Six Challenges State and Local Governments Should be Addressing Now
As the $1.2 trillion Bipartisan Infrastructure Law (BIL) reached its first anniversary in November 2022, the White House announced that over $185 billion in funding had already been allocated for 6,900 projects in over 4,000 communities across all 50 states, Washington, D.C. and U.S Territories. Funds are now being deployed for all major investment sectors from roads and bridges to clean transportation, to water and sewer, to broadband, to airports, to ports and waterways, to support cybersecurity and more.Now that this unprecedented investment in the nation’s infrastructure is underway, are the state and local government recipients who will receive the lion’s share of these funds fully prepared to go forward? Have they secured necessary workforce and material supply chains to operationalize their capital investment plan and actually build the roads, bridges and broadband projects they need? Have they now identified the competitive grants they wish to seek and ensured that they have the experienced resources they will need to submit grant applications that are compelling to the federal agencies dolling out the cash? And how will state and local agencies tasked with spending this money design programs that streamline and align state and federal permitting requirements for projects with environmental impacts, collaborate with neighboring and subordinate governments, and undertake critical community outreach and education so that their projects enjoy necessary and wide public support?
These questions are hardly academic. Workforce and supply chain challenges have vexed the United States’ and the global economy for years. Having the people, goods, materials and processes to execute is critical – and is all the more demanding in an economy facing continued inflation and recession. Here are the six most important challenges that all state and local governments should be addressing now in order to be positioned to capture and maximize the opportunities the BIL represents:
Resetting Capital Budgets & Investment Plans
The BIL most assuredly disrupted the capital budget and investment plan of every state and local government. Government leaders should resize and reorder their next 5-year capital plan to factor in planned increases in formula grants, as well as the design and planning for projects tied to new competitive grants. A revised capital projects budget and investment plan that reflects funding inputs from the BIL and carefully prioritizes projects based on the certainty of the funding source is the foundation for establishing a realistic master project schedule over the remainder of the 5-year BIL funding period.
Securing the Workforce
Money alone will not get bridges, roads, or broadband networks built. State and local recipients of federal funds must build a workforce ecosystem that delivers the skilled workforce needed for BIL projects, especially at peak demand periods. Mapping current and future state workforce capabilities, skills and availability tied to scenario-based model forecasts of workforce demands across the capital project plan lifecycle is critical. This model must account for variables such as out of state leakage – the cross-state worker shopping that inevitably will occur as the entire nation ramps up infrastructure spending. Workforce attraction programs can help fill in immediate gaps, while longer term strategies are implemented. The BIL’s $800 million in dedicated funding for job training and the Administration’s recently released guidance on workforce development funding opportunities can be leveraged by state and local governments for their workforce efforts.
Building the Supply Chain
The nation’s supply chain of goods and materials needed for infrastructure remains porous. Waivers for Build America/Buy America – requiring that all of the iron, steel, manufactured products, and construction materials used in infrastructure projects are manufactured in the U.S. – are provided for in the BIL, but in some cases blanket waivers are now expiring and prospects for some further waivers are limited. Mitigation strategies must reflect the most accurate demand forecasts and will need to be built using a category management approach for all goods and materials -- from concrete to steel to fiber optics and all others. Supply chain mapping should include all suppliers, vendors, and manufacturers over multiple levels from the purchaser. Due diligence for project partners – regarding ownership, financial capacity, sanctions history, security breaches, foreign relationships – are among key metrics to confirm and track. All of these considerations should roll up to an impact analysis that transparently identifies and assesses risks of all potential project partners. Ultimately, constant monitoring will be needed throughout the project cycle to identify when adjustments to suppliers may be required.
Streamlining the Permitting Process
Federal and state permitting, including for environmental reviews, will be required for many BIL projects. The Biden Administration has recently issued a Permitting Action Plan stating that it will emphasize accelerated delivery of projects through federal permitting that is transparent, guided by science, and shaped by public input through partnerships with state and local governments, territories and Tribes. In order to deliver on those expectations, the Action Plan contains five key elements that state and local governments should consider adapting to their own permitting processes:
Executing on Local Education and Engagement Strategies
Key elements to successful competitive grant applications and to the implementation of large-scale projects in the community are successful stakeholder and public education, communication and buy-in. The ability to forge local partnerships, attract workforce, secure local community funding, and facilitate siting of projects are all tied to education and communication regarding project goals and their planned execution. State and local governments need thoughtful and transparent strategies for communication. They should consider collaborating on the establishment of a central hub, czar, or Center of Excellence around which these strategies can be vetted and agreed upon. A centralized view of funded projects that brings together key stakeholders can serve as a convening body and a resource center for BIL project information and connection throughout the project cycle.
Empowering Project Leadership
It is already clear that states have employed different models for BIL project leadership. Some states have established an infrastructure office either under the governor’s office or as a stand-alone agency. Others have tapped key state agency heads to serve on an executive branch planning and oversight council. Municipalities are embarked on similar efforts to organize and execute on their BIL programs. Apart from the individual or entity that leads the effort, it is clear that several layers of project oversight and management will be needed. The infrastructure governing body or decision-maker such as a chief transformation officer should be supported by a core working group whose jurisdiction includes project and program governance, integrated scheduling, financial planning, quality management, stakeholder and public communication, and risk management and reporting. Other key components to a project management pyramid below the core working group are a delivery team that is supported by government agency and departmental leadership, staff and subject matter experts.
The transformational opportunity represented by the BIL – and the climate and energy funding under the Inflation Reduction Act that is also coming – needs an equally transformational – and timely -- effort by state and local governments to be prepared to take full advantage of BIL formula and competitive funding.
Guidehouse is a leader in grants strategy, management, and compliance activities for state and local governments. With more than 40 state and local grants strategy/management clients around the country, we bring skilled experts and technology solutions that help state and local governments optimize their use of federal funds.
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Guidehouse has the experience, resources, and technology to interpret and help prioritize and manage this influx of federal funds, as well as leveraging them with other state and federal funds to maximize impact and meet federal matching requirements. We work with clients to ensure that benefits from funding sources are maximized, tapping funding streams in an order of applicability from state-specific and federal targeted programs (American Rescue Plan Act (ARPA), IIJA) to mixed-use funds (capital projects and Broadband Equity and Deployment) to funds of general applicability (ARPA, State and Local Fiscal Recovery Funds, and general funds). We regularly work with state and local clients to assist with the planning, application, and implementation cycles for federal funds and support assessments, procurement, capacity building/stakeholder engagement, and strategic communications.
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The successful pursuit and implementation of large federal grants is often tied to community understanding and support. Many of the funding opportunities offered by the IRA involve impactful investments in our nation to address long-standing and urgent climate, energy, and local infrastructure needs, including for disadvantaged communities. Guidehouse works locally with our clients to create a winning strategy and engages with the local community to ensure successful grant pursuits and post-award implementation.