Lawyers see opportunities for private sector in $787bn stimulus bill

The $64bn of money allocated to infrastructure spending includes multiple pockets of discretionary spending that contractors and developers could compete for, lawyers at McKenna, Long and Aldridge explained to listeners during a conference call.

The $787 billion economic stimulus bill signed into law earlier this week by President Obama includes several avenues for the private sector, mostly government contractors and developers, to take advantage of the $64 billion it earmarked for infrastructure spending, lawyers at McKenna, Long and Aldridge told listeners during a Friday conference call on the legislation.

Frank Rapoport, a partner in McKenna’s public-private partnership (PPP) practice, identified three discretionary pockets of money within the $64 billion earmarked for infrastructure that could be leveraged by the private sector.

First, he pointed to a $1.5 billion discretionary fund that the American Reinvestment and Recovery Act created for the Department of Transportation to allocate as block grants toward surface transportation projects.


Half of that money will be allocated in accordance with the department’s surface transportation formula toward transportation plans already submitted and half will be based on states’ population. Money will begin to be distributed to states as block grants 21 days from 20 February.

“We believe that the second half of the money that will come from the Department of Transportation down to the states can be used in combination with PPPs to leverage massive, massive infrastructure programs,” Rapoport said.

He explained that state governors and mayors, who submitted lists of “shovel-ready” projects – or those that have been fully vetted and approved at the state and local level – have complete discretion over how they spend those dollars.

If you have a proposal or a project that is more shovel-ready than someone else's, you need to urge the governor or his staff . . . to move that project along

Frank Rapoport

“So if you catch my drift here, what you need to do if you have a proposal or a project that is more shovel-ready than someone else’s, you need to urge the governor or his staff through an unsolicited proposal to move that project along,” Rapoport said.

He identified two other appropriations within the bill that may provide similar opportunities for contractors and developers.

There is $7 billion of Federal Transit Administration funding, which is being allocated according to the government’s transit funding formula. Half of it is obligated to be spent within 180 days and the funds are available through 30 September 2010.

Additionally, there is $27.5 billion of funding allocated to the Federal Highway Administration for highway and bridge repair. Half of that must be used by the states in 120 days on a use-it-or-lose-it basis. In response, several states – including California – have been scrambling to get their budgets organised in order to take advantage of the funding opportunity.

Rapoport advised private sector participants to do follow their lead.

“Move quickly because, like some of the bank bailouts we saw, the opportunity will be gone before you know it,” Rapoport said.