Regulation and Administration of Transportation Programs (NAICS 926120): An Investor's Primer

1. Overview

This industry is the government machinery that licenses, plans, inspects, and polices how Americans and their goods move — by road, air, rail, water, and pipeline. It is the Department of Motor Vehicles (DMV) that issues your license, the Federal Aviation Administration (FAA) inspectors who certify aircraft, the safety boards that investigate a derailment, and the state transportation departments that decide which bridge gets rebuilt. Under the North American Industry Classification System (NAICS) — the 2022 classification the U.S. Census Bureau uses to sort establishments — this is code 926120, Regulation and Administration of Transportation Programs. [1]

The essential thing to understand up front: this is not a for-profit industry. Code 926120 is a public-administration category, so almost everyone in it is a government employee, not a company. No publicly traded stock has "regulating transportation" as its core business. [1]

So why does it belong in an investor's library? Because it is the control tower for roughly a tenth of the U.S. economy. It sets the rules that make or break airlines, railroads, trucking fleets, automakers, and electric-vehicle companies; it directs hundreds of billions of dollars of infrastructure funding; and it hires an army of private engineering firms, technology vendors, and toll-road operators to do the work it funds. You do not invest in this industry — you invest in the companies that live under its rules and feed off its budgets.

• Public-market ways in: engineering and program-management firms, tolling and traffic-enforcement technology vendors, air-traffic and safety-systems contractors, listed toll-road and infrastructure owners, and the municipal bonds that fund transportation agencies.
• Private ways in: infrastructure funds and public-private partnership (P3) equity, direct concession stakes, private credit, and privately held engineering and toll-systems companies. Federal policy even lets private firms own, lease, or operate certain public airports. [32]

2. What it is, and how it's structured

The Census definition is narrow: government establishments "primarily engaged in the administration, regulation, licensing, planning, inspection, and investigation of transportation services and facilities." [1] It explicitly includes: motor-vehicle and operator licensing (state DMVs); the U.S. Coast Guard (except its academy); the FAA except its air-traffic-control operations; motor-carrier licensing and inspection offices; the National Transportation Safety Board (NTSB); non-operating port, transit, and public-transportation authorities; and parking authorities. [1]

What matters just as much is what the code excludes — because the exclusions are where the profit-making companies live: [1]

So the regulator that certifies a runway sits in 926120; the contractor that paves it sits in 237310; the airline that lands on it sits in Sector 481. This primer covers the regulator.

Ownership mix. By head count the industry splits roughly one-third federal, well over half state, and the rest local. The federal side is a handful of large agencies; the state side is dominated by 50 state departments of transportation (DOTs) and their motor-vehicle bureaus; the local side is city traffic, parking, port, and transit authorities.

3. How big it is

Standard "business" statistics badly undercount this industry, and it's important to know why. The Census Bureau's County Business Patterns and the Small Business Administration's tallies are built from private employers and largely exclude government establishments. Because 926120 is almost entirely government, those datasets show close to nothing here — and our ingested federal business statistics contain no figures for this node, exactly what you'd expect for a public-administration code. The honest way to size it is by government employment, which the Bureau of Labor Statistics (BLS) captures through its Quarterly Census of Employment and Wages (QCEW) — a count of employers covered by unemployment insurance, not a measure of program spending. [2]

Using QCEW 2024 annual averages for NAICS 926120: [2]

That ~$30.8 billion is a payroll, not revenue — this industry produces rules and oversight, not sales. [2] Small special districts and authorities can still be under-captured or grouped, so treat the totals as a solid floor rather than a precise ceiling.

For federal context, the U.S. Department of Transportation (DOT) had roughly 54,100 full-time-equivalent (FTE) staff and about $152 billion of enacted funding in fiscal year (FY) 2025 — though most of that money is grants passed through to states and transit agencies, not the department's own operations. Federal head counts have been in flux since early 2025 amid government-wide workforce cuts. [3] A related security workforce, the Transportation Security Administration (TSA, part of the Department of Homeland Security), added roughly 64,000 more people as of late 2024, about 50,000 of them airport screeners. [5] The much larger flows of money these agencies administer are covered in Section 5.

4. The investable universe

There is no pure-play public company here — you cannot buy shares in "the FAA" or "a state DOT." [1] Investors instead buy the private firms that sit around the regulator: the ones it pays to design and build projects, the vendors that run its systems, and the operators it licenses to run infrastructure. Tickers below are for orientation, not recommendations, and none of these companies is a pure 926120 business — each is a diversified proxy.

Major private owners and vendors. Much of the money-making activity is not listed at all: privately held or employee-owned engineering firms — Kiewit, Bechtel, HDR, Burns & McDonnell, Kimley-Horn [21][22][23][24]; toll-technology vendors — TransCore (owned by Singapore-listed ST Engineering), Kapsch TrafficCom, and Cubic (taken private by Veritas Capital) [25]; and, critically, the infrastructure funds and P3 equity holders — Macquarie, Global Infrastructure Partners, Meridiam, IFM Investors, and airport platform Vantage Group — that own long-dated concessions on public toll roads, bridges, and airports. [26][27] Public investors who want income rather than equity buy the municipal revenue bonds that toll, airport, port, and transit authorities issue to finance their capital programs.

5. How the money works

Because the industry itself earns no profit, "how the money works" has two halves: how the government side is funded, and how the private proxies actually make money.

The government side — dedicated user taxes plus general revenue. The signature mechanism is the Highway Trust Fund, filled by the federal fuel excise tax: 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel — rates unchanged since 1993 and never indexed to inflation. [9] That is the central flaw in U.S. transportation finance: because the tax is per gallon (not per dollar or per mile), rising fuel efficiency and electric vehicles (EVs) steadily erode it while construction costs climb. Since 2008 the fund has needed repeated bailouts from general tax revenue, including a $118 billion transfer in the 2021 infrastructure law. [9] Aviation runs on a parallel model of ticket and fuel taxes; states and localities add vehicle registration and license fees, tolls, transit fares, and port charges.

The scale of money administered dwarfs the industry's own payroll. Across all levels of government, transportation user fees exceeded $240 billion in 2024; state and local governments provided about $262.9 billion for highways (topped up by roughly $65.1 billion in federal highway transfers) and about $76.1 billion for transit (plus $19.8 billion in federal transit transfers). These flows overlap and should not be summed — they show how heavily transportation leans on subnational government. [6] On top of the baseline, the Infrastructure Investment and Jobs Act (IIJA, 2021) — roughly $1.2 trillion total, about $550 billion of it new spending — directs on the order of $650+ billion to transportation, including about $350 billion for federal highway programs and up to about $108 billion for public transit through FY2026. [6][7][8] The money flows back out as agency payroll (~$31B, Section 3), formula and competitive grants to states and transit systems, and contracts to private vendors.

The private side — the metrics that actually matter to investors:

• Engineering & program-management firms (AECOM, Jacobs, Parsons, Stantec, WSP): watch funded backlog and book-to-bill (new orders divided by revenue booked). These are labor businesses billing engineers' time; margins are thin but backlog visibility is long, and it swells when Washington passes a big funding bill. Contract mix matters — fixed-price work carries execution risk; cost-reimbursable work is steadier. [10][11]
• Tolling & enforcement technology vendors (Verra Mobility, Conduent, TransCore, Kapsch): the economics are per-transaction and per-violation fees plus multi-year back-office/software contracts. The key drivers are contract wins and renewal (re-compete) rates — losing a large state or tolling-authority contract is the main risk. [13][14]
• Toll-road concessionaires and infrastructure owners (Ferrovial, Brookfield, FTAI): they earn toll or usage revenue on traffic volume, usually with inflation-linked toll escalators, over very long concession terms (often 30–99 years). The metrics are traffic growth, toll-per-trip, capital spending, leverage, and remaining concession life. Federal credit such as the Transportation Infrastructure Finance and Innovation Act (TIFIA) can finance eligible public and private borrowers. [17][18][19][31]
• Municipal bondholders: the relevant metric is debt-service coverage — how many times a toll road's or airport's net revenue covers its bond payments — plus the strength of the pledged revenue.

Capacity-utilization, same-store-sales, regulated-utility rate base, and REIT-style funds-from-operations metrics do not apply cleanly to this code; use the measures above instead.

6. What drives demand

"Demand" here means workload for the regulators and dollars for their contractors. The main drivers:

• The federal funding cycle. Surface-transportation programs are funded in roughly five-year bills. IIJA authorizes programs through FY2026, so the fight over its successor is the single biggest near-term swing factor for infrastructure contractors. [7][8]
• Aging infrastructure and safety incidents. Deteriorating bridges, pipeline failures, and high-profile crashes generate new rules, inspection mandates, and spending. The Federal Transit Administration alone reports a state-of-good-repair backlog exceeding $105 billion. [8]
• Traffic, freight, and licensing volume. More vehicle-miles, registrations, and licensed drivers mean more DMV and safety workload; more air passengers mean more FAA and TSA activity; more freight means more motor-carrier and port oversight. Mandatory licensing and inspection make a durable, non-cyclical base of demand. [1]
• Digitization. Connected vehicles, artificial intelligence, digital tolling, contactless fares, and real-time asset data steadily expand the technology layer agencies must buy. [14][15]
• The EV transition. EVs pay no fuel tax, so their rise erodes the funding base and pushes agencies toward new revenue models such as mileage-based user fees. [9]
• Climate and resilience. Flooding, hurricanes, wildfire, and heat drive demand for resilient design, permitting, and emergency-recovery work. [29]
• Politics and appropriations. Administrations set priorities (highways vs. transit vs. rail), and government shutdowns can freeze both operations and contract awards. [3]

7. Regulation

In this industry the establishments are the regulators — so "regulation" is really a map of who holds which lever, plus the rules suppliers must follow.

Who regulates:

• U.S. DOT and its modal administrations: the FAA (aircraft, airports, airspace), Federal Highway Administration (FHWA), Federal Motor Carrier Safety Administration (FMCSA) (trucks and buses), Federal Railroad Administration (FRA), Federal Transit Administration (FTA), National Highway Traffic Safety Administration (NHTSA) (vehicle safety and recalls), Maritime Administration (MARAD), and the Pipeline and Hazardous Materials Safety Administration (PHMSA). [1][3]
• Independent bodies: the NTSB, which investigates accidents but cannot write rules; and the Surface Transportation Board (STB), the economic regulator for freight railroads. [1]
• State and local: 50 state DOTs and their DMVs, regional metropolitan planning organizations (MPOs) that prioritize local projects, and port and transit authorities. [2]

The rules that shape supplier economics:

• Environmental review: the National Environmental Policy Act (NEPA) requires federal agencies to weigh environmental effects and often drives project timing, scope, and permitting. [29]
• Domestic sourcing: the Build America, Buy America Act (BABA) imposes domestic-content requirements on most federally funded infrastructure. [30]
• Procurement: the Federal Acquisition Regulation (FAR) governs contract types, pricing, competition, and audits. [28]
• Private finance: TIFIA credit is open to governments, authorities, and qualifying private entities. [31]

For investors, the regulatory levers that move company earnings are vehicle-safety and emissions rules (automakers, EV makers), rail safety and rate oversight (railroads), hours-of-service and licensing rules (trucking), and airworthiness and certification timelines (aircraft makers and airlines). The FAA's certification pace, in particular, can gate an aircraft program worth billions. State-by-state fragmentation — separate licenses, contract vehicles, labor rules, and data controls — is itself a cost and a moat for incumbent suppliers.

8. Competitive dynamics and consolidation

The government side does not compete or consolidate — it is a monopoly by design, with defined jurisdictions and public mandates. The action is on the supplier side, where firms compete on qualifications, past performance, price, technical depth, local relationships, safety record, and delivery reliability — and it is consolidating:

• Engineering firms have been rolling up for a decade, chasing the scale needed to win IIJA-funded mega-projects; Parsons, for example, expanded its Southeast footprint by acquiring BCC Engineering, and WSP has reportedly weighed a bid for Jacobs. [12][20]
• Tolling and enforcement technology is effectively an oligopoly — Verra Mobility, Conduent, TransCore, and Kapsch (with Thales, Cubic, and INIT also cited as competitors) split most large U.S. contracts, which makes each state or authority re-compete a high-stakes event. [14]
• Public-private partnerships (P3s) keep expanding the private role in operating public assets, letting infrastructure funds own toll roads and airports under long government concessions — a structural shift that hands more transportation economics to private capital while government keeps the regulatory reins. [32]

Our view: consolidation should continue among engineering, program-management, and transportation-technology suppliers; scale improves access to large contract vehicles and cross-selling, while smaller firms keep an edge in local relationships and niche expertise. The main risks to that thesis are integration failures, customer concentration, and loss of technical talent.

9. Risks

• Structural funding gap. The fuel tax has been flat since 1993 while costs rise and EVs erode the base; the Highway Trust Fund now depends on recurring general-fund bailouts, making long-term funding politically fragile. [9]
• Reauthorization and shutdown risk. Contractor backlogs hinge on Congress passing the next surface-transportation bill and annual appropriations on time; IIJA's authorization horizon ends in FY2026, and delays or shutdowns stall awards. [3][7][8]
• Procurement and execution risk. Re-competes, price pressure, audits, debarment, and contract termination can dent supplier earnings; fixed-price work exposes contractors to labor, material, and schedule overruns. [12][28]
• Permitting risk. NEPA review, BABA content rules, local approvals, litigation, and public opposition can delay projects. [29][30]
• Workforce strain. Air-traffic-controller staffing has run below target — about 13,200 certified controllers at the end of FY2025 despite record hiring — and 2025 federal workforce cuts add uncertainty across safety agencies. [3][4]
• Traffic, financing, and cyber risk. Toll and transit owners face volume risk, political limits on pricing, heavy capital needs, and refinancing exposure; enforcement and payment systems face outages, inaccurate-citation disputes, privacy breaches, and legal challenges to camera-enforcement programs. [13][17][18]
• Basis risk. A company can benefit from transportation spending without meaningful 926120 exposure — most public proxies are diversified conglomerates, so isolate the actual transportation segment before drawing conclusions.

10. How to invest, and the outlook

Public-market routes. For equity exposure to transportation spending and rules, investors look to three buckets: engineering and program-management firms (AECOM, Jacobs, Parsons, Stantec, WSP), whose funded backlogs track federal and state budgets; tolling and enforcement / administrative-technology vendors (Verra Mobility, Conduent) that run agency systems on multi-year contracts; and air-traffic and safety-systems contractors plus asset owners (Leidos, RTX; Ferrovial, Brookfield, FTAI). Compare valuation multiples, dividend yields, and balance sheets only after isolating each company's real transportation exposure. Income-oriented investors buy municipal revenue bonds issued by toll, airport, port, and transit authorities, where the pledged revenue and debt-service coverage — not a stock price — are what matter. [10][13][14]

Private routes. Institutional and accredited investors reach the same economics through infrastructure funds and P3 equity (Macquarie, Global Infrastructure Partners, Meridiam, IFM Investors), project-level equity and private credit, direct stakes in toll and airport concessions, and privately held engineering and toll-systems companies. These offer the long-dated, inflation-linked, quasi-regulated cash flows public markets can't fully replicate. Diligence should center on the public counterparty, contract-termination rights, construction risk, handback obligations, inflation protection, and refinancing assumptions. [26][27][31][32]

Near-term drivers (forward-looking). In our judgment the industry's next few years turn on four things: (1) the tail end of IIJA deployment through FY2026, which keeps engineering backlogs full; (2) the fight over the next surface-transportation reauthorization, whose size and timing set the funding baseline for years; (3) FAA modernization and the controller-hiring surge, a multi-year tailwind for air-traffic technology and staffing; and (4) the slow-motion funding crisis as EVs erode the fuel tax, which will eventually force a shift toward mileage-based or other new user fees.

The bottom line: NAICS 926120 is structurally durable but financially indirect. The underlying need for transportation administration, safety, and modernization is about as recession-proof as demand gets — but the investable returns come from the private companies and infrastructure assets that help government plan, regulate, finance, build, operate, and modernize the system. Earnings there are lumpier and politically timed, so the most attractive exposures are diversified providers with strong public-sector relationships, disciplined contract-risk management, and recurring technology or program-management revenue. None of the four drivers above is a company you can buy — but each one moves the earnings of the companies you can.

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Sources

1. U.S. Census Bureau, 2022 North American Industry Classification System Manual — NAICS 926120 definition, inclusions, and cross-references. https://www.census.gov/naics/reference_files_tools/2022_NAICS_Manual.pdf
2. U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW), 2024 annual averages, NAICS 926120, national totals by ownership; and QCEW methodology overview. https://data.bls.gov/cew/data/api/2024/a/industry/926120.csv · https://www.bls.gov/cew/overview.htm
3. Congressional Research Service, "Department of Transportation Funding: FY2021–FY2026," R48596, 2025; and U.S. DOT Budget & Performance (DOT FTE and enacted funding). https://www.congress.gov/crs-product/R48596
4. Federal Aviation Administration / U.S. DOT, Air Traffic Controller Workforce Plan 2025–2028 (certified controller count). https://www.faa.gov/about/plans_reports/congress/air-traffic-controller-workforce-plan-2025-2028
5. Transportation Security Administration, "TSA by the Numbers," 2024–2025 (workforce and screener counts). https://www.tsa.gov/news/press/factsheets/tsa-numbers
6. U.S. Bureau of Transportation Statistics, Transportation Public Finance / Government Transportation Finance Statistics, 2024–2026 (user fees; highway and transit funding by level of government; IIJA transportation total). https://www.bts.gov/tpfs
7. Federal Highway Administration, "Infrastructure Investment and Jobs Act" (IIJA topline and federal highway programs through FY2026). https://highways.dot.gov/infrastructure-investment-and-jobs-act
8. Federal Transit Administration, "The Infrastructure Investment and Jobs Act" (transit authorization through FY2026; state-of-good-repair backlog). https://www.transit.dot.gov/IIJA
9. Tax Policy Center, "What is the Highway Trust Fund, and how is it financed?"; Peter G. Peterson Foundation, "The Highway Trust Fund Explained" (fuel-tax rates since 1993; general-fund transfers). https://taxpolicycenter.org/briefing-book/what-highway-trust-fund-and-how-it-financed
10. AECOM, Form 10-K / Annual Report FY2024 (revenue ~$16.1B); Smart Cities Dive, "Federal infrastructure investments buoy engineering and construction firms," 2024. https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000868857&type=10-K
11. Jacobs Solutions, Form 10-K, 2025. https://www.sec.gov/Archives/edgar/data/52988/000162828025053316/jec-20250926.htm
12. Parsons Corp., Form 10-K, 2025 (transportation program management; BCC Engineering acquisition). https://www.sec.gov/Archives/edgar/data/275880/000119312526045495/psn-20251231.htm
13. Verra Mobility Corp., "Fourth Quarter and Full Year 2024 Financial Results," 2025, and Form 10-K, 2025 (total and Government Solutions revenue). https://www.prnewswire.com/news-releases/verra-mobility-announces-fourth-quarter-and-full-year-2024-financial-results-302387610.html
14. Conduent Inc., "Fourth Quarter and Full Year 2024 Financial Results," 2025, and Form 10-K, 2025 (~$3.36B revenue; transportation-technology competitors TransCore, Thales, Cubic, INIT). https://www.sec.gov/Archives/edgar/data/1677703/000167770326000024/cndt-20251231.htm
15. Leidos, "Transportation" (air-traffic, safety systems, and ITS). https://www.leidos.com/markets/transportation
16. (reserved)
17. Brookfield Infrastructure Partners, Annual Report / Form 20-F, 2025 (toll roads, rail, transport assets). https://www.sec.gov/Archives/edgar/data/1406234/000140623426000002/bip-20251231.htm
18. Ferrovial SE, Form 20-F, 2025 (North American toll-road and airport concessions). https://www.sec.gov/Archives/edgar/data/1468522/000162828026011789/fer-20251231.htm
19. FTAI Infrastructure Inc., Form 10-K, 2025 (railroads, ports, terminals). https://www.sec.gov/Archives/edgar/data/1899883/000189988326000015/ftai-20251231.htm
20. Engineering News-Record, "Observers Weigh Possible WSP Acquisition Bid for Jacobs," 2024 (reported/speculative). https://www.enr.com
21. Kiewit Corp., "About Us" (employee-owned engineering and construction). https://www.kiewit.com/about-us/
22. Bechtel, "Infrastructure" (privately held engineering, construction, and project management). https://www.bechtel.com/markets/infrastructure/
23. HDR Inc., 2025 Annual Report (employee-owned engineering/architecture; transportation practice). https://www.hdrinc.com/about-us/2025-hdr-annual-report
24. Burns & McDonnell, "About" (employee-owned engineering, architecture, construction). https://www.burnsmcd.com/about
25. TransCore, "About" (transportation-technology firm owned by ST Engineering). https://transcore.com/about
26. IFM Investors, infrastructure capabilities (private infrastructure manager with toll-road exposure). https://www.ifminvestors.com/capabilities/know-how/
27. Vantage Group, "Who We Are" (private airport and transportation investment/management platform). https://www.vantagegroup.com/who-we-are/
28. Acquisition.gov, Federal Acquisition Regulation (FAR) Part 16 — Types of Contracts. https://www.acquisition.gov/far/part-16
29. U.S. Department of Transportation, "NEPA" (National Environmental Policy Act review). https://www.transportation.gov/transportation-policy/nepa
30. U.S. Department of Transportation, "Buy America Requirements for Manufactured Products" (Build America, Buy America Act), 2024. https://www.transportation.gov/bipartisan-infrastructure-law/regulations/2024-31350
31. U.S. DOT Build America Bureau, "TIFIA Eligibility" (Transportation Infrastructure Finance and Innovation Act). https://www.transportation.gov/buildamerica/financing/tifia/eligibility
32. U.S. Department of Transportation, "Public-Private Partnerships (P3)"; Federal Aviation Administration, Airport Investment Partnership Program. https://www.transportation.gov/buildamerica/technical-assistance/public-private-partnerships-p3 · https://www.faa.gov/airports/airport_compliance/privatization