If you’re a contractor working on federal construction projects, you know that funding can be a complex and often frustrating process. Just because a project has been approved doesn’t mean the money is there to get started. That’s because federal projects go through two separate but equally important financial steps: authorization and appropriation. Understanding how these processes work—and why some projects remain stalled despite being “approved”—can help you plan ahead and navigate government contracts more effectively.

The Two-Step Process: Authorization vs. Appropriation

Think of authorization as getting permission to start a project. It’s a legislative approval that lays out the project’s scope, objectives, and even how much money could be spent. But here’s the catch: authorization doesn’t mean funding is available yet. The project still has to go through the second step—appropriation—which is when Congress actually allocates the money to make it happen.

Let’s break it down with an example. Imagine Congress authorizes a new flood control project under the Water Resources Development Act (WRDA). That sounds great, but until lawmakers pass an appropriations bill that actually funds it, construction can’t begin. Sometimes this takes years, and in some cases, the funding never comes through at all.

Why Do Some Projects Stay Stuck?

You might be wondering why so many projects sit in limbo after being authorized. The reasons vary, but it usually comes down to budget limitations and shifting political priorities. The federal budget can only stretch so far, and not every project makes the cut for immediate funding. Other times, major events like natural disasters or economic downturns redirect money to more urgent needs, leaving previously authorized projects waiting indefinitely. Some projects receive partial funding over multiple years, which can cause delays and uncertainties for contractors.

Additionally, political considerations often play a role in which projects receive funding first. Lawmakers prioritize projects based on national needs, regional influence, and even lobbying efforts. If a particular infrastructure improvement aligns with current government initiatives—such as climate resilience or national security—it may be more likely to receive funding sooner than a lower-priority project.

Finding Alternatives: Public-Private Partnerships (P3s)

To keep critical infrastructure projects moving, agencies like the U.S. Army Corps of Engineers (USACE) have turned to alternative funding models, such as Public-Private Partnerships (P3s). These partnerships allow private companies to help finance, build, and even operate projects alongside the government. For contractors, P3s can mean faster project timelines, reduced financial risk, and greater opportunities for long-term collaboration.

A good example of this is the USACE P3 Pilot Program, which funds large-scale water infrastructure projects that might otherwise be stuck waiting for congressional appropriations. Similarly, P3s have been used to modernize military base infrastructure, develop renewable energy projects, and improve transportation systems.

The advantage of P3 projects is that they often involve shared risk and responsibility between the public and private sectors. The government benefits by accelerating project timelines and reducing upfront costs, while private investors gain long-term revenue opportunities through tolls, leases, or service agreements. Contractors who specialize in P3s can position themselves as key players in an evolving federal funding landscape.

What Contractors Can Do to Stay Ahead

If you’re working on federally funded projects, keeping up with budget decisions and funding trends is key. Tracking congressional appropriations, following USACE funding updates, and engaging with industry groups can help you stay informed about upcoming opportunities. When bidding on government projects, take a close look at how they’re funded—some may rely on future appropriations, while others might already have full or partial funding secured.

If you’re interested in getting involved in P3 projects, consider partnering with firms that specialize in these agreements. Many P3 contracts also include long-term maintenance and operations responsibilities, so having a strong project management strategy is essential.

Beyond federal projects, contractors should also explore state and municipal opportunities. Many local governments have adopted P3 models for infrastructure improvements, providing additional chances for contractors to engage in well-funded projects without the uncertainty of congressional appropriations.

At the end of the day, securing work on federal projects isn’t just about winning bids—it’s about understanding how the funding process works. A project might be approved, but without appropriations, it’s just an idea on paper. That’s why staying informed, exploring alternative funding sources, and being adaptable in your approach can make all the difference.

By keeping an eye on both traditional funding mechanisms and emerging P3 opportunities, contractors can position themselves for success in an ever-evolving government contracting landscape. The more proactive and flexible you are in seeking out funding sources, the better equipped you’ll be to secure and complete major federal projects.