Section 428 Alternative Procedures for Permanent Work

Section 428 of the Stafford Act allows FEMA to fund permanent work on the basis of a fixed estimate agreed in advance, instead of actual costs reconciled at the end. FEMA's Public Assistance Program and Policy Guide (PAPPG) describes these Public Assistance Alternative Procedures — often shortened to "428" — in an appendix of its own and limits them to large projects. The Act and the guide — Version 5.0 Amended, which applies to disasters declared on or after January 6, 2025; an older declaration follows the edition in force when it was declared — are the sources for this page.

The idea is a trade. FEMA, the recipient and the applicant agree on the damage, the scope of work and a cost estimate; the award is then capped at the federal share of that estimate. If the work costs less, the applicant keeps the difference for approved recovery and resilience activities. If it costs more, FEMA does not add funds, and the applicant carries the overrun. Taking part is the applicant's choice — the Act does not allow FEMA to make assistance depend on it — but once a fixed cost offer is accepted, FEMA's guide says the project cannot go back to the standard procedures.

What the Act authorizes

Congress set out four goals for the alternative procedures: reducing federal costs, increasing flexibility, speeding up assistance, and creating incentives to finish work on time and within budget. For permanent work, the Act's minimum procedures include grants based on fixed estimates, combining several facilities into one project, estimates prepared by the applicant and certified by licensed engineers, and keeping excess funds. The Act also provides alternative procedures for debris removal, which are a separate track.

FEMA's guide applies the permanent-work procedures only to large projects — those at or above the dollar threshold FEMA sets each federal fiscal year — and groups them with improved and alternate projects as the "capped" options of its flexible-restoration framework. Two limits the guide names: work on building code and floodplain management administration cannot be included, and funding for temporary facilities is not part of a fixed-cost project.

The fixed cost offer

Before an estimate is developed, whether by FEMA or by the applicant, the three parties agree on the damage description, the scope of work and any hazard mitigation to be included. FEMA's guide describes the estimate as covering the cost of restoring the facility to its pre-disaster design and function under the codes and standards that apply, plus cost-effective mitigation tied to the restoration: design and environmental review fees, construction and restoration costs including permits and construction management, and the cost of applicable codes and standards. Approved mitigation is carried as a separate fixed amount, which FEMA reduces if the mitigation is not completed, and the estimate is reduced by credits such as insurance proceeds and salvage.

FEMA's estimating format builds in contingency for hidden damage and for unforeseen environmental and permitting requirements, which is the guide's reason for not adjusting the amount later. Under the Act, an estimate certified by a licensed engineer is presumed reasonable and eligible once accepted, absent evidence of fraud. FEMA transmits the estimate as a fixed cost offer through its grants portal; obligation is FEMA's acceptance of the amount, and after that the only adjustments are for insurance and for approved changes to the mitigation scope.

The guide sets periods for each step — a window after the declaration within which the fixed cost agreement is reached, a short window for the recipient and applicant to accept an offer once FEMA transmits it, and periods after the applicant's last alternative-procedures project is complete for proposing uses of excess funds and for closeout certifications. An offer that is not accepted in time sends the project back to the standard procedures, with no retention of excess funds. Extensions are approved at FEMA headquarters, before the deadline, and a denied extension cannot be appealed.

Flexible use of funds, and excess funds

Unlike a standard project, whose funds attach to one scope, the funds of an applicant's alternative-procedures projects may be shared across all of them — for repairing, restoring or replacing damaged facilities and equipment, building new facilities including the land for them, buying equipment, and cost-effective mitigation. Once the approved scope is complete, funds left over may go to cost-effective activities that reduce future disaster risk and to activities that improve future Public Assistance operations or planning. The guide's examples include mitigation on undamaged facilities, future insurance premiums, training, disaster planning, and salaries for emergency management staff. Excess funds cannot be used to pay down debt, cover operating expenses or budget shortfalls, meet the non-federal share of federal awards, or work on facilities made ineligible by a lapse in required insurance. FEMA evaluates proposed uses for reasonableness and sets a completion date within the disaster's period of performance.

How these projects differ from standard ones

FEMA's guide compares the two tracks. A standard project is funded on actual costs, reconciled at closeout, with no excess to keep; an alternative-procedures project is funded on the fixed estimate. A standard project's funds serve its own scope; alternative-procedures funds are shared. Costs on a standard project are tracked to each work item; on an alternative-procedures project only total costs are tracked and the work is checked against the approved scope. A scope change on a standard project needs FEMA's approval. On an alternative-procedures project, once the fixed cost offer is accepted, the applicant notifies FEMA before any change that involves a building or structure 45 years of age or older, ground-disturbing work, or work in or near a waterway; a change that substantially conforms to the approved scope needs no notice, except on those older structures; and a change to the hazard mitigation scope needs FEMA's approval within the window for reaching the fixed cost agreement, with the offer adjusted to the revised mitigation scope. Overruns on a standard project can be funded; here they are the applicant's. And appeals, available on a standard project, are not granted on these projects except for cost adjustments made after acceptance, such as those for insurance, noncompliance or audits — which is why the guide says disagreements about damage, scope or cost are resolved before the offer is accepted.

What does not change: the obtain-and-maintain insurance requirement still applies, closeout still calls for certifications covering procurement, environmental and historic preservation compliance, civil rights, insurance and total actual costs, and the Office of Inspector General may audit any project.