The U.S. Department of Transportation (USDOT) is calling for project applications for $850 million in transportation infrastructure grants, representing the second opportunity for funding from a program that has already received tremendous interest from public project sponsors and the infrastructure community. The grants, announced in a Notice of Funding Opportunity posted on the USDOT website on October 28, find their genesis and funding authorization in the FAST Act (P.L. 114-94), which President Obama signed into law on December 4, 2015.
The FAST Act created a discretionary grant program, which USDOT dubbed the “FASTLANE” program, to provide additional federal funds for nationally significant highway and freight projects. Congress created this program under the rationale that in today’s fiscal climate, public sponsors of large infrastructure projects will be able to leverage existing public and non-public revenue sources more effectively with seed money in the form of a grant awarded under this program. The FAST Act authorized $800 million for the program in fiscal year (FY) 2016, $850 million in FY 2017, and nearly $3 billion more in FY 2018 through FY 2020.
USDOT conducted the competition for the FY 2016 round of FASTLANE grant funding this summer. In that first solicitation, project sponsors submitted 212 applications requesting nearly $10 billion in grant funding—over twelve times the amount available for award. USDOT ultimately awarded 18 projects a total of nearly $760 million in grants, with an estimated total project cost for all of the awarded projects of over $3.6 billion. This leveraging effect is exactly what the congressional authors of the program intended.
With that background in place, the fact that USDOT chose to release these funds today is noteworthy for several reasons. First, while the FAST Act authorized $850 million in Contract Authority for these grants in FY 2017, USDOT is not able to release those funds until the President signs a full-year appropriations bill, essentially directing the U.S. Treasury to transfer the funds made available by the FAST Act to USDOT. Currently, the federal government is operating under a Continuing Resolution that expires on December 9, 2016. So, while USDOT has provided a Notice of Funding Opportunity for the FY 2017 round of FASTLANE funds, the Department does not currently have the legal authority to release those funds. This fact has not stopped USDOT from soliciting applications in the past (see, for example, the Department’s Positive Train Control solicitation), but it raises the question why USDOT chose to release the notice before the full-year appropriation is in place. The Department addressed this issue in the Notice, stating that “the Department is now beginning the process of soliciting applications to facilitate the possibility of awards with sufficient time for grantees to obligate in advance of peak construction season.” Whether industry stakeholders will find that to be a satisfying explanation is unclear.
Second, at the risk of stating the obvious, especially in light of the foregoing facts, the optics of distributing nearly a billion dollars in discretionary grant funds days before the end of the Administration will undoubtedly raise concern in the industry. To be clear, soliciting grant applications and making grant awards are not the same, and it is unclear whether USDOT expects to make initial project selection prior to the inauguration of the next President. That being said, merely soliciting applications for such a large amount of funding will be sufficient to raise the question of political motivation in the minds of project applicants.
Third, the industry consensus is that USDOT rushed the first round selection process this summer. That process took four months from issuance of the Notice of Funding Opportunity to initial project selection. The Department’s solicitation for applications for FY 2017 grant funding indicates that the timeline to initial selection may be even quicker. The Notice stipulates that applications are due on December 15th. As stated above, it is unclear whether USDOT intends to select projects prior to the end of the Administration, but if so, this timing would leave USDOT staff a month over the holiday season to review, score, and advance applications for award.
Finally, should USDOT intend to make initial project selection during this Administration, rushing the process in this way will be bad for the program, overall. Compressing the application and selection process for such a large amount of grant funding discourages thorough, well-planned project applications and a robust Q&A process between USDOT and potential applicants.
While the timing of this Notice of Funding Opportunity gives project sponsors much to be nervous about, it also emphasizes how valuable USDOT finds the program. In an era where infrastructure funding is unable even to begin to address infrastructure needs, the FASTLANE program leverages funds to deliver infrastructure projects that would otherwise sit on the proverbial shelf for years.