On March 31, the Biden Administration unveiled a $2+ trillion jobs and infrastructure plan including some $621 billion in upgrades for roads, bridges, public transportation, rail, ports, waterways, airports, and electric vehicles aimed at improving air quality, reducing congestion, and limiting greenhouse gas emissions. There are other infrastructure components contained within the plan such as high-speed internet, renovating homes, and upgrading federal facilities.
Having spent 35 years in the U.S Army Corps of Engineers (USACE), including four years overseeing Civil Works programs and Federal permit approvals in the South Atlantic and South Pacific Corps regional headquarters, I’m already being asked, “Who’ll be the winners?”
The answer, like most things the Federal government gets involved with, is a bit complicated.
First, no one knows how Congress will change President Biden’s plan or even if it will eventually become law.
Second, while our aging transportation infrastructure clearly needs attention, there is still a long, deliberate procedure for determining which projects provide the greatest benefit to the public. In my opinion, the most competitive projects will be those providing the greatest national benefit while aligning with the Biden Administration’s environmental goals.
With that said, it’s important to recognize just “how” the nation decides which projects to move forward.
As a former leader in the Corps of Engineers, I witnessed firsthand how USACE performs a project benefit-cost analysis (BCA) to compare economic benefits of project alternatives to the investment costs of those alternatives. As an April 2019 Congressional Research Service report stated, “Disagreement persists about various aspects of these analyses, including the use of BCAs in decision-making, how (and which) benefits and costs are captured and monetized, and how to value future benefits and costs….” Debate notwithstanding, the resulting analysis produces a benefit-cost ratio (BCR) that is used as the primary performance metric for selecting which construction projects to propose for funding.
When overseeing federal projects, I routinely stressed to non-Federal project sponsors that having an updated and fully rationalized BCR could give them a significant advantage in getting their navigation, flood control or environmental restoration projects funded. It was surprising how often projects had not been through the rigorous planning and engineering process required by Federal law.
The legal threshold for an Administration recommendation for construction authorization is that the benefits exceed the costs (i.e., BCR>1). However, when preparing the annual budget, the Administration typically only accepts projects with benefits at least 2.5 times the project costs (i.e., BCR>2.5) or address a significant risk to human safety. Congress often funds projects with benefits less than 2.5:1 (but still greater than 1:1). Nonetheless, congressionally authorized projects below the budget-development BCR threshold quickly discover the funding prospects to be improbable.
Interestingly, the Water Resources Development Act (WRDA) of 2020 introduced language that is worthy of a closer look. Section 110 of the WRDA 2020 requires that future analysis by the Corps “fully identifies and analyzes national economic development benefits, regional economic development benefits, environmental quality benefits, and other societal effects.” That’s fundamentally significant. For example, this new language could potentially level the playing field for municipalities whose population density and development values haven’t previously been able to generate sufficient flood damage, navigation or environmental benefits to justify construction of major flood protection.
To comply with Section 110, the previous Administration’s Assistant Secretary of the Army for Civil Works, R. D. James, issued guidance to the Corps detailing how to change the benefits analysis process. In general, the new process allows more benefits to regional and local (vs. national) than previously. The Corps’ expected release of guidelines detailing how Section 110 will be implemented, currently in development, bears watching.
During my 4-years as an Army General Officer leading two different USACE regional commands, most of my effort was dedicated to project costs and environmental issues. The Corps of Engineers takes this responsibility very seriously. Eventual winners will be non-Federal sponsors with a comprehensive understanding of BCRs and how they’re formulated. That understanding will provide a decided edge once the current Jobs and Infrastructure Plan discussions end and the hard process of choosing begins.
Brig. Gen. (ret) Dave Turner