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Getting Gateway Done

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Getting Gateway Done

With federal infrastructure money on the horizon, here’s how to keep the Gateway Program moving quickly and efficiently. April 11, 2022
Infrastructure and energy
Economy, finance, and budgets
New York

Massive federal funds will soon be released for infrastructure projects nationwide, meaning that the Gateway Program can finally begin. Gateway will rehabilitate critical rail connections along the Northeast Corridor (NEC); its most ambitious undertakings include the replacement of the 111-year-old Portal Bridge and rehabilitation of the North River Tunnel, both serving NEC’s busiest stretch, between Newark and New York. But getting these projects over the finish line means avoiding past mistakes that led to massive delays and overspending. Private-sector principles, including design-build contracting, can help.

The NEC stretches from Washington, D.C. to Boston and is home to more than 50 million people. The Gateway Program will increase track capacity, improve disintegrating infrastructure, and better serve this economic epicenter. The replacement of the Portal Bridge over the Hackensack River and construction of the new tunnel under the Hudson River are projected to create more than 83,000 jobs and spur $19 billion in economic activity.

New Jersey governor Phil Murphy, New York governor Kathy Hochul, and Senate majority leader Chuck Schumer (from New York) secured Gateway funding immediately after Congress passed the bipartisan infrastructure bill. With supply-chain bottlenecks and millions of unfilled jobs, projects that get underway fast may be the only projects that get underway for some time. The floodgate of funds coming from the infrastructure law dwarfs the country’s capacity to use the money. Contractors can respond only to a limited number of proposal requests that would bring public works projects to fruition. States that don’t move quickly risk competing against one another for scarce contractors, labor, and supplies. Fortunately, the funding agreement for the Hudson Tunnel project, Gateway’s largest component, is nearly complete.

Design-build, widely used in the private sector, can bring the project to fruition on time and on budget. Design-build maximizes efficiency, reduces the risk of delay, and minimizes finger-pointing because the same contractor is responsible for both the design and the construction of a project. Research from the Construction Industry Institute has found that design-build projects “are delivered faster and with greater reliability in cost and schedule performance” than either design-bid-build (DBB) or construction-manager-at-risk (CMR) systems. On average, design-build was marginally less costly than CMR and incurred marginally less cost growth than both alternative systems. And design-build projects were delivered 61 percent faster than CMR and 102 percent faster than DBB.

In 2019, the New York City Public Works Investment Act (PWIA) authorized seven city agencies to use design-build project delivery, and New York City tendered a number of design-build projects. For the Orchard Beach Maintenance and Operations Facility and Rockaway Operations HQ, design-build is projected to save two years in project completion; for the Queens Garage and Community Space Facility, the time savings is projected to be three years. In a report to the state legislature, the city said that “design-build creates a true partnership, unlike the design-bid-build project delivery method, which prohibits the design firms and the construction firms from collaborating with each other,” and recommended extending PWIA legislation and further streamlining the design-build procurement process. Since Gateway exists to ensure a smooth interstate flow of people and goods through the NEC, lawmakers should extend design-build authorization to the key public agencies responsible for it.

Once a design-build process is approved, it’s important to collaborate with the bidders themselves in structuring the requests for proposals (RFPs). By engaging bidders at the beginning of the procurement process, the RFP can consider all the factors that can lead to problems down the line—especially if it includes a 100-year warranty for the work, which is customary in these large projects. The New York State Thruway Authority did this to great effect with the Tappan Zee Bridge replacement project, saving $2 billion in projected costs and delivering the completed project on time.

In the end, principals should consider anything that accelerates the procurement process and gets projects underway more quickly—and reconsider anything that slows the process. A commonly used public-procurement method that allows bidders to adjust their bids after submission, called Best and Final Offer (BAFO), may provide the chance of better value for the contracting agency—though it can easily backfire, too, since going back to bidders for another round when a clear winner already exists can slow down the process and open the door for the low bidders to raise their prices. Market conditions can also change quickly, particularly in inflationary times. Agencies should take a cue from the private sector and grab the right offer when they have a compelling price in hand. A contract that locks in that offer should be encouraged, both with strict penalties for missing deadlines and financial bonuses for finishing early.

Entrepreneurial instincts, so ingrained in the running of a private business, can help guide contracting. When considering infrastructure bills and spending, we often act as if the process and the dollar amounts—billions and trillions—are the only variables. But time is money. What’s truly essential is a smooth, rational, and unburdened process that allows massive public-works projects to proceed quickly and cost-effectively to completion.

Photo by Mario Tama/Getty Images

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