What Is Happening with the IIJA?
The Infrastructure Investment and Jobs Act (IIJA) — the federal law that authorized $1.2 trillion in infrastructure spending — expires on September 30, 2026. Congress has not passed a reauthorization. $2.3 billion in previously authorized funds have already been rescinded, and the Department of Government Efficiency (DOGE) has terminated federal contracts totaling roughly $71 billion across programs, some of which fund A/E services directly.
If your firm's proposal pipeline depends on federal work, you have about six months to prepare.
Why This Matters for Proposal Teams Specifically
IIJA expiration is not just a policy story. It directly changes the math for every firm that pursues federal and federally funded work.
Here is what shifts:
- Fewer federal solicitations. FHWA, FTA, EPA, and Army Corps programs funded under IIJA will wind down or pause new procurements as authorization lapses. Firms that built pipelines around a steady flow of federal SF330s and RFQs will see fewer opportunities to chase.
- State DOT programs get uncertain. Many state DOT consultant selection programs rely on federal pass-through funding. When federal authorization lapses, states that depend on federal formula dollars may delay or reduce their annual consultant solicitation cycles.
- More competition for fewer pursuits. As federal-heavy firms look for work elsewhere, state, municipal, and private-sector pursuits get more competitive. Firms that never chased federal work will suddenly face new competitors in their markets.
- Existing contracts are not necessarily safe. DOGE contract terminations have already hit active task orders. Firms with federal contracts in progress should review their contract vehicles for termination-for-convenience clauses and understand their exposure.
This is not a slow-moving trend. The expiration date is a hard deadline. Firms that wait until September to adjust will be six months behind firms that start now.
How to Audit Your Pipeline for Federal Exposure
Before you adjust strategy, you need to know how exposed you are. Here is a straightforward audit process.
1. Categorize every active pursuit by funding source
Go through your current pursuit list and tag each opportunity:
| Funding Category | Description | IIJA Exposure |
|---|---|---|
| Direct federal | Agency is federal (USACE, FHWA, GSA, VA) | High — directly affected by authorization lapse |
| Federal pass-through | State/local agency using federal dollars (FHWA → State DOT) | Medium-high — depends on state reserves and commitment authority |
| State/local funded | Funded entirely by state or municipal budgets | Low — not directly tied to IIJA |
| Private sector | Private client, no public funding | None |
Most firms will find their exposure is a mix. The goal is to put a number on it: what percentage of your active pursuits and projected revenue depends on IIJA-authorized dollars?
2. Assess your backlog by program
Some programs are more affected than others. Prioritize your review around these:
- Surface transportation (FHWA) — The largest IIJA funding category. Highway, bridge, and transit design programs funded through state DOTs are the most exposed. If your firm does roadway or bridge work through state DOT on-call contracts, check whether those contracts are funded by federal formula or state appropriation.
- Water infrastructure (EPA/SRF) — The State Revolving Fund programs received significant IIJA increases. Water and wastewater engineering firms should check whether their pipeline includes SRF-funded projects that may not receive new capitalization grants after September.
- Army Corps of Engineers — Civil works programs (flood risk management, navigation, ecosystem restoration) authorized under IIJA may see new project starts freeze if authorization lapses.
- Broadband and energy — Firms working on broadband deployment or grid modernization under IIJA programs should assess program-specific timelines and funding obligations.
3. Talk to your clients
This is the step most firms skip. Call your program managers at the agencies you work with. Ask direct questions:
- Is your program funded through the current fiscal year regardless of IIJA status?
- Are you planning new solicitations in Q3/Q4 2026?
- Has your agency received guidance on IIJA expiration planning?
Agency staff are thinking about this too. The ones who work with consultants regularly will often share what they know about upcoming solicitation schedules — especially for on-call and task-order contracts.
What Firms Should Do Now
Diversify pursuit targets
If more than 50% of your pipeline is federally dependent, start shifting now. The opportunities that are least affected by IIJA expiration:
- Municipal capital improvement programs funded by local bonds and sales tax revenue
- State-funded programs with dedicated revenue sources (state gas taxes, transportation trust funds)
- Private-sector work — particularly in sectors that are growing independently of federal spending (data centers, renewable energy, private development)
- Utility-funded infrastructure — water and power utilities with rate-based capital programs
This does not mean abandoning federal work. It means reducing the concentration risk so a single policy event does not crater your revenue.
Get your SOQ materials ready for new clients
When you pursue a new agency or client for the first time, you need current, polished qualification materials — and you need them fast. State and municipal agencies that are not your current clients will have their own submittal formats, evaluation criteria, and prequalification processes.
The firms that move first will have an advantage. The firms that wait until September and then scramble to put together SOQs for unfamiliar clients will submit weaker packages.
This means having up-to-date staff resumes, project sheets, and firm qualifications in a system where you can generate tailored versions quickly — not buried in folders organized around your federal clients.
Update your go/no-go process
Your pursuit selection criteria should now include federal funding dependency as a risk factor. When evaluating whether to chase a new opportunity, ask:
- Is this funded by IIJA-authorized dollars?
- If IIJA is not reauthorized, does this project still move forward?
- Is the client agency signaling continued procurement activity post-September?
Adding this to your go/no-go checklist prevents you from investing pursuit hours on opportunities that may evaporate.
Watch the reauthorization process
There are three possible outcomes, and each means something different for your pipeline:
| Scenario | Likelihood | Impact on Your Pipeline |
|---|---|---|
| Full reauthorization — Congress passes a new multi-year surface transportation bill | Possible but not before Sept 30 | Business as usual, eventually. Expect a gap between expiration and new authorization. |
| Continuing resolution / short-term extension | Most likely near-term outcome | Keeps current programs alive at reduced levels. New project starts may freeze. Existing contracts continue. |
| Lapse with no extension | Unlikely but not impossible | Federal programs funded by IIJA stop obligating new funds. Existing contracts with obligated funds continue. New solicitations halt. |
Even the best-case scenario — full reauthorization — likely involves a gap. The last surface transportation reauthorization (FAST Act to IIJA) took over a year of extensions. Planning for a gap is the baseline, not the worst case.
What This Means for Different Firm Sizes
Small firms (under 50 staff): If you built your book of work around one or two federal on-call contracts, you are the most exposed. You likely do not have the overhead capacity to pursue an entirely new client base while maintaining current workload. Start identifying 2-3 non-federal opportunities now and get your qualifications packages ready.
Mid-size firms (50-200 staff): You probably have a mix of federal and non-federal work. Your risk is concentration in specific programs — if your transportation division is 80% federally funded and your water division is 20%, the transportation team needs a plan. Audit by division, not just at the firm level.
Large firms (200+ staff): You have diversification built in but may have entire offices or regional operations that are federally dependent. The bigger risk for large firms is the competition effect — as federal work contracts, your competitors will flood the same state and municipal markets you already serve.
Frequently Asked Questions
When does the IIJA actually expire?
The IIJA's authorization period ends on September 30, 2026. This does not mean all spending stops on that date. Funds already obligated to specific contracts continue. What stops is the authority to obligate new funds to new projects and contracts under IIJA programs. For A/E firms, the practical impact is that new solicitations tied to IIJA-authorized programs will slow or stop unless Congress acts.
Will my existing federal contracts be canceled?
Not automatically. Contracts with obligated funds — money already committed to a specific contract — continue even if authorization lapses. However, task orders under indefinite delivery/indefinite quantity (IDIQ) contracts may not receive new task orders if the funding source is no longer authorized. Separately, DOGE-related terminations are a distinct risk that applies regardless of IIJA status. Review your contracts for termination-for-convenience provisions.
Should my firm stop pursuing federal work?
No. Federal A/E work is not disappearing. Even in a lapse scenario, agencies continue to operate, and some programs have multi-year funding that outlasts the authorization period. The smart move is reducing concentration risk — not exiting federal work entirely. If federal pursuits currently represent 70% of your pipeline, bringing that to 50% by adding state and municipal work is a reasonable adjustment.
How does this affect state DOT work?
It depends on the state. States with strong dedicated transportation funding (gas taxes, tolling revenue, transportation trust funds) can continue their programs with less disruption. States that depend heavily on federal formula funds for their consultant selection programs will be more affected. Check your state DOT's funding mix — many publish this information in their annual work programs or STIP (State Transportation Improvement Program) documents.
What happened last time a surface transportation bill expired?
The FAST Act expired in September 2021. Congress passed multiple short-term extensions before enacting the IIJA in November 2021. During the extension period, programs continued at prior-year levels but new project starts were limited. The pattern of short-term extensions is the most likely near-term outcome again, but firms should plan for reduced activity during any transition period rather than assuming uninterrupted procurement schedules.