With just 18 months remaining until the Infrastructure Investment and Jobs Act (IIJA) expires on September 30, 2026, contractors across the United States are confronting a familiar yet unsettling predicament: major infrastructure projects require years of planning and execution, but the federal funding guarantees that make those projects possible are about to disappear. As Congress has yet to introduce successor legislation, the construction industry is bracing for potential disruptions that could affect everything from bidding strategies to equipment acquisitions and workforce planning.
The uncertainty isn't merely academic. Without clear federal surface transportation funding beyond 2026, contractors face difficult decisions about pursuing multi-year projects, investing in specialized equipment, and maintaining the skilled workforce needed for complex highway, bridge, and transit work that depends on sustained federal commitments.
The Stakes for Surface Transportation Programs
The IIJA authorized $1.2 trillion in infrastructure spending, including $550 billion in new federal investments over five years. The legislation reauthorized federal surface transportation programs while delivering historic funding increases for highway construction, bridge repairs, public transit, and rail infrastructure. These programs have generated significant work for contractors specializing in earthwork, grading, and excavation—the backbone of nearly every major infrastructure project.
Federal highway and transit programs have traditionally operated on five-or six-year authorization cycles, providing the predictability that state departments of transportation and contractors need to plan major projects. When these authorizations lapse or operate under short-term extensions, the ripple effects are immediate and costly.
"Multi-year projects don't stop on a fiscal year deadline," explains a regional director at a mid-Atlantic excavation firm who requested anonymity to speak candidly about company planning. "If you're three years into a five-year highway expansion that requires moving millions of cubic yards of material, you need to know the funding will be there to complete the work. Uncertainty means we're going to think twice before bidding on projects that extend past 2026."
How Contractors Are Adjusting Bidding and Backlog Strategies
The approaching IIJA expiration is already influencing how contractors approach their infrastructure construction backlog. Industry sources report several emerging strategies:
- Prioritizing near-term projects: Contractors are increasingly favoring projects that can be completed before or shortly after the September 2026 deadline, reducing exposure to potential funding interruptions.
- Building contingency clauses: Bid proposals for projects extending beyond 2026 now commonly include language addressing potential federal funding lapses, shifting some risk back to project owners.
- Pursuing projects with dedicated funding: Work funded through specific IIJA programs with dedicated revenue streams—rather than annual appropriations—is becoming more attractive.
- Diversifying project portfolios: Firms heavily dependent on federal highway work are actively seeking state-funded, local, and private projects to balance their backlog.
For contractors who specialize in earthwork, the implications extend to material management decisions. Large-scale highway and interchange projects generate enormous quantities of excavation material that must be hauled, stored, or repurposed. Project delays or cancellations due to funding uncertainty can leave contractors scrambling to find dump sites for spoil material or suddenly searching for fill dirt when delayed projects unexpectedly restart.
Equipment Investment Decisions in Limbo
Capital expenditures represent another pressure point as the IIJA expiration approaches. Heavy equipment purchases—excavators, haul trucks, dozers, and specialized machinery—require multi-year financing that contractors justify based on projected workload. When the federal pipeline becomes uncertain, these calculations change dramatically.
"We've been planning to expand our fleet to handle the increased bridge work we anticipated through 2028 and beyond," said one Midwest contractor who has worked on several IIJA-funded projects. "But with no visibility into what happens after September 2026, we're holding off on equipment orders worth several million dollars. If the work doesn't materialize, we're stuck with debt and idle iron."
The construction equipment sector is already experiencing extended lead times for certain machinery, sometimes exceeding 12 months. Contractors who delay purchasing decisions due to IIJA expiration uncertainty may find themselves unable to quickly scale up if Congress does eventually pass successor legislation—creating a potentially painful catch-22.
Workforce Planning and the Skilled Labor Challenge
The construction industry's well-documented skilled labor shortage adds another dimension to the uncertainty. Training heavy equipment operators, experienced grade foremen, and specialized trades requires significant time and investment. Contractors are reluctant to aggressively recruit and train workers for infrastructure projects that may not materialize.
Conversely, if funding uncertainty causes contractors to slow hiring or reduce crews, those workers will move to other sectors or regions. When federal funding eventually resumes—whether through successor legislation or short-term extensions—contractors may find themselves unable to staff projects adequately, driving up labor costs and extending timelines.
This boom-and-bust cycle, driven by congressional authorization gaps, has plagued the construction industry through previous reauthorization periods. The 2015 FAST Act, which preceded the IIJA, came only after 36 short-term extensions spanning more than a decade—a period contractors remember as characterized by stop-start planning and inefficiency.
State DOTs Caught in the Middle
State departments of transportation, which administer federal highway and transit funding, face their own planning challenges. Most states develop multi-year transportation improvement programs (TIPs) that outline planned projects and funding sources. Without federal reauthorization, states must decide whether to advance projects into the uncertain post-2026 period or delay letting contracts until funding clarity emerges.
Some states with stronger fiscal positions may choose to advance projects using state funds with the expectation of federal reimbursement once successor legislation passes. Others, particularly those with limited bonding capacity or constitutional balanced-budget requirements, will likely pause major projects—directly impacting contractor workload and the associated demand for excavation material, fill dirt, and dump site capacity.
What Contractors Should Do Now
While contractors cannot control congressional action—or inaction—on infrastructure funding, several practical steps can help navigate the uncertainty:
- Diversify your project mix: Balance federal highway work with state, local, and private projects to reduce dependence on federal surface transportation funding.
- Maintain close communication with state DOT contacts: Understanding your state's approach to post-2026 project letting can inform bidding decisions.
- Structure contracts with appropriate risk allocation: Work with legal counsel to ensure contracts address potential federal funding disruptions.
- Evaluate equipment needs conservatively: Consider leasing options or used equipment purchases that offer more flexibility than long-term financing of new machinery.
- Stay engaged with industry associations: Groups like the American Road & Transportation Builders Association (ARTBA) and Associated General Contractors (AGC) monitor congressional action and advocate for long-term reauthorization.
The coming months will prove critical as Congress considers its options. A robust, multi-year reauthorization would provide the certainty contractors need to bid confidently, invest in equipment and workforce development, and plan material logistics. Short-term extensions or a lapse in authorization would trigger the planning disruptions and inefficiencies that have plagued previous reauthorization cycles.
For contractors whose work depends on moving earth—whether excavating for new highway alignments, finding fill dirt for embankments, or locating dump sites for millions of cubic yards of surplus material—the IIJA expiration represents more than a policy debate in Washington. It's a business reality that demands careful attention and proactive planning as the September 30, 2026 deadline approaches.