The Infrastructure Investment and Jobs Act is putting $1.2 trillion towards our country’s infrastructure – with $550 billion being spent this year on projects from repairing and replacing dams and constructing new water systems out west, to new power systems and charging stations. What does this mean for contractors, especially as we could be heading for a recession? It means you should be looking into federal contracting if you aren’t already. Learn more on this week’s episode.
Topics we cover in this episode include:
- Details of The Infrastructure Investment and Jobs Act
- How smaller contractors can benefit
- How the federal money is being allocated
- How the bill can help contractors through a potential recession
- How trade groups can help you get into federal contracting
- What you need to know about bonding and federal contracting
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Welcome to the Contractor Success Forum. Today, we’re discussing the Infrastructure Investment and Jobs Act and what it means to you, our listeners. On the Contractor Success Forum, we discuss how to run a more profitable, successful construction business.
[00:00:25] Rob Williams: And who is here to tell us how to do all these things? We have first Stephen Brown, McDaniel Whitley bonding and insurance agency. And we have Wade Carpenter, Carpenter and Company CPAs. And I’m Rob Williams with IronGate Entrepreneurial Support Systems. So guys, what is this IIJA, Infrastructure and Investment and Jobs Act? And why do the heck do we care?
[00:00:54] Stephen Brown: Well, if you’re a contractor, you know, you should know about this. That’s I guess the whole point of the podcast. It’s–
[00:01:00] Rob Williams: This is, but this is huge. This is just this giant, just these behemoth people, they’re the only ones that need to know about this.
[00:01:08] Stephen Brown: No, no, no, no. This affects everybody if you’re in the construction industry. It’s really big. And when I wanna put it in perspective, I could say that when they built the federal highway interstate system- you remember that? That was back in the fifties when president Eisenhower said this is gonna be done.
And I remember also these–
[00:01:30] Rob Williams: I don’t remember that from the womb.
[00:01:32] Stephen Brown: Well, you know, that’s how it started. If you built any roads, it started somewhere and it started there, but you don’t remember. And thank goodness I don’t, but I do know that. And also interestingly enough, the interstates had to be designed where you could land airplanes on them. So, infrastructure.
[00:01:51] Rob Williams: I do know that I did spend years wondering what those little airplanes were painted on the thing, because they never, as a pilot, they never taught us what those were.
The Infrastructure Investment and Jobs Act
[00:01:58] Stephen Brown: All right. Well, you’re driving around and you hit a pothole and it pisses you off. You’re like, man, somebody needs to fix that. Well, somebody is infrastructure. So that infrastructure has been going down the tubes for a while and they’re pumping a lot of money into it. It’s long overdue, and this is a bill that has been funded, at least the new part of it, it’s already been funded by other initiatives. So it is not designed to raise your taxes. It’s funded through the federal government through other things. So anyway, here, we got this bill and they say 1.2 trillion, you know, in the bill. But the main thing is a lot of that has to do with normal maintenance.
So new construction. New projects. It’s $550 billion of that $1.2 trillion, and that’s over the next five years. And they say just this year, of that, they can only crank out like 10% of that amount or 55 Million dollars worth of work out because we got the bill going and now we gotta get all these projects done, but how are we gonna do it?
And we talked in that federal contracting, we talked about who gets this stuff done. And it’s the Department of Transportation. It’s the US Army Corps of Engineers. It’s NAVFAC and some other entities, but all these organizations that have to get these projects done, from repairing and replacing dams to new water systems out west, you know what a big issue that is. And then new power systems, new off the grid, recharging, all that comes into play right now in this bill.
So it’s exciting. And I can tell you that the people that are in charge of seeing these projects put out for bid, they’re slammed. And I remember the Corps of Engineers is looking to hire 55 new engineers now, just right now. So guys, you know, the federal government is behind the eight ball because of this COVID situation, but the money’s real, it’s there, it’s funded.
That’s what you have to know. And it’s gonna happen. It’s gonna happen. Somebody’s gonna make money off of it. So if we’ve only got 10% of that whole new construction that’s going out this year, remainder of this year, then what about the other 90% spread out over five years? Somebody’s gotta do it and it’s gonna affect you.
That’s my point. It’s gonna affect you. And if you know about it, if you hadn’t signed up on SAMS, if you haven’t put your company on the radar to take advantage of this, that’s the thing that I wanted our listeners to hear.
How smaller contractors can benefit from the act
[00:04:44] Wade Carpenter: Stephen, a lot of my contractors, especially the smaller guys, are kind of intimidated by this. They heard some of these things that were going into the infrastructure bill. You know, they’re gonna put all this stuff in, charging stations for vehicles and stuff like that.
But a lot of the small guys feel like they can’t get any benefit of that because they’re not at a certain level. I know we did an episode on, you know, you did a great job of teaching us about federal contracting, but I think there’s some intimidation factor out there.
[00:05:14] Stephen Brown: Well, yeah, it makes sense. You don’t need to be intimidated. Of the 550 billion, seven and a half billion is electrical charging stations and so forth. So, It’s a very small percentage, but you know, your point is it gets intimidating. Well, I can tell you that the big companies that are taking on the big projects, they need more subcontractors and suppliers than ever.
They’re desperate to find you. And one of the best ways to find you is through SAMS. That’s how the government finds you and says, hey, whoa. You know, so and so, electrical.
[00:05:48] Rob Williams: Man. I love Sam’s. They got these great foot long hot dogs there that–
[00:05:52] Stephen Brown: It. Yeah. Well–
[00:05:55] Rob Williams: What is SAMS again? does that stand for?
[00:05:57] Stephen Brown: That, that is the Statistical Acquisition Management System, the US government.
[00:06:03] Rob Williams: Oh, it’s not that wholesale place.
[00:06:05] Stephen Brown: Oh just, oh, come on. Just go. Listen to our podcast.
[00:06:07] Wade Carpenter: Go back to the old episode.
[00:06:09] Stephen Brown: Well, hey. Of this 550 billion, we were talking about, 110 billion for roads and bridges, okay? What goes into road in bridge construction?
Do you supply any of that? $110 billion. Now that’s what the Department of Transportations of every state out there have been drooling over. And the problem is do they have enough people? Do they have enough shovel ready projects in place to get these things going? And do they have enough contractors to do the work? What everybody’s afraid of is no. So that’s an opportunity for you to make money.
Transit and road is included in that, is 66 billion of road construction, 11 billion of improved safety, and another 39.2 billion in public transport. Also included in this bill 65 billion of broadband. Everybody’s gonna get the internet in the United States. Airports and other ports is 25 billion. Electric vehicles, I mentioned seven and a half billion. Power systems, generation, 65 billion. Improved water systems, 55 billion 8.3 billion alone just for western water issues. 21 billion in pollution. Guys, you know, there’s a lot of lead pipe that has to be removed in the ground out there that’s dangerous. And then we’re talking about those PCBs and you know, potential problems with PVC pipes. That’s a huge issue. 21 billion there. Then cyber security, 47.2 billion. That’s in the bill. It’s gonna happen.
The federal government is just not gonna be hacked anymore.
[00:07:48] Wade Carpenter: Electrical utilities? And–
[00:07:50] Stephen Brown: Especially with the grids. Yes. And then there’s seven and a half billion in what they call clean buses and ferries. That’s public transportation money.
So anyway, hey, that’s the breakdown on it.
How the federal money is being allocated
[00:08:02] Wade Carpenter: Well, I don’t know if you’ve got any statistics on this or you may have to do some research on it, but you mentioned the water out west and a lot of the projects were up north. And we’re here in the south.
Is there any thing that you can give us by region or state how the money is allocated or do you have any of those statistics?
[00:08:21] Stephen Brown: Well, as general rule, it’s supposed to be allocated evenly, but it depends on your local politicians and their ability to get it. But they have prioritized this bill toward the most important things that have to be addressed. And you can say, guys, you know, the US government’s in charge of 2,600 dams nationwide. 12 of them are failing. Money’s gotta go there. You know, the safety of roads and bridges is number one. You know what happened when our Memphis bridge went out, Rob.
[00:08:55] Rob Williams: Yeah,
[00:08:56] Stephen Brown: Okay. It cost a fortune to get it fixed quickly, but it was costing us more than a fortune every day to not have it in operation.
[00:09:04] Rob Williams: Yeah, because those barges weren’t allowed to go under it there for a little while. And the cars couldn’t go over the top. What was crazy is I didn’t realize the barges were being held up. I guess, where they think the bridge was gonna fall on them or something?
[00:09:16] Stephen Brown: Well, you know, that was part of it. But then also you’ve got, as far as infrastructure concerns, think of it, guys. You’ve got bridges that are not over the Mississippi river, but just over anything: ditches creeks, things that flood. Things that wear away those bridges. There’s a useful life to that. And to building.
There’s a useful life. I don’t care what it is. There’s a useful life. And when that useful life is not being supported by replacements that need to be done, it’s just gotta be done. And it’s long overdue.
Another important consideration is say you have a flood or hurricane. How important is it for those bridges to work and be available for you to leave town, for your safety?
The leader in all of this, as far as determining what that is is the US Army Corps of Engineers. And so they’re gonna prioritize, they’re gonna fight, but everybody’s fighting. And remember your legislators, your congressmen, and your senators, not only do they want the money to come into your hometown and into their region, but they want the project to be done and they wanna be out there at the ribbon cutting getting votes out of it.
How the bill can help contractors through a potential recession
[00:10:28] Stephen Brown: And so you’ve got the money there and then you’ve got the politicians. And I can just say that this act was bipartisan. And that’s to me an exciting thing about it. It was a bipartisan effort. It had to be done. It got done and the money’s there. So if we’re heading in, we’ve got inflation now. If we’re heading into a recession, where can you find construction work?
[00:10:52] Wade Carpenter: That’s precisely where I was about to go. We recently finished a podcast episode about whether we’re possibly heading to a recession. And 10, 12 years ago with The Great Recession in 2008, and all that time period, there was nothing coming behind it. And construction was hit pretty hard long after they said the recession was over.
And so, Stephen, how do you feel like, you know, could this prop up some of this, if we’re heading into a recession?
[00:11:22] Stephen Brown: Yeah. It is gonna prop it up. It’s there and it’s real. It’s huge.
[00:11:27] Rob Williams: This was the big question that I had a misconception of is, okay. Aren’t all these jobs just gonna go to these big road, contractors? How does the smaller contractor do this? And is some of that money set aside just for smaller businesses?
[00:11:45] Stephen Brown: Well, you need to talk to these bigger contractors and ask them, what are you looking for? Can my company help? I don’t know. Tell me about your company. No, I don’t think you can, or yeah, absolutely. You know, it’s dialogue. It’s also your networking, you’re always looking for new sales for your company. And part of that is just getting out there and find out what’s going on. Look, for example, look at the Blue Oval project, which is the big project around Memphis right now. And it’s outside of of Memphis and it’s a–
[00:12:18] Rob Williams: For the Ford electric trucks, right?
[00:12:20] Stephen Brown: Battery plant, it’s big numbers, but when you think about how they broke it down, their construction manager, they went out there on the road and they did road shows. Not only to every trade organization that’s out there. But individually. Come meet us. Let’s talk about the opportunities that are there. And that’s gonna be going on with this work as well. If you are in infrastructure, and you are a supplier to that infrastructure, you’re gonna make money as long as you’re bidding on it. And if you’re not bidding on it, that means you don’t know about it, or you don’t care about it. So.
[00:12:54] Rob Williams: I happen to have one client that’s getting into the electric car thing. They thought there was a niche and somebody, actually, one of his buddies came to him and brought it to him. And he realized that he actually has the people and different things. He could retool up for that.
He’s not in that business at all, but he realized that it’s a common, his trades, his company can support that. So they’re out there going to do these charging stations because he was able to conveniently transfer some of the skills he had to that. And he’s not an electrician. You know, and, it was interesting how you can look at some of these things and try to see how you can fit.
[00:13:31] Stephen Brown: Well, you know, you can make fun of it or you can pay through the nose for gas, you know, $5 a gallon. One of my customers was talking about these self-driving cars and I made the point to him, I said, as bad as you drive, even though there’s some flaws in self-driving cars, it’s better for society if you just get you a self-driving car. Anyway, his response to me, I can’t share with our listeners, but it, you know, it’s it is it’s out there.
Trade groups can help you get into federal contracting
[00:14:00] Stephen Brown: And I wanted to tell you that everybody out there in the construction industry, all your trade groups, you know, if you don’t belong to one, now’s a good time to join, they will help you find this work. That’s their job. That’s why they exist.
AGC, ABC. They’re out there to help you find this work. They really are. And they all realize how important it is and they’re already ready to help you get this work. And so if you wanna get into federal contracting, you can listen to our podcast. You can call me, I’ll give you my 2 cents worth on it. And you can also join one of these trade groups. That’s where the expertise in federal contracting comes from. You gotta get started and you gotta learn. But I believe, and a lot of other folks believe it’s well worth it.
Bonding and federal contracting
[00:14:48] Wade Carpenter: So Stephen, if I could pivot a little bit here on this conversation. There’s a lot of my smaller contractors that, you know, maybe they came through recession and it hurt their credit or whatever, but typically with federal contracting, you know, you gotta get bonded. And a lot of people are intimidated to even go down that path.
So can you talk about some of that? Like some of the SBA programs or whatever might help some of these people that they’ve never experienced bonding?
[00:15:18] Stephen Brown: My advice would be to stay in fear and don’t do anything.
[00:15:22] Wade Carpenter: No.
[00:15:23] Stephen Brown: It’s intimidating. And I just think it’s a whole lot better just to probably go back home and relax. Hey, no, come on guys. Please. Just talk to a good bonding agent. You’d be surprised at, that’s all we do. Our job is to get you bonds.
There’s the SBA bonding program. There is always something you can do and you always have to start somewhere. So please start, you know, call me, call a local bonding agent you know, or that’s been recommended, but find someone that knows their craft and can help you. And one thing that we were talking about earlier, guys, you know, we’ve been doing what we’ve been doing a long time.
So does that make us credible to give you advice? Well, you better believe it because I wouldn’t be in business if I wasn’t getting people bonds. That’s my job. And also guys, I don’t get paid unless I get you bonds. So please, you know, let’s get that fixed. If you’re worried about that. Don’t be intimidated by it.
Also, the situation is this job act might be requiring you to get a larger bond program. And, you know, you’re getting hems and haws from your agent and your company. Well, now’s the time to double and triple your capacity. If you’re able to do it, and you can prove that you’re able to do this work, but the bonding company’s holding you back, well, let me know. I’ll be happy to help.
[00:16:48] Wade Carpenter: I’d like to put a personal plug in there for Stephen, myself. I remember sending a contractor to him and you know, he did everything he could to just sit down and talk to him and figure out what was going on and how he could help. And he was looking at different programs and things like that, and just counseling them. And so Stephen, I appreciate how you work with these contractors because a lot of times it is really intimidating. And I appreciate that all the ones you’ve ever helped me with.
[00:17:17] Stephen Brown: Well, you know, it’s only as intimidating as what you think it is. And I can tell you that to me, the bonding industry is just a joy. I never had a midlife crisis where I wished I did something else. Knocking on wood, maybe. But nevertheless I love it because it’s just a win-win when everybody’s working together. And that’s also what it’s gonna take to get these jobs finished: everybody communicating, everybody working together.
[00:17:45] Rob Williams: So if you have an inkling that you might be interested in something like this, you know, give Stephen a call or if you’ve got somebody else that you’re already working with, call him, ask him. He can’t answer it? Give Stephen a call. But I did it. I talked to Stephen, we were friends and I was intimidated.
I didn’t think I was capable to be in the bonding programs. And I was really surprised. All contractors, if you ever worry, we, everybody has receivables and payables and things like that. That’s all in your working capital. You might be surprised how bondable you actually are. Bonding doesn’t mean that you haven’t ever worried about your business.
So, if you’re worrying about it, that probably means maybe you’re more bonded– if you’re not worried about it then you probably don’t even realize you’ve got a problem. So worrying maybe a first start towards your bonding. So give them a call. Don’t think that you’re not qualified.
[00:18:38] Stephen Brown: All right. Well, thanks guys for the plug, but I hope our listeners get something out of this and understand what options are available with this new act that’s out.
[00:18:47] Rob Williams: Oh, you know, another thing I remember going to that meeting, one more plug here, Stephen. You and I spoke at something at the airport and I was shocked at who all these contractors were. There are so many different jobs. It doesn’t mean that you own heavy equipment to be a bonded contractor.
There are so many other contractors that do– I remember the people that fill the toilet paper, that was the shocking, that was– the sign people at the airport. And the people that fill the toilet at the airport are bonded. You know, I was like, what in the heck? This is a bonded contractor?
[00:19:22] Stephen Brown: Well, you know, I personally think that’s overkill, but.
[00:19:25] Rob Williams: But they were there. I was just shocked that they were at that meeting, you know?
[00:19:28] Stephen Brown: When you break down a project and you put a bid together, you knew all the unit costs involved and you know all the people involved, this is a people business. And I think it’s gonna take for this amount of money and this type of project, I think it’s gonna take everybody.
[00:19:43] Rob Williams: Yep. So we need you, they need you, the government needs you.
[00:19:46] Stephen Brown: Yeah. And you need to look into it.
[00:19:48] Rob Williams: All right. Well, thanks a lot again.
[00:19:50] Wade Carpenter: Great, Stephen. No, thanks for doing it.
[00:19:53] Rob Williams: All right, this is great. We need to hear more and more about it. And it’s just really surprising. And I’m sure as we go through, we’re gonna be hearing more and more about it, and more people will be moving that direction with all this money coming in there, as long as they can get those jobs shovel ready or whatever we wanna call those.
So, we’re here at the Contractor Success Forum to help you figure that out because we discuss how to become more profitable and successful in your construction business. And part of that is going to get more jobs. So thanks. And we will have more. Profitability and great tips on our next episode. So listen to the Contractor Success Forum.
Stephen Brown, McDaniel Whitley bonding and insurance agency, Wade Carpenter, Carpenter and Company CPAs, and Rob Williams. IronGate Entrepreneurial Support Systems. All available, because you were waiting for this the whole time. Now that you have your pencils and keyboards– ContractorSuccessForum.Com. Since you’re listening to this on the job, you know, they got these carpenter pencils, Stephen, they’re writing it on the boards right now.
[00:21:01] Stephen Brown: There we go.
[00:21:02] Rob Williams: Make it back home and ContractorSuccessForum.Com. All right, we’ll see you on the next episode.