Small vs Large Projects in Public Assistance

A FEMA Public Assistance project is either small or large, depending on whether its cost falls below, or at or above, a dollar threshold that FEMA sets each federal fiscal year under Section 422 of the Stafford Act. The classification decides how the project is funded and paid: small projects run under simplified procedures and are paid on estimates, while large projects are reconciled to actual documented costs at closeout. FEMA's Public Assistance Program and Policy Guide (PAPPG) and FEMA's regulations describe the two tracks, and they are the sources for this page.

The threshold

FEMA's regulations set a base amount for the threshold and direct that it be adjusted each year for inflation, and the Stafford Act carries the same base and adjustment. FEMA posts the amount for each fiscal year on its website, and a new year's figure applies to disasters declared in that year; it does not reclassify the projects of earlier declarations. The guide adds a point that surprises some applicants: FEMA decides whether a project is large or small on the final approved eligible cost after adjustments, including insurance reductions, so a project that starts above the line can become small once anticipated insurance proceeds are deducted.

A second, much lower figure is easy to confuse with it. FEMA also sets a minimum project amount each fiscal year, and a project application below it is not eligible for Public Assistance at all. The guide applies the minimum to each project application rather than to each item of damage, does not combine work from several sites into one project solely to reach it, and exempts donated-resources and management-cost projects, which are eligible only when tied to an eligible project that meets it.

Small projects: simplified procedures

Congress created the simplified procedures to make the program easier to administer for smaller projects. Under them, as FEMA's guide describes, an applicant may submit summary documentation and certify its costs rather than produce full supporting records before FEMA obligates funds; FEMA may accept a certification in place of documentation, and it may fund a small project on estimated costs even when the work is finished, provided the completed scope is documented. The applicant still keeps the underlying records for a period after its last small project is certified complete.

Payment is quick by design. Under FEMA's regulations the federal share is paid to the recipient when the project is approved and passed to the applicant as soon as practicable, and the payment is not reduced if the applicant spends less than the approved amount — though a project that is not completed may have to be refunded. Simplified procedures do not relax compliance: the guide says small projects still follow the procurement and contracting rules, although they carry no quarterly reporting requirement.

Once a small project is obligated, FEMA's guide adjusts the funding only in specific situations: the approved scope was not completed, FEMA approved a change of scope, actual insurance proceeds differ from the estimated deduction, there were errors, omissions or hidden damage, the applicant did not comply with applicable law, or there was fraud, waste or abuse. In those cases FEMA adjusts the affected cost items rather than reopening the whole estimate.

Net small project overruns

FEMA does not normally review a cost overrun on a single small project. Instead, FEMA's regulations and guide let an applicant ask for more funding when the combined actual cost of all its small projects exceeds the total FEMA obligated for them. The request goes through the Public Assistance appeal process, within a period the regulations set after the last small project is completed, and it has to be supported by actual cost records for each small project — which is why the records are kept even when payment was based on estimates. An applicant that is not making such a request certifies instead that its small projects are complete, within the period the guide describes.

Large projects: reconciliation at closeout

With the exception of capped projects — improved and alternate projects, and projects under the Section 428 alternative procedures — a large project's final eligible amount is the actual documented cost of completing the approved scope of work, reconciled through the recipient's accounting under FEMA's regulations. Because the actual cost becomes clear only at completion, the regulations require recipients to report quarterly on open large projects, tracking spending against progress. During the work, justified overruns — from unit-price changes, eligible changes of scope or delays, for example — are evaluated and submitted through the recipient to FEMA for a determination.

At closeout, FEMA's guide describes the applicant providing the records that support its actual costs within a period after the work is complete, and the recipient submitting an expenditure report and a certification that the costs tie to the approved scope, that the work complied with the agreement between FEMA and the state, territory or Tribal Nation, and that payments were made as the federal grant rules require, with the final claim following within a further period. The closeout package the guide describes includes the final inspection report, expenditure summaries, labor and contract cost records, procurement records, the final insurance statement of loss and change orders. Before closing, FEMA checks that no appeals, audits or arbitration cases are pending, that the work matches the approved scope, that the costs fall within the approved deadline, and that nothing duplicates another source of funds. If the eligible costs exceed the initial approval, FEMA obligates the additional funds; a discrepancy can lead to a field review or an audit.

The two tracks at a glance

A small project is funded on the federal share of the approved estimate, paid on approval, not adjusted to actual costs except in the situations above, and reviewed for overruns only in the aggregate; a large project is funded on the federal share of actual documented costs unless capped, reported on quarterly, evaluated for overruns project by project, and closed with a certification and a final claim. Which track a project is on depends on the threshold in force for its declaration, which is one more reason the date of a disaster matters — see which PAPPG version applies.