Ensuring the Successful Execution of Federally-Funded Construction Projects by Local Governments

Federally-funded construction projects can be a mystery for leaders in state and local government and public education. Questions abound regarding which projects qualify for federal funding, complying with federal regulations and accessing available funds. But with public facilities and infrastructure aging fast and revenues shrinking, it is becoming increasingly necessary for local entities to get relief in the form of federal aid.

In this blog post, we cover the basics of federally-funded construction projects. We’ll cover the two categories of federal funding for construction, and explore a project delivery method with a track record of successfully completing federally-funded work.

Two Types of Construction Funding

There are two distinct categories of federally-funded facilities construction spending.  The first is for construction projects that are in support of an agency’s mission.  The Department of Defense, for example, may use funds to make improvements to military installations.  The General Services Administration also uses federal dollars to fund construction projects.

The second category of federally-funded construction spending refers to money that flows down in the form of grants to state and local governments. Think FEMA block grants for disaster recovery or ESSER funding for public school modifications. There are several drivers behind this model of federal spending.

The first is to engage local governments in sharing the costs of critical infrastructure projects. These grants typically require local matching at some predetermined percentage, in addition to programmatic requirements. Examples of grant-based federal construction spending include HUD funding for housing projects and USDA Community Development Block Grants for rural infrastructure.  Much of the ARRA funding also follows this model.

Benefits and Limitations of Grant Funding

The grant-based approach empowers local governments to determine acquisition strategies within certain parameters. There are two benefits to taking this tack. First, it fosters autonomy among state and local leaders who can leverage their knowledge of local market and industry conditions to spend this funding wisely and responsibly. Second, giving local leaders some decision-making power enables them to support local businesses.

Keeping spending near the project source deepens the benefit to the local community, but sometimes local governments, whether a small rural government or a large city, struggle to keep up with procurement throughput to maximize federal funding. This is especially true when the federal funding represents a surge over typical workload, as in the case of rebuilding after a disaster, or stimulus funding.

Job Order Contracting: A Proven Means of Execution Federally-Funded Construction Projects

Many communities have found Job Order Contracting (JOC) provides many benefits in the execution of federally-funded projects. An indefinite delivery, indefinite quantity (IDIQ) construction project delivery method, JOC allows many projects to be completed with one competitvely-awarded contract. This unique single solicitation process enables faster project start times, creates stronger relationships between owners and contractors and results in high quality work.

JOC is good vehicle for grant funding because it is a widely-accepted competitively bid delivery method in the federal government, complying with all FAR (Federal Acquisition Regulations), and there are JOC contracts, resources and programs that are readily available to local governments across the country. This should be comforting news to government and education leaders, who cited uncertainty about compliance as a major deterrent to using federal funds, according to a survey by GovExec.

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Further, since JOC projects start an average of 25% faster than traditional delivery methods like Design-Build, Design-Bid-Build and Construction Manager at Risk, communities benefit from federal funding faster, and local governments maximize their ability to spend grant aid by funding deadlines. With aging facilities a top concern for local leaders, the power to deploy resources quickly is a major advantage.

Job Order Contracts use researched and published Unit Price Books to bid projects. The unit price costing basis of JOC allows for segregating costs to allow local communities the flexibility to include value-added enhancements to projects that may not be funded by the federal government but make perfect sense to execute concurrently. Using unit prices, local leaders can show federal agencies what work was funded by the federal government, and what work was completed using local funds.

With an unprecedented amount of federal funding available for facilities and infrastructure work, state and local leaders have a unique opportunity to address their backlogged needs and enhance their communities. Working with industry partners like Gordian will enable them to take full advantage of this opportunity and complete federally-funded construction projects quickly and compliantly.