Democrats and Republicans hammered out the framework of a deal Thursday that would spare most construction-related federal funding from lapsing as a partial government shutdown still looms.
The agreement follows negotiations around removing funding for the Department of Homeland Security, particularly Immigration and Customs Enforcement, from the larger Consolidated Appropriations package and considering it separately, according to an Associated General Contractors of America statement sent to Construction Dive. The deal struck late Thursday funds most federal agencies except the DHS, which will operate under a short-term extension as further negotiations continue.
Senate leaders aim to finalize votes on DHS funding on Friday, according to Politico. House Speaker Mike Johnson said that the government will "inevitably" shut down briefly, despite the Senate deal, due to the logistics of organizing a vote prior to the deadline.
The bullet construction dodged
For the construction industry, the agreement, if ratified, would keep funding in place for the federal departments that matter most to building activity.
The appropriations package includes funding for programs at the departments of Defense, Labor, Transportation and Housing and Urban Development, according to the AGC. These agencies support road, bridge, airport, transit system and military base projects.
AGC had backed the funding package in part because it maintained dollars for workforce development programs and record levels of investment in registered apprenticeships, according to the statement. It also ensures continued access to supplemental employment visas, subject to statutory eligibility requirements, to help employers address workforce shortages.
Payment delays
Without the last minute deal, contractors would have faced renewed uncertainty around payments and project approvals, said Zack Rippeon, partner in the Atlanta office of Adams & Reese.
For example, projects funded before the start of the federal fiscal year on Oct. 1, 2025, would have technically had appropriated funds available, said Rippeon, but contractors still would have likely faced delays due to furloughs and slower payment processing. Projects not funded before that date would have gone dark for the foreseeable future, he said.
Impact on federal construction
Following the record, 43-day shutdown that began Oct. 1, contractors are growing wary of the on-again, off-again cadence that comes with government contracts. Repeated shutdown threats will likely damage how contractors approach federal work, said Rippeon.
“Constant political shutdown threats create uncertainty, especially when coupled with the already constrained funding for various government agencies involved in construction projects,” said Rippeon. “Contractors may see the need and opportunity to price in more risk tolerance for having to finance the work without payment.”
That then either leads to responsible bidders driving up the overall costs of federal construction projects, or a less qualified low bidder being successful, he said.
