The President Wants to Bring Outcomes to Infrastructure

By:  Dr. John Brown Miller

The Trump administration’s Legislative Outline for Rebuilding Infrastructure in America will add the measurement of outcomes against infrastructure plans to federal grant policy.  That is a revolutionary change for the better.  The program includes $200 billion in new, direct federal spending over a ten-year period, designed to attract $1.3 trillion in non-federal resources.

State and local sponsors would compete for $100 billion in incentive grants.  For the first time in our history, evaluation criteria would be used that would hold grantees responsible for outcomes of projects and programs.  Four criteria would provide 90% of an applicant’s score.

  • the applicant has secured and will commit new, non-Federal revenue to create sustainable, long-term funding for infrastructure investments (50% weight).
  • the applicant has secured and will commit new non-Federal revenue for operations, maintenance and rehabilitation (20% weight).
  • updated procurement policies and project delivery approaches to improve efficiency in project delivery and operations (10% weight)
  • dollar value of the project or program of projects (10% weight).

Grantees must commit to progress milestones, and would lose their grant if milestones are not met.  The proposal makes numerous adjustments to grant, permitting, and procurement policy – to improve work force development and streamline processes.

The legislative program includes:

  • a $50 billion Rural Infrastructure Program, allocated on a formula basis to the governor of each state, with discretion to choose individual investments that respond to unique rural infrastructure needs;
  • a $20 billion Transformative Projects Program is aimed at significant projects that are capable of generating revenue;
  • a $20 billion expansion in Private Activity Bonds and federal credit programs (like the Transportation Infrastructure Finance and Innovation Act loan program); and
  • $10 billion Interior Maintenance Fund within the Department of Interior will begin to address $12.5 billion in deferred maintenance backlog in Fish and Wildlife and the National Parks.

The President’s focus on outcomes in infrastructure is revolutionary – and long overdue.  The American medical profession has been tracking outcomes – for example, from most kinds of surgery – for decades.  Measuring outcomes against plan is how hundreds of industry sectors improve their products and services.

Our trading partners across the world – including the United Kingdom, Canada, Australia, and much of Europe – have already moved to outcome based life cycle procurement of core infrastructure.  They have already implemented asset management systems based on International Standards Organization standards that save between 30-40% in total life cycle costs.

The United States remains stuck in the muck of putting states and municipalities in long lines in Washington, D.C., to lobby for a piece of insufficient federal design and construction dollars.  The current “prize” for winning federal grant dollars comes with the unfunded future cost of operations, maintenance, and repair – an obligation ten times that of the grant.  The state of the nation’s infrastructure confirms this policy has failed.

But, the futility of this circular motion among three levels of government is regularly overlooked.  The following table illustrates why.  Roads and bridges are the example.  The federal government has only a tiny ownership stake – confined to federal lands and bases.  Current policy simply paralyzes all levels of government – precluding actual solutions.

2015 Conditions and Performance Report DOT Total Federal State Local
US Road Mileage by Owner (%) 4,201,148 3.70% 19.00% 77.30%
Vehicle Miles Traveled (%) on US Roads 2.987 Trillion 0.10% 72.10% 27.80%
US Bridges (>20 ft) by Owner (%) 607,380 1.50% 48.20% 50.10%
Bridge Traffic Carried 0.20% 87.30% 12.40%

The President proposes a different role for the federal government – encouraging state and local government to achieve provably better outcomes for their infrastructure investments.  The “carrot” the President wants Congress to offer is to reward provably better procurement, technology, levels of service, and life-cycle cost performance.

PennDOT’s 2015 Rapid Bridge Replacement program is an example of a project that President Trump’s proposal would encourage in the future.  PennDOT is replacing 558 structurally deficient (small) bridges over a three-year period, each with a 100-year design life, in a single contract that includes 25 years of operations and maintenance.  Financing by a concession contractor through Private Activity Bonds allowed the state to deliver a quick improvement in service to citizens, at a low financing cost.

Every American can see how and why such a strategy is a vast improvement.  Contracting to replace 558 bridges, one bridge at a time, first with a designer, and then with a contractor, would produce more than 1100 competitions, higher prices, higher administrative costs, confusion, conflict, and delay.  [PennDOT saw the benefits in 2015.]  Competing to include 25 years of operation and maintenance simply skips decades of deferred repairs, along with 25 years of legislative appropriations to maintain 558 bridges.

The President correctly recognizes that state and local governments know best what needs to be done with their infrastructure.  The President is right that long term, binding commitments to design, construction, operate, and maintain infrastructure are best secured at the state and local levels – by the owners of these facilities.

Infrastructure’s nature is to decay, become obsolete, and be replaced.  What we have done by rote for six decades is failing.  The President’s proposal encourages state and local governments to think and act differently, and to use federal dollars to improve service and lower costs with measurable outcomes –  like on time, within budget, and fully maintained.

Measuring Outcomes against Plans is at work in every aspect of American life outside of government.  This aspect of the President’s proposals is long overdue.

Miller was professor of civil engineering at MIT, chair of the ABA Section of Public Contract Law, and is an expert on infrastructure procurement.