In August 2022, FEMA increased the threshold for Small Projects under the FEMA Public Assistance program to $1 million with the intent to reduce the administrative burden, increase timely project obligations, and provide faster recovery to impacted entities. The increased threshold to simplify and streamline Small Project funding has resulted in a shift in recovery, required an evaluation of existing policies and procedures, and necessitated a strategic approach to maximize funding.

Here are five key considerations when planning your recovery:

1. Cost estimates
   The accuracy of Small Project estimates is vital to making Recipients and Subrecipients whole. Small Projects are not typically amended to align estimates at project obligation with actual costs incurred. Even when actual costs vary from estimates, the approved amount of an individual Small Project may remain unchanged. This underscores the importance of thorough cost estimates. FEMA's Cost Estimating Format (CEF) approach can now be used during Small Project formulation prior to accepting an award to mitigate the risk of cost overruns.
2. Document requirements
   The responsibility of tracking, compiling, and retaining cost documentation for all projects remains unchanged. While FEMA may require less documentation to obligate funding, Recipients and Subrecipients may be subject to additional requirements. All source documentation must still be maintained according to record retention requirements.
3. Duplication of benefits
   Duplication of benefits occurs when a Recipient or Subrecipient receives funding for the same purpose from multiple sources. Recipients and Subrecipients must carefully assess their funding sources and coordinate with FEMA to ensure compliance and avoid recoupment of funding.
4. Small project cost overruns
   Accurate cost estimates will be key to maximizing reimbursement. A small project overrun will be considered by FEMA only if certain criteria apply. If these criteria do not apply, then the Recipient or Subrecipient must submit a Net Small Project Overrun appeal within regulatory timeframes.
5. Strategic approach to procurement and bidding
   Given the limitations of Small Project adjustments post-obligation, Recipients and Subrecipients should adopt a strategic approach to procurement. It is vital to assess the feasibility of contracting and purchasing materials. Soliciting bids and surveying the market can provide valuable insights to prevent unexpected cost overruns. In addition, all procurement laws, regulations, and policies still apply. The liability for ensuring compliance with proper procurement processes increases with less FEMA oversight.

With this dynamic policy and process change, CohnReznick's suite of services stands ready to not only facilitate the efficient deployment of funds but also uphold program integrity. As program participants navigate the changes and implications, keeping these five considerations in mind can help optimize recovery efforts as well as help ensure compliance with FEMA's evolving guidelines.

Contact

Meghan Hicks, Director, Government & Public Sector

512.499.1496