Infrastructure Investment and Jobs Act: Contractor Opportunities in 2026

Infrastructure Investment and Jobs Act: Contractor Opportunities in 2026

The Infrastructure Investment and Jobs Act (IIJA) represents the largest federal infrastructure investment in decades. With over $1.2 trillion authorized and funding deployment reaching peak levels in 2026, contractors have unprecedented opportunities in federal and federally-funded construction work.

Understanding IIJA Funding Distribution

IIJA funding flows through multiple channels, each with distinct contracting processes:

Direct Federal Procurement

Some projects are contracted directly by federal agencies:

• U.S. Army Corps of Engineers: Waterway and flood control projects
• General Services Administration: Federal building construction and renovation
• Department of Defense: Military installation infrastructure
• National Park Service: Park facility improvements

These contracts follow Federal Acquisition Regulation (FAR) procedures and are advertised on SAM.gov.

Formula Funding to States

Most IIJA funding reaches contractors through state agencies:

• Highway Formula Programs: State DOTs receive formula allocations for roads and bridges
• Transit Formula Programs: Public transit agencies receive funds for facilities and systems
• Water Infrastructure: State revolving loan funds for water and wastewater projects
• Airport Improvement: State aviation agencies distribute airport funding

These projects follow state procurement rules but include federal requirements like Davis-Bacon prevailing wages.

Competitive Grant Programs

Federal agencies award competitive grants to state and local governments:

• RAISE Grants: Multimodal transportation projects
• INFRA Grants: Large freight and highway projects
• Bridge Investment Program: Major bridge rehabilitation and replacement
• Mega Projects: Transformative infrastructure investments over $500 million

Grant recipients then procure construction services following applicable rules.

Key Funding Categories for Contractors

Roads and Bridges

Funding Level: $110 billion over five years

Opportunity Areas:

• Interstate highway rehabilitation and expansion
• Bridge replacement and rehabilitation (45,000+ structurally deficient bridges)
• Rural road improvements
• Safety improvements and traffic management systems

Typical Project Sizes: $1 million to $500+ million

Public Transit

Funding Level: $89.9 billion over five years

Opportunity Areas:

• Rail station modernization and accessibility upgrades
• Bus rapid transit infrastructure
• Fleet maintenance facilities
• Transit-oriented development infrastructure

Typical Project Sizes: $500,000 to $100+ million

Water Infrastructure

Funding Level: $55 billion over five years

Opportunity Areas:

• Lead service line replacement
• Drinking water treatment plant upgrades
• Wastewater system improvements
• Stormwater infrastructure
• Western water storage projects

Typical Project Sizes: $250,000 to $50+ million

Broadband

Funding Level: $65 billion over five years

Opportunity Areas:

• Fiber optic network installation
• Last-mile connectivity construction
• Network facility construction
• Underground and aerial cable installation

Typical Project Sizes: $100,000 to $20+ million

Electric Vehicle Infrastructure

Funding Level: $7.5 billion over five years

Opportunity Areas:

• EV charging station installation
• Electric utility infrastructure upgrades
• Parking facility modifications
• Highway rest area electrification

Typical Project Sizes: $50,000 to $5 million

Airports

Funding Level: $25 billion over five years

Opportunity Areas:

• Terminal construction and renovation
• Runway and taxiway improvements
• Air traffic control facilities
• Sustainable aviation infrastructure

Typical Project Sizes: $500,000 to $200+ million

Resilience and Climate

Funding Level: $50+ billion across programs

Opportunity Areas:

• Flood control and coastal resilience
• Wildfire mitigation infrastructure
• Grid hardening and modernization
• Climate adaptation projects

Typical Project Sizes: $1 million to $100+ million

Federal Contracting Requirements

Working on IIJA-funded projects requires compliance with federal requirements:

Davis-Bacon Prevailing Wages

All IIJA construction projects over $2,000 require payment of locally prevailing wages as determined by the Department of Labor. Requirements include:

• Weekly certified payroll submissions
• Proper classification of workers by trade
• Payment of fringe benefits or cash equivalents
• Compliance monitoring and enforcement

Buy America/Buy America Build America

IIJA strengthened domestic sourcing requirements:

• Iron and Steel: Must be produced in the United States
• Manufactured Products: Must be manufactured in the United States
• Construction Materials: Phased requirements for cement, glass, lumber, and more

Waivers are available but increasingly scrutinized.

Small Business Requirements

Federal projects include small business participation goals:

• SBA Size Standards: Determine eligibility by NAICS code
• Subcontracting Plans: Large contractors must include small business subcontracting plans
• Set-Asides: Certain contracts reserved for small businesses
• 8(a), HUBZone, SDVOSB, WOSB: Specialized programs with additional preferences

Equal Employment Opportunity

Federal contractors must:

• Maintain affirmative action programs
• Submit EEO-1 reports
• Ensure nondiscrimination in employment
• Meet apprenticeship and training requirements

Environmental Compliance

IIJA projects require:

• NEPA environmental review compliance
• Stormwater pollution prevention plans
• Historic preservation coordination
• Endangered species protection

Positioning Your Company for IIJA Work

Obtain Necessary Registrations

SAM.gov Registration

• Required for all federal contracts
• Must be renewed annually
• Includes CAGE code and UEI assignment

State Registrations

• Prequalification with state DOTs
• State contractor licensing
• DBE/MBE/WBE certifications as applicable

Build Bonding Capacity

IIJA projects often require substantial bonds:

• Bid bonds (typically 5% of bid)
• Performance bonds (100% of contract)
• Payment bonds (100% of contract)

Work with your surety to increase bonding limits before pursuing large projects.

Develop Federal Experience

If new to federal work, build experience through:

• Subcontracting to established federal contractors
• Pursuing smaller federal contracts
• Mentor-protégé program participation
• Joint ventures with experienced partners

Invest in Compliance Infrastructure

Federal work requires robust compliance systems:

• Certified payroll tracking and reporting
• Cost accounting systems meeting federal standards
• Document retention and audit readiness
• Safety program meeting federal requirements

Finding IIJA Opportunities

Federal Sources

• SAM.gov: All federal contract opportunities
• Grants.gov: Federal grant announcements
• Agency Websites: DOT, EPA, DOE opportunity announcements

State Sources

• State DOT Websites: Highway and bridge lettings
• State Procurement Portals: General infrastructure projects
• Regional Planning Organizations: Multi-jurisdictional projects

Local Sources

• Municipal Procurement Sites: City and county projects
• Transit Authority Portals: Public transit work
• Utility District Notices: Water and wastewater projects

Bidding Strategies for IIJA Work

Understand the Funding Source

Different funding sources create different procurement approaches:

• Federal direct: Formal FAR procedures, negotiated contracts common
• State pass-through: Low-bid procurement typical for highways
• Grant-funded: May allow best-value selection

Price Federal Requirements

Factor compliance costs into bids:

• Davis-Bacon wage premiums over market rates
• Certified payroll administration costs
• Buy America material premiums
• Reporting and compliance overhead

Build Strong Past Performance

Federal evaluations heavily weight past performance:

• Document successful project completions
• Collect owner references and evaluations
• Maintain records of on-time, on-budget delivery
• Address any past performance issues proactively

Consider Teaming Arrangements

Large IIJA projects may require partnerships:

• Joint Ventures: Share risk and combine capabilities
• Mentor-Protégé: Access set-aside work with established partners
• Prime-Sub Relationships: Build experience as subcontractor first

2026 IIJA Outlook

As IIJA implementation matures, 2026 presents peak opportunities:

• Funding obligation deadlines create urgency for project lettings
• State and local capacity has expanded to deploy funds
• Supply chain constraints have eased from 2022-2024 peaks
• Labor availability remains tight but manageable

Contractors positioned with proper registrations, bonding capacity, and federal experience can capture significant market share.

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Learn more about federal contracting on our construction bidding blog.