the best source of AE expertise.
How is funding allocated throughout the organization?
The program that the Corps is overseeing is a generational infrastructure investment. Its total current program is over $90 billion, about $50 billion of which is committed to the civil works program. It also includes over $1 billion for R&D; $5 billion for Army work; $28 billion for work for their DoD partners, like the Air Force and Defense Logistics Agency; and roughly $13 billion for interagency and international partners, such as the Veterans Administration and Foreign Military Sales cases.
That seems like a lot to handle, even for an organization the size of the Corps.
It is, especially considering that the amount allocated from the Bipartisan Infrastructure Bill alone—$17.1 billion—is nearly the size of their typical annual program. The Corps is structured, organized, and staffed for what has historically been a $20-22 billion annual program, not including storm supplementals. Meanwhile, the Corps is competing for the same talent as the rest of the industry. This massive program simply won’t be fully executed if the Corps relies on legacy staffing and business processes. It has to grow, become nimbler, and be the best possible business partner for industry.
Is there no way out of the quagmire?
As I mentioned, legacy federal systems aren’t built for this kind of massive investment. The Corps, in particular, is constrained by processes which, in many cases, are dictated in law or regulation, such as the Federal Acquisition Regulation—well-intended to protect the taxpayer’s funds and to ensure fairness in hiring and in contracting, but not necessarily nimble, innovative, or transparent. From hiring to contracting to design to construction oversight, the Corps is going to have to significantly streamline its business practices to “get ‘er done.” The Corps’ leadership is working this hard right now. But industry needs to see results at the project level.
How will this pressure impact the federal government’s need for AE consultants?
The Corps has to rely more on industry than ever before. It self-performs design on a relatively small percentage of its projects, and industry performs basically 100% of its construction. Industry partners may have to help with that staff augmentation and contracting, and the Corps has already taken some aggressive steps to better work with them. In 2022, LTG Scott Spellmon, the Chief of Engineers, signed a partnership charter with the Associated General Contractors of America to enable collaboration to overcome obstacles and increase innovation, agility, and efficiency. He also published a “Partnering Playbook” to provide guidance and tools for delivering projects with industry. But partnering is a two-way street. One common area of industry frustration has been bureaucracy, delays, and lack of transparency in the contracting process. This is an area that the Corps is going to have to really advance to be good partners with the entire industry and deliver the program.
What does it take for an AE firm to be successful in this arena?
The federal government needs firms that have a history of delivering; it values strong past performance above almost all other traits. Firms that don’t have a significant background in this type of work need to look for “competimates” to team up with firms like Dewberry, WSP, AECOM, and many others that have that big experience. You have to build your federal resume by getting on teams like theirs. You can also look to the SBA’s mentor/protégé programs (formal mentoring commitments) and the joint ventures that can be born from them. It’s worth looking into because the amount of funding that is coming down the pike is significant.
What other advice do you have for AE firms looking to enter the fray?
If your firm is in a strong cash position, consider building your federal resume by acquisition. Bluntly stated, buying federal past performance may be the speediest way to get it on your resume. Or if it fits your company’s lifecycle and situation, consider selling to a firm that has a strong federal background and needs capacity, which is just about all of them these days.
Will small AE firms be left out in the cold?
Oh goodness, no. The Department of Defense has a goal to award about 23% of all federal prime contract dollars to small businesses and for large business to subcontract about 32% of contract value to small business. Not a lot of battleship and weapons systems are being produced by small businesses, so DoD needs to maximize its business with industries like the AE industry, where it can be successful using small businesses. So there will be more small business opportunities than ever before.
When do you see the BIL projects really taking off?
In many cases, they already have. But I would look to 2023 and 2024 and beyond before we start seeing the real heavy workload driven by BIL. Given the prediction of a looming recession, that’s all the more reason to seriously consider the federal market as part of your strategy in the coming years.
Mark Goodale leads Morrissey Goodale’s strategic planning practice. Call him at 508.254.3914 or send an email to [email protected].