As I understand it, the prevailing wages are established regionally, meaning areas with very strong unions (for example) will tend to see MUCH higher labor cost for their government contracts. Which is a big part of the change Reagan made. By making union markets so much more expensive than "abused worker" markets, it meant big contracts that weren't married to some locality would tend to be pulled from those union markets by the bidding process, punishing those places for daring to care about their workers.

Fortunately, a lot of infrastructure IS necessarily local.

There is a dark side to that kind of "free money for infrastructure", though, which we're seeing in tons of American cities these days.

The eternal growth mindset has led to many cities building more than their tax base will ever be able to maintain. More roads, more sewers, more firehouses, more electrical lines. Especially true with the nearly-unlimited faucet that is state DOT money, allowing endless major road and highway expansion even if the project makes zero economic sense. It makes it seem like a no-brainer for towns to build eternally outwards and get shiny new subdevelopments instead of investing in the communities that are their economic engines, since the federal money tends to vastly prefer new construction.