President Biden signed the Infrastructure Investment and Jobs Act (“IIJA” or the “Infrastructure Bill”) into law on November 15, 2021, as an investment in our nation’s infrastructure and competitiveness. The Infrastructure Bill will upgrade America’s highways and major roads, bridges, airports, ports, and water systems and expand and make improvements to the nation’s broadband access, public transportation systems, and energy grid infrastructure; helping to ease inflationary pressures and strengthen supply chains. The Federal government is preparing to disburse more than $1.2 trillion in program funds throughout a five-to-ten-year period and States will apply for funding through a competitive process requiring proposals and plans for the projects’ scope, anticipated improvements and benefits.
Strategically Plan to Receive IIJA Funding
Repairs and upgrades to our nation’s infrastructure will be performed by private companies funded by federal agencies and/or state & local government contracts. A&E firms will be included among this group and will reap the benefit of a significant number of opportunities, including services on larger scale projects. To capitalize on IIJA funding, A&E firms will need to develop the tangible strategies and action plans needed to optimize their business and operations – examining their people, processes, and technology along with gaining an understanding of the complexities of working with the government and the additional compliance requirements required if they are unfamiliar with government contracting.
Firms will need to ensure they have the capacity and talent to perform under these new and expansive contracts, potentially partnering with other firms to accomplish tasks, and optimizing systems and reporting to ensure these opportunities are won and serviced in the most efficient and effective manner possible. Technology tools and controls will be critical to ensure the necessary record-keeping is taking place. The ability for A&E firms to adopt digital strategies and tools that will provide standardization in processes, collaboration and 360-degree visibility into projects, will help maximize productivity, improve efficiencies, increase profitability, and drive business success.
Evaluating the ability to qualify for tax incentives and grants can effectively be used to help fund the cost of operations, increasing your workforce, acquiring new talent or an acquisition for competitiveness and growth. There have been many tax incentives enacted over the years, including the 179D Energy tax deduction that focuses on encouraging businesses to incorporate energy efficiency into their design plans for public and commercial buildings. The 179D tax deduction has been in effect since January 1, 2006 and is now permanent in the tax law enacted as part of the Consolidated Appropriations Act of 2021. If your A&E firm has not looked into the 179D tax deduction, or previously did not qualify, you should evaluate design projects from 2021 through 2025 to determine eligibility. Likewise, less than 30% of eligible companies are aware that they qualify for the Research & Development (“R&D”) tax credit, which can generate a dollar-for-dollar reduction in federal and state tax liabilities for current and future years, among other tax advantages.
A&E firms new to working on federally funded projects will need to educate themselves about working with the government to gain an understanding of the various contract types and compliance requirements to ensure bids comply to successfully win and perform on contracts, including the cost accounting, budgeting, pricing and document retention associated with government contracts. To ensure work is performed in a profitable manner, firms will also need to make sure personnel have the training and skills in government contract management to successfully work with contracting officers or other companies in a subcontractor role. Firms may also want to consider Joint Venture arrangements to gain the ability to expand their business and compete for contracts that may normally be out of reach.
Our Advisory and Consulting Services
Your journey to take advantage of IIJA funding will be unique. Cherry Bekaert is here to guide you at every step. Whether it is our government contracting advisors assisting in the identification or pursuit of opportunities, ensuring bids comply with necessary requirements and the funding and cash flow of the contract is understood to ensure accurate budgeting and forecasting, our digital advisory team optimizing operations and reporting so you will be able to design and deliver faster projects with greater efficiency, saving time and ultimately improving the bottom line, our credits and incentives advisory team identifying new or expanded ways to fund these operations, or our transaction advisory group assisting in the identification of partners with whom to joint venture on an opportunity, we stand ready to guide you forward.
