Congress passes a $ 1T infrastructure bill, but how does the government go about spending so much money?

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The U.S. Congress has passed an infrastructure bill that funds more than one billion dollars in federal spending nationally November 5, 2021.

The bill puts approximately $ 240 billion towards the construction or reconstruction of roads, bridges, public transport, airports and railways. More than 150 billion dollars are planned for projects that tackle climate change, such as the construction of electric vehicle charging stations, the modernization of networks and energy production to work better with renewable energies, and to make public transport more sustainable on the environmental plan.

There is funding for cybersecurity, drinking water and waste treatment systems, broadband internet connections and more.

The bill is the the biggest infrastructure investment in the country in decades.

So how does the government go about spending all this money?

Officials are required to follow certain procedures, regulations and guidelines for advertising and collecting offers, reviewing them and then hiring contractors to do the work. This process is called “public procurement”.

What is interesting to me and my colleagues who study public procurement policy is how this massive influx of spending can be used as a innovative policy tool promote the government’s social, economic and environmental objectives.

Judging by the executive orders of President Joe Biden prioritize action on climate change in procurement and procurement and ensure fair compensation for workers employed by federal government contractors, his administration will encourage the use of contracting authority to achieve environmental, social and economic policy objectives.

To understand how public procurement can be used to improve social equity or accelerate climate action, it helps to know the basics of how it works.

How do civil servants buy infrastructure?

The process begins with a formal request from an agency such as the Department of Transportation or Public Works and the selection of the best contract award procedure for a funded project.

For several decades, public infrastructure procurement Processes have generally taken one of two forms: “design-offer-build” or “design-build”.

In the design-offer-build option, governments separate contracts into two parts – project design and project construction, one after the other. A major asset of design-offer-build is that agencies know about this traditional way of building things. The main downside is that this requires a three-way relationship – with the government working with both designer and builder, and designer and builder also working together – which increases the potential for conflict during the project. And that can sometimes lead to increased costs.

An example of the design-bid-build method is that of the Virginia Department of Transportation I-95 / Telegraph highway interchange project, which involved the construction of 11 new bridges and freeway access ramps in Alexandria. A professional services firm named Dewberry designed the project – winning engineering awards as well as praise for avoiding negative impacts on residents and local businesses – and the separate construction company was Corman Kokosing.

In the design-build procurement process, potential contractors bid to do both the design and construction of the infrastructure in one package. The main advantage of this type of contract is the direct relationship between the contractor and the government. The designer and the construction company work together as a unified project team, which can significantly reduce project completion time.

However, design-build also requires a high level of expertise in drafting government design and construction specifications, as decisions must be made early in the process, and changes can result in increased costs.

An example of the design-build methodology is the US 15 on Indian Field Swamp Bridge Replacement Project in Dorchester County, South Carolina.

With these two infrastructure procurement options, the process is generally competitive among contractors, and the government owns, operates, finances, and maintains the last bridge, causeway, transit line, or other asset.

Public-private partnerships

The Biden administration also proposed to use another common type procurement for infrastructure spending – public-private partnerships.

These partnerships divide the costs to design, build, operate and maintain a project between a private sector company and the government for 25 or 30 years before the expiration of the agreement. The private enterprise may receive some or all of the income generated by the project during this period.

Let’s say the necessary infrastructure is a new toll road. The the government concludes a contract with a private company to design, finance, build, operate and maintain this new highway for a period of time. In return, the private enterprise recovers its costs by collecting the toll revenues.

Toll lanes for high occupancy of the capital’s bypass Project in Fairfax County, Virginia, also called the 495 Express Lanes Project, is just such a public-private partnership. The government agency is the Virginia Department of Transportation, and the private partner is a company formed specifically for this project called Capital Beltway Express LLC.

Supporters argue that Public-private partnerships can help the government to better infrastructure without increasing public debt.

Public policy researchers in the Netherlands have also found that by supporting the confidence building and engagement between partners, public-private infrastructure partnerships can lead to better outcomes in many ways, such as efficient design solutions, reduced environmental impact, lower costs and better relationships and support local communities or organizations.

But there are also criticisms. Policy specialists noted that these partnerships may not really save governments money. Other researchers have expressed concerns that these arrangements are giving way too public control of infrastructure the private sector, who can watch greedier for his own financial interests than those of the public.

By inserting demands in public procurement, new infrastructure spending could be used to promote fair wages, health care benefits, fair working conditions for people employed by government contractors and ensure products are sourced sustainably and ethically. This approach can also be used to require locally goods and services produced, Support for veteran, minority and women owned businesses and stimulate the market innovation, ecological products and services.

This article is republished from The conversation under a Creative Commons license. Read it original article.


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