The Infrastructure Investment and Jobs Act (IIJA) became law in November 2021. It directs $550 billion for improvements to the nation’s infrastructure, including roadways and bridges, public transportation systems, airports and rail travel, and water and energy distribution systems. Contractors and construction firms have been exploring how they can take advantage of this new funding, especially minority-owned, women-owned, and veteran-owned contractors, who will benefit from earmarked funds, as will small contractors.
Why the US Government is a Great Customer
Contractors experienced in government work believe Uncle Sam is a great customer. For one, the federal government pays its bills on time, which makes cash flow more predictable. Some contractors consider doing business with the federal government to be recession-proof because infrastructure projects don’t stop when the economy slows. In fact, they often do the opposite.
With hundreds of billions of dollars being dispersed for major infrastructure projects, now is the time to consider how your firm can get in on the action. But with new opportunities come new disciplines that contractors must adopt to be successful in the world of government contracting. This is especially true for contractors who aren’t experienced in working with the federal government.
For example, government contracts often include regulatory clauses that contractors aren’t familiar with. It’s critical to make sure you understand these requirements and how to comply with them, as well as whether funds are coming from the state or federal government. Funds from federal infrastructure bills often flow into states to disburse them, but federal rules still apply to the projects.
Success Tips for Contractors
Here are seven tips to help you prepare to win government contracts stemming from the infrastructure bill:
1. Know which criteria are most important for the job. Price isn’t always the main factor in determining who wins a government contract bid. For example, when an interstate bridge collapsed in Minneapolis, contractors assumed that the firm with the lowest bid would win the contract to rebuild it. But the contract ended up going to one of the highest bidders due to specific design points. Find out what criteria are most important for a project before submitting a bid, then structure your bid accordingly.
2. Become familiar with the bid process. The basic process for federal government construction bids consists of these steps:
● Bid solicitation from the government.
● Subcontracting from general contractors to subcontractors
● Bid submission by general contractors
● Bid selection by the government
● Contract finalization
● Project delivery
3. Understand equitable adjustments. This is a formal request for an increase in the contract price due to a change in project scope or requirements. It’s important to maintain documentation and records to substantiate the additional costs to be incurred due to the change. Equitable adjustment requests are made to the contracting officer, who is the only person authorized to change the original contract.
4. Be ready for greater scrutiny to your technology and controls. The federal government holds contractors to higher standards for physical security and cybersecurity than many firms are used to. Some contracts even require personal background checks on executives and key employees.
5. Be prepared to play by the government’s rules. While contractors often wield most of the power on commercial projects, this isn’t the case on government infrastructure projects. For example, bid requests and submissions must follow specific rules and procedures; failure to comply can get a bid tossed out. Make sure you understand all the rules and are ready to comply before you bid on a government infrastructure project.
6. Put the right processes in place. You’ll need processes for things like managing certified payroll and prevailing wages, tracking workers’ time, complying with local labor laws, training workers on the latest compliance regulations, and hiring new employees and getting them up to speed quickly.
7. Ask questions. RFPs issued by the federal government for infrastructure projects usually allow contractors to submit questions about anything they’re unsure about. Take advantage of this opportunity to avoid unpleasant surprises.
Federal infrastructure contracts include extensive compliance obligations via the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) and the Wage & Hour Division (WHD), which have jurisdiction over construction contractors. The OFCCP enforces affirmative action and non-discrimination rules, while the WHD enforces provisions of the Davis-Bacon Act, which require government contractors to pay construction workers at locally prevailing wages, including fringe benefits.
Covered contractors must take affirmative action and may not discriminate against employees based on their sex, race, national origin, religion, sexual orientation, gender identity, disability, or protected veteran status. These obligations are triggered once a contractor has just $10,000 in total federal contracts.
To meet the Davis-Bacon Act requirements, you must keep accurate records of hours worked, wages paid, and fringe benefit contributions. You must also submit certified payroll each week to the funding agency, include standard clauses and applicable wage determinations in all subcontracts, and post the required “Employee Rights under the Davis-Bacon Act” poster at worksites.
Worth the Changes
Preparing for and bidding on a federal government contract may take time and effort, but it may be worth it. And the first federal contract you bid on will be the hardest since once you’re selected, you are automatically deemed a government contractor, which expedites the process for future contracts.
Give us a call if you have questions about the infrastructure bill and how you can prepare for potential new projects.