Congress passed an infrastructure bill Friday that funds more than a trillion dollars in nationwide federal spending.

The bill puts about $240 billion toward building or rebuilding roads, bridges, public transit, airports and railways. More than $150 billion is slated for projects that address climate change, like building electric vehicle charging stations, upgrading energy grids and production to work better with renewables, and making public transit more sustainable.

There’s funding for cybersecurity, clean water and waste treatment systems, broadband internet connections and more.

The bill is the largest investment in the nation’s infrastructure in decades.

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

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

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

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

How do government

officials buy infrastructure?

The process starts with a formal demand from an agency like the Department of Transportation or Public Works and the selection of the best procedure for awarding the contract for a funded project. For several decades, government infrastructure procurement processes have generally taken one of two forms: “design-bid-build” or “design-build.”

In the design-bid-build option, governments separate the contracts into two tracks — project design and project construction, one following the other. A major advantage of design-bid-build is that agencies are familiar with this traditional way of building things. The main disadvantage is that it requires a three-way relationship — with the government working with both the designer and the builder, and the designer and builder also working together — that heightens the potential for conflict during the project. And that can sometimes lead to increased costs.

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

However, design-build also requires a high level of expertise in drafting design and construction specifications from the government, because decisions need to be made early in the process, and changes may lead to cost increases.

With both of these infrastructure procurement options, the process is typically competitive among contractors and the government owns, operates, finances and maintains the final bridge, roadway, mass transit line or other asset.

Public-private partnerships

The Biden administration has also proposed using another common type of procurement for the infrastructure spending: public-private partnerships.

These partnerships divide the costs of designing, building, operating and maintaining a project between a private sector firm and the government over 25 or 30 years before the agreement phases out. The private firm may receive some or all of the revenues the project generates during that time.

Let’s say the infrastructure needed is a new toll road. The government enters into a contract with a private company to design, finance, construct, operate and maintain this new highway for a certain period of time. In exchange, the private company makes back its costs by collecting the revenues from the tolls.

Proponents argue that public-private partnerships may help the government provide better infrastructure without increasing public debt.

But there are also critics. Policy scholars have noted that these partnerships may not really save the government money. Other scholars have raised concerns that these arrangements cede too much public control of infrastructure to the private sector, which may look out more avidly for its own financial interests than those of the public.

By inserting demands into government contracts, the new infrastructure spending could be used to promote fair wages, health care benefits, fair working conditions for people employed by government contractors and ensure that products are sourced in a sustainable and ethical manner. This approach can also be used to demand locally produced goods and services; support for veteran-, minority- and women-owned businesses; and spur market innovation for environmentally friendly products and services.

Ana Maria Dimand is an assistant professor of public policy and administration at Boise State University. This was first published by The Conversation and is reprinted with permission.


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