Alternative procedures offer applicants maximum flexibility in how they use Public Assistance (PA) funds to restore damaged facilities. Under standard procedures, applicants receive PA funding based on the pre-disaster size, capacity, and function of a damaged facility. However, Section 428 of the Stafford Act authorizes FEMA to award PA funding based on estimates which are "fixed" or capped for large permanent work projects through alternative procedures. These procedures can only be applied to large projects.
Alternative procedures projects enable applicants to actively shape their recovery outcomes by considering the community's hazards, risks, exposure, and vulnerability and how they can be mitigated.
Standard and alternative procedures differ across several critical administrative areas:
FEMA funds large alternative procedures projects based on a fixed cost estimate instead of actual costs reconciled at closeout. FEMA, recipients, and applicants must agree to the damage description and dimensions (DDD), SOW, and hazard mitigation initiatives before the fixed cost estimate is developed or provided by the applicant.
FEMA caps the project funding based on the aggregate federal share of the estimated cost to restore the facility to pre-disaster design and function under eligible codes and standards, plus cost-effective 406 mitigation measures the applicant will perform. The following lines are allowable:
A FEMA-funded, independent third-party panel of cost estimating experts may be deployed to review project estimates. The panel's review is strictly limited to issues pertaining to the estimated cost and executing the SOW; it holds no authority to make eligibility determinations or evaluate project appeals.
When applicants repair a facility but alter its pre-disaster capacity, the proposed 406 mitigation SOW is based on the actual work being performed. However, cost-effectiveness is assessed according to the fixed baseline amount required to restore the facility to its original pre-disaster condition.
Scope Restriction: If the facility's capacity is increased, the mitigation SOW and costs are limited strictly to what is needed to protect the facility at its original, pre-disaster capacity. Approved mitigation proposals are included as a separate fixed cost amount; if the approved mitigation SOW is not completed, FEMA will reduce the subaward by that portion.
FEMA, the recipient, and the applicant must reach a formal fixed cost agreement within 18 months of the disaster declaration date.
Timing Mandate: Recipients and applicants have a combined total of exactly 30 days to accept a fixed cost offer from the date of FEMA's transmittal via the Grants Portal. If the offer is not accepted within 30 days, the project is automatically processed under standard procedures based on actual costs, and the flexible use of excess funds is lost. Any time extensions to accept offers must be approved by the Assistant Administrator for Recovery before the 30-day deadline lapses.
FEMA considers the fixed cost amount reasonable and final if there is no evidence of fraud, grant conditions are met, and the estimate is reduced by all applicable credits, including insurance proceeds and salvage values. Once accepted, the project cannot revert to standard procedures. Obligation represents FEMA's final acceptance, and no further cost adjustments will be made, except for insurance adjustments or SOW changes altering hazard mitigation. If final actual costs exceed the fixed award, FEMA will not approve additional funds.
Applicants may share funds from a fixed cost subaward across all active alternative procedures projects to repair, restore, or replace damaged facilities; construct new facilities (including land acquisition); purchase equipment; or execute cost-effective hazard mitigation.
If final actual costs are less than the subaward, applicants may request to use the remaining balance. This follows a phased workflow: applicants first use fixed funds for standard restorations or alternate projects, and upon completion of that SOW, any leftover excess funds can be used for an expanded list of mitigation, planning, and preparedness activities.
Once a fixed cost offer is accepted, applicants do not need to notify FEMA when making changes that substantially conform to the approved SOW, such as substituting material types (e.g., pre-cast concrete vs. steel beams) or executing interior floor plan reconfigurations.
Applicants must formally notify FEMA prior to executing any SOW changes that involve:
If an applicant wishes to change the SOW to the extent that it alters or adjusts the hazard mitigation elements, such changes must be approved within the initial 18-month deadline, and the fixed cost offer will be adjusted to reflect the cost of the revised mitigation SOW.
Work must be completed by the end of the approved project completion deadline, and the recipient must certify that all incurred costs are associated with the approved SOW.
Closeout Mandate: For the subrecipient to retain and use any excess funds, the recipient must submit their formal completion certifications to FEMA within 180 days of the subrecipient completing its last alternative procedures project or the latest project deadline, whichever occurs first.
The closeout certification must include a final report of alternative procedures project costs and documentation supporting the following criteria:
Subrecipients do not need to track costs to specific work line items; they only need to substantiate and certify that all claimed costs relate directly to the overall eligible project envelope.
Applicants receiving alternative procedures funding for permanent work must obtain and maintain commercial or self-insurance to protect the insurable property (buildings, contents, equipment, and vehicles) against future loss as a strict condition of federal assistance.
FEMA does not grant appeals on alternative procedures permanent work projects. Any disagreements regarding disaster damage, SOW line items, or cost estimates must be completely resolved before the applicant signs the fixed cost offer.
The Department of Homeland Security's OIG maintains full statutory authority to conduct independent audits, compliance reviews, and investigations into alternative procedures projects to identify, deter, and address fraud, waste, and abuse.