Robust infrastructure advances access to jobs and services, connects rural and tribal (PDF) communities to valuable technology, and supports a prospering economy. Yet, throughout the United States, poor-quality, aging infrastructure plagues communities. To meet some of this need over the next five years, Congress passed the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) in November 2021.
Within the IIJA allocations, the Infrastructure Project Assistance Grants Program (Mega) will allocate $5 billion through 2026 to support large, complex infrastructure projects. States, localities, planning organizations, tribal governments, and other entities could apply to receive federal funds for projects such as National Highway System repairs or improvements, bridge construction, intercity passenger rail, and freight railroads.
To better understand who the Mega funding process benefited and what barriers existed in the first year of allocations, we examined the US Department of Transportation’s (DOT) first set of applicants and decision justifications as well as a small pool of applications published online. From our research, we found there’s a need to better define how DOT program officers interpret Mega requirements when reviewing grant applications and to allocate more infrastructure funding to ensure it reaches the communities most in need.
Who applied for Mega funding?
There were 246 applications for potential Mega funding, although 108 were ruled ineligible. Of the 138 applicants the DOT found eligible, 9 projects (PDF) were awarded funding in fiscal year 2022, totaling $1.2 billion. Seven types of entities were eligible to apply for Mega funds:
- states
- metropolitan planning organizations
- units of local government
- other political subdivisions of a state
- special purpose districts or public authorities with a transportation function
- tribal governments
- Amtrak
Applications were lengthy and asked for a detailed narrative, budgets, a benefits-cost analysis, a project outcomes report, and multiple approvals and permits. Throughout the two-month application process, applicants were also given the opportunity to solicit assistance from the DOT.
Ultimately, state departments of transportation won six grants, Amtrak won another, and two went to substate grantees. Of the 20 Mega-eligible funds that received funding, only two awards were allocated to local agencies in cities with fewer than 1 million residents (Moorhead, Minnesota, and Cincinnati, Ohio). The rest were awarded to state-level governments and transportation agencies or cities with larger populations.
The application process prioritized more-experienced and well-resourced entities
To progress to the decision phase, Mega project applications had to receive a rating of “highly recommended” on the following six criteria:
- likely to generate national or regional economic, mobility, or safety benefits
- in need of significant federal funding
- cost-effective
- availability of one or more nonfederal sources of funding to maintain the project and cover cost increases
- demonstration of sufficient legal, financial, and technical capacity
- submission of a data collection and analysis plan
For the 138 Mega-eligible applications, only 16 projects were “highly recommended,” with 96 “not recommended.”
Of the “not recommended” applications, 38 percent failed to meet just one statute required, while 26 percent failed to meet three or more. About a quarter (26 percent) of these applications failed solely on the grounds of not meeting cost-effectiveness standards, and 81 percent failed for a combination of reasons, including not meeting cost-effectiveness standards. No applicant was rejected solely for failing to demonstrate “sufficient legal, financial, and technical capacity,” but of the applications that fell short of multiple requirements, nearly half (45 percent) did not meet the capacity criteria.
With so many projects failing for reasons related to cost effectiveness and technical capacity, it seems the application process and requirements present significant barriers for many applicants—including tribal governments, which were eligible for but completely unrepresented in the Mega applicant pool. Applicants were required to submit benefit-cost analyses but were given limited information about what components should be included in such an analysis. Applicants also had to demonstrate that projects were “in significant need” of federal funding by explaining how the project would be negatively affected without the award.
With such an involved and opaque process, entities with less grantwriting experience may have been less likely to receive funding. Very few entities would be able to produce an application containing the level of detail, specific financial demonstration requirements, and project timelines required to be successful without doing significant preproposal work. As a result, the current Mega funding formula and application review process may unintentionally maintain a status quo in transportation funding, even with revisions aimed toward advancing equity.
Continuing to improve federal infrastructure funding processes
To better meet the infrastructure needs of communities nationwide, the DOT could offer more funding and more assistance for Mega projects in future years. Although the department is authorized to allocate $2 billion each year (PDF) under Mega, it awarded less than $1.2 billion in 2022. Successful applications were also responsible for funding a minimum of 20 percent of project costs, but if the department reduced this number, fewer applicants would fail on the grounds of capacity. Finally, the department could consider extending offers of technical assistance to more than just 13 candidates (PDF). This outreach would likely identify which parts of the application were the most confusing for applicants.
So far, Mega is the only IIJA program to include statutory determinations and recommendations in their public release of award decisions. If more grant programs released these detailed funding determinations, municipalities with relatively little application experience may be better prepared to apply for grants and have a real chance at winning.
The administration has already recognized the need for a more streamlined application, as shown by recent guidance detailing the need for a simpler process and stronger metrics and milestones. With hundreds of billions of dollars still available over four more years, federal agencies have a unique opportunity to ensure infrastructure funds go to the communities that need it—not just those that can assemble the best application.