A late bipartisan agreement reached Thursday is set to spare most construction-related federal funding from expiring, even as the threat of a partial government shutdown continues to loom over Washington.
Democrats and Republicans finalized a framework that would keep federal dollars flowing to the construction programs most critical to infrastructure and building activity. The deal follows negotiations to remove funding for the Department of Homeland Security — particularly Immigration and Customs Enforcement — from the broader Consolidated Appropriations package and instead consider it separately, according to a statement from the Associated General Contractors of America sent to Construction Dive.
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Under the agreement, most federal agencies would receive full funding, while DHS would operate under a short-term extension as negotiations continue.
Senate leaders are aiming to hold final votes on DHS funding Friday, according to Politico. However, House Speaker Mike Johnson cautioned that a brief shutdown remains likely due to the logistical challenges of organizing a vote ahead of the deadline, saying the government will “inevitably” shut down briefly despite the Senate agreement.
For the construction industry, the agreement — if ratified — would preserve funding for the federal departments that play the largest role in project delivery and workforce support.
The appropriations package maintains funding for programs at the departments of Defense, Labor, Transportation and Housing and Urban Development, according to AGC. Together, those agencies support a wide range of projects, including roads, bridges, airports, transit systems and military installations.
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AGC supported the package in part because it protects funding for workforce development initiatives and sustains record investment levels in registered apprenticeship programs, the organization said. The deal also ensures continued access to supplemental employment visas, subject to statutory eligibility requirements, which employers rely on to address persistent labor shortages.
Absent a last-minute deal, contractors would have faced renewed uncertainty surrounding payments, approvals and project timelines, said Zack Rippeon, a partner in the Atlanta office of Adams & Reese.
Projects funded before the start of the federal fiscal year on Oct. 1, 2025, would have technically retained access to appropriated funds, Rippeon said, but contractors still would have likely experienced delays caused by furloughs and slower payment processing. Projects that had not yet been funded would have effectively stalled indefinitely.
Following the record 43-day shutdown that began Oct. 1, contractors are increasingly wary of the recurring stop-and-start nature of federal funding, Rippeon added. Repeated shutdown threats could permanently alter how firms approach government work.
“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 dynamic could ultimately drive up costs for federal construction projects or allow less-qualified bidders to win contracts by underpricing risk, Rippeon said — outcomes that could undermine project quality and long-term value.
Originally reported by Sebastian Obando, Reporter in Construction Dive.
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