The Infrastructure Investment and Jobs Act: Opportunity and Risk for Contractors

February 7, 2022 Construction Law Corner

In November 2021, President Joseph Biden signed into law the Infrastructure Investment and Jobs Act (the “Infrastructure Act” or the “Act”), a five-year, $1.2 trillion bill that represents the nation’s largest investment in infrastructure in decades. The Act provides funding to repair and upgrade a variety of infrastructure assets throughout the country. The categories of infrastructure eligible for funding include:

  • bridges
  • roads
  • railways
  • aviation facilities
  • navigable waterways
  • transit
  • dams
  • drinking water delivery systems
  • energy plants
  • port facilities
  • others

Background

For years, construction industry professionals clamored for federal funding to address rapidly deteriorating infrastructure throughout the nation. The American Society of Civil Engineers (“ASCE”) has published periodic “report cards” on the state of the country’s infrastructure.

In 2021, the nationwide grade was a “C-”.[1] If the ASCE evaluation needed any further validation, as President Biden was about to visit Pittsburgh to tout the Act earlier this month, a bridge in that city collapsed sending a city bus and other vehicles tumbling into the ravine below and injuring 10 people.[2]

The state of Illinois infrastructure is in line with the woeful state of infrastructure in Pittsburgh and nationwide. The most recent ASCE report for Illinois, issued in 2018, also graded Illinois infrastructure at a “C-”.[3] Illinois railways fared slightly better by garnering a “C+” but, as Illinois serves as the crossroads for much of the nation’s freight rail traffic, that grade is not encouraging. Illinois clearly needs upgrades across all of its infrastructure.

What it Means for Illinois

How much and how quickly infrastructure funds will flow to Illinois remains to be seen.  Early reports indicated that Illinois could receive up to $18 billion under the Act. According to information released from U.S. Senators Dick Durbin and Tammy Duckworth, the estimated infrastructure funding to Illinois might consist of the following:

  • Roads and bridges: $9.8 billion for federal-aid highway apportioned programs and $1.4 billion for bridge replacement and repairs. Illinois will be eligible for billions more in competitive grant programs.
  • Public transportation: $4 billion over five years to improve public transportation options across the state.
  • Broadband: A minimum allocation of $100 million to help provide broadband coverage across the state, including providing access to the 228,000 (or more) Illinoisans who currently lack it.
  • Electric vehicles: $149 million over five years to support the expansion of an electric vehicle (EV) charging network in the state. Illinois is eligible for $2.5 billion in competitive EV charging grants.[4]

Know the Legal Landscape

Contractors with experience working on federal projects (or projects with federal funding) know all too well that the contract provisions and regulations applicable to those projects can be extensive and challenging to understand. With the influx of federal funds for infrastructure projects, other less experienced contractors and subcontractors (and developers for that matter) may find themselves in unfamiliar legal territory.

It is important for anyone seeking to bid this new work to be educated on the various federal laws that may apply to their activities on infrastructure projects. While the list of potentially applicable federal laws is long, a few of the acts that may apply to projects funded under the Act are highlighted below:

Davis Bacon Act:

  • The Davis Bacon Act, 40 U.S.C. 3141 et seq., requires that laborers and mechanics be paid prevailing wages for specific job classifications as determined by the U.S. Department of Labor for the geographic area where the project is located. Depending on project location, these wages may be higher than contractors typically include in their bids.
  • In addition, the Davis Bacon Act requires submission of certified payrolls in support of invoices for work performed.
  • The penalties for Davis Bacon Act violations include fines and/or imprisonment. In addition, any contractors or subcontractors found to be “in aggravated or willful violation” may be debarred from bidding on future federal contracts. Federal debarment is bad enough, but that debarment may also trigger debarment from public construction work at the state and local level, as well.

Contract Work Hours and Safety Standards Act:

  • The Contract Work Hours and Safety Standards Act, 40 U.S.C. 3701 et seq., is related to the Davis Bacon Act and addresses the length of a work week and overtime for purposes of wages payable to laborers and mechanics on federally funded construction projects.
  • The implementing regulations typically require that a contractor compute the wages of every mechanic and laborer on the basis of a standard work week of 40 hours.
  • Any work in excess of the standard work week is allowed so long as workers are compensated at a rate of not less than one and a half times the basic rate of pay for all hours worked in excess of 40 hours in the work week.

Buy American Act:

  • The Buy American Act, 41 U.S.C. §§ 8301, et seq., generally requires that steel and iron products used in the construction, alteration, or repair of any domestic public project be purchased from U.S. suppliers although there are exceptions. The particular contract provisions that implement the Buy American Act vary among the federal agencies providing funding to the project.
    • For example, the Federal Highway Administration’s regulations provide that no federal-aid highway construction project is to be authorized for advertisement or otherwise authorized to proceed unless all manufacturing processes for steel and iron materials “permanently incorporated” into the project, including application of a coating for these materials, occurs in the United States.
    • Coating includes all processes which protect or enhance the value of the material to which the coating is applied.[5]
    • During bidding, these requirements should be factored into any estimate that includes steel and iron products.
  • Violations of the Buy American Act can have severe consequences. A Wisconsin architectural firm was fined $3 million to resolve civil and criminal liability for improperly using foreign sources materials for glass space framing in roofs and atrium enclosures on federally funded projects. The firm was also debarred from bidding on future federally funded projects.[6]

Executive Order 11246 and Equal Employment Opportunity:

  • Executive Order 11246, originally signed by President Lyndon Johnson in 1965, prohibits federal contractors from discriminating on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin.
  • In addition to the fundamental requirement to avoid discrimination, contractors on federally funded projects may be required to establish, implement, and maintain an affirmative action program that meets the requirements of the applicable regulations. Those affirmative action programs may require, among other things, that contractors:
    • Maintain a working environment free of harassment, intimidation and coercion;
    • Establish and maintain a list of minority and female recruitment sources for job openings;
    • Maintain records of minority and female hiring efforts; and
    • Provide on-the-job training opportunities or participate in job training programs for minorities and women in the relevant job categories.

False Claims Act:

  • The False Claims Act, 31 U.S.C. § § 3729-33, prohibits a person (which includes any business entity) from knowingly making a false “claim” for money or property from the U.S government.
    • A claim can include a request for payment made either directly to the U.S. government or to some entity that is receiving U.S. government funding.  
    • It is this latter category that extends the reach of the False Claims Act to construction projects funded by the Infrastructure Act.  
  • False claims liability can arise due to the following categories as specifically set forth in the False Claims Act:
  • Direct false claims: occurs when a person “knowingly presents or causes to be presented, a false or fraudulent claim for payment or approval.”[7]
  • False statements/records: occurs when a person “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.”[8]
  • Reverse false claims: when a person does not return property or money that belongs to the federal government, that person can be liable under the False Claims Act.[9]
  • The False Claims Act is often the enforcement mechanism used by the federal government or whistle blowers to address not only overbilling, but violations of other federal requirements listed above such as the Davis Bacon and Buy American regulations.

Closing Thoughts

The promise of the Infrastructure Act is encouraging but contractors need to be mindful of the many laws and regulations that may be attached to any funding provided under that Act. Ensuring compliance may be onerous but being well-informed will help avoid any legal entanglements down the road.

Article Content is Not Legal Advice. This article is for informational purposes only. The content in this article is not legal advice and should not be construed nor relied upon as such. This is not a substitute for personal legal advice.

[1] See America’s Infrastructure Scores a C-, 2021 Report Card For America’s Infrastructure ASCE, https://infrastructurereportcard.org/ (last visited Jan. 29, 2022).

[2] See Ed Blazina, Jesse Bunch, Andrew Goldstein, Kris B. Mamula, Julian Routh, Mick Stinelli and Stephanie Strasburg, Officials seek answers, intensify calls for change after Pittsburgh bridge collapse, Pittsburgh Post-Gazette, https://www.post-gazette.com/local/city/2022/01/28/pittsburgh-bridge-collapse-forbes-braddock-avenue-point-breeze-squirrel-hill/stories/202201280075 (last visited Jan. 29, 2022).

[3] See 2018 Infrastructure Report Card; 2018 Report Card GPA C-, 2021 Report Card For America’s Infrastructure ASCE (Jan. 29, 2022), https://infrastructurereportcard.org/state-item/illinois/.

[4] See Duckworth and Durbin Announce Illinois Set to Receive More than $15 Billion If Bipartisan Infrastructure Deal Becomes Law, Tammy Duckworth U.S. Senator for Illinois, https://www.duckworth.senate.gov/news/press-releases/duckworth-and-durbin-announce-illinois-set-to-receive-more-than-15-billion-if-bipartisan-infrastructure-deal-becomes-law (last visited Jan. 29, 2022).

[5] See 23 C.F.R § 635.410.

[6] See Department of Justice Office of Public Affairs, Wisconsin Architectural Firm to Plead Guilty and Pay $3 Million to Resolve Criminal and Civil Claims, The United States Department of Justice, https://www.justice.gov/opa/pr/wisconsin-architectural-firm-plead-guilty-and-pay-3-million-resolve-criminal-and-civil-claims (last visited Jan. 29, 2022).

[7] 31 U.S.C. § 3729(a)(1)(A).

[8] See 31 U.S.C. § 3729(a)(1)(B) (emphasis added).

[9] 31 U.S.C. § 3729(a)(1)(G).

Categories