How to navigate FEMA sections 406 and 428

The Robert T. Stafford Disaster Relief and Emergency Assistance Act was signed into law in 1988 to create an orderly system to get federal assistance to state and local governments in the wake of natural disasters. No process is perfect, but the complexity of the act itself often causes uncertainty for applicants.

FEMA’s extensive approval process can impede an applicant’s ability to meet the 18-month obligation deadline for public assistance projects. By understanding the challenges ahead, those seeking relief funding are better prepared to address the many factors that play a role in accessing FEMA support and unlock its benefits.

The facts about FEMA Sections 406 and 428

Section 406 hazard mitigation funding is a program that provides discretionary authority to pay for mitigation measures along with the repair of facilities damaged by a disaster. Funding is limited to declared counties and eligible damaged facilities.

President Obama signed into law the Sandy Recovery Improvement Act in January of 2013. This added Section 428, which authorizes FEMA to implement alternative procedures for the public assistance program without notice of rulemaking—a step the Stafford Act would otherwise require.

According to FEMA’s website, the goals for the alternative procedures are:

• Reducing the costs to the federal government of providing public assistance.
• Increasing flexibility in the administration of such assistance.
• Expediting the provision of assistance to a state, tribal, or local government, or nonprofit owner or operator of a private nonprofit facility.
• Providing financial incentives and disincentives for timely and cost-effective completion of projects with such assistance.

What are the benefits of the alternative procedure approach?

State applicants and their subrecipients can pursue alternative projects that go beyond merely replacing or repairing a damaged facility or infrastructure to its pre-disaster design. The provision allows applicants to use funds in a manner that best meets their specific needs for recovery, long-term resiliency, and future preparedness. So, it offers increased flexibility in the administration of projects.

An alternative procedure results in a fixed-cost offer for the pilot project. If the applicant accepts the fixed-cost offer, they are:

• Not required to rebuild the facilities back to what existed before the disaster.
• Allowed to share funds across all pilot projects.
• Not required to track costs to specific work items.
• Not required to map costs or work to specific pilot projects since funds can be shared across all an application’s pilot projects.
• Allowed to retain and use excess funds to reduce risk and improve future disaster operations (subject to timely closeout).
• Eligible for cost-effective hazard mitigation on replacement projects.

Clearly, there is a significant payoff once the applicant successfully navigates these requirements. However, the journey to a successfully obligated project under Sections 406 or 428 is full of potential landmines for applicants. These are the most critical factors to acknowledge when working to obtain such funding.

1. FEMA has complete control over the process.

The grants portal system creates significant time restrictions for processing traditional public assistance and Section 428 projects.

FEMA controls all movement of projects through the system. Neither the recipient nor the subrecipient has an opportunity to affect the timing of a project to achieve agreement of a fixed cost estimate (CE) or an obligated project worksheet.

The grants manager system is not designed to incorporate recipient decisions or approvals after the Damage Dimensions and Description (DDD) completion step in the workflow.

FEMA, the recipient, and the subrecipient must collaborate and ultimately approve a DDD. However, the project cannot move to the scope of work (SOW) stage until all information has been entered into the grants manager system, passed through quality assurance and quality control, and approved. The recipient cannot influence these two workflow steps or provide any interactive feedback.

FEMA approaches each project with the objective of narrowly defining eligible costs.

FEMA’s approach results in multiple collaboration meetings and reviews to ultimately achieve a fixed CE that mitigates the risk of a capped grant. The number of reviews is unpredictable and varies with the size and complexity of the project. Negotiating for a more accurate reimbursement of eligible costs—which is in the interest of the recipient—requires an unspecified amount of additional time.

A number of unpredictable outside parties can delay or alter the SOW and CE.

Upon agreement of a fixed CE, the project is submitted to the Department of Homeland Security’s Office of the Chief Counsel and Office of Legislative Affairs for final approval prior to obligation. Rejection or alterations required by the Office of Legislative Affairs will cause the project to reenter the grants manager system at the beginning of the project formulation process.

2. Section 428 projects need the right resources, and you must account for cycle time.

The average length of time to order and perform individual site inspections—as well as prepare and input a DDD, SOW, and CE—is burdensome, time-consuming, and varies with the size of the project.

The current FEMA process requires each site to have its own DDD, SOW, and CE. Many Section 428 projects require packaging these individual sites together. Bundling these agreed-upon cost estimates into a single, larger Section 428 project requires the additional time of entering and evaluating the alternate proposed SOW and CE. For example, a two-mile stretch of road damaged in 10 places would require 10 DDDs, SOWs, and CEs. Bundling them into a single project under Section 428 would then require a new SOW and CE.

Collaboration and agreement are required at each step of the project formulation process for Section 428 projects.

FEMA, the recipient, and the subrecipient must agree and acknowledge agreement before the project moves to the next step in the process. Multiple steps within the grants manager system are completely dependent on FEMA to achieve approvals and move projects through the workflow.

Large, complex projects require specific expertise—often from multiple subject matter experts—to effectively formulate a Section 428 project.

Section 428 projects typically involve SOWs for large, complex facilities (e.g., a wastewater treatment plant) or the bundling of projects (e.g., two to three school buildings). Examples of additional lines needed to ensure maximum funding include:

• Inclusion or exclusion of soft costs.
• Allowances for environmental assessments, such as asbestos and mold testing (regardless of apparent existence).
• Mold remediation.
• Unforeseen contingencies.

Although the work on each of these projects by the recipient is an eligible cost and reimbursable with FEMA Direct Administrative Costs (DAC), it could require unpredictable labor hours from a yet unknown number of experts. The exact number will depend on the number of individual projects bundled into the Section 428 project.

Repetition and reworked projects are inevitable.

When FEMA quality assurance and quality control disagree with either the DDD or the SOW, they send it back to be reworked. This creates additional delays for an already lengthy process, putting the project further at risk of not meeting the 18-month obligation deadline.

3. Combining Sections 406 and 428 is not straightforward.

The skill sets required for Section 406 mitigation and Section 428 project formulation are substantially different.

The basic difference is the ultimate product that each produces. Mitigation approaches each project with the expressed purpose of making the final product more resilient and eliminating additional claims from future disasters. Public assistance projects are completely focused on repair or replacement of a facility. Or, in the case of Section 428, providing an alternate or improved facility using the funds from the estimated fixed cost to repair damages. In most cases, the development, review, or assistance associated with Section 406 will be provided by resources other than Section 428.

Bundling Sections 406 and 428 may ultimately cap the total amount of funding available for mitigation.

Each project can potentially include a Section 406 component. If several projects are bundled together and an alternate project is developed, this creates a capped grant with a fixed CE. The only provision for altering the capped grant is a one-time allowance to modify the Section 406 Mitigation to conform to the alternate project. This is after a fixed CE is agreed to, but before obligation—which is an additional mitigation effort for the individual projects.

4. Determination memos and appeals are your responsibility.

The burden of appeal and the associated time rests with the recipient.

FEMA’s current method of resolving disagreements with Section 428 projects is to create determination memos during the formulation process. The recipient or subrecipient is responsible for writing the rebuttal to the determination memo and uploading it through the grants portal. These determination memos are the basis for filing a formal appeal or arbitration. Any project engaged in determination memos and appeals will take several additional months to reach obligation.

Making it through to the other side

Forewarned is forearmed when preparing to navigate the application process for Sections 406 and 428. By understanding the nuances of the federal recovery funding landscape, you will be better prepared to secure the relief you need to get your community back on its feet. For additional guidance on how to work effectively with FEMA, review our FEMA pre-disaster planning tips or contact us to start a conversation.