FEMA and the grantee share responsibility for making Public Assistance Program funds available to the subgrantees. FEMA is responsible for approving projects and making the Federal share of the approved amount available to the grantee through a process called obligation.
Through obligation FEMA notifies the grantee that the federal funds are available but reside in a Federal account until the grantee is ready to award grants to the appropriate subgrantees. The grantee is responsible for providing the grantee portion of the non-federal share of the grant amount and for notifying the subgrantee that funds are available.
Payment for small projects is made on the basis of the estimate prepared at the time of project approval. The grantee is required to make payment of the Federal share to the subgrantee as soon as practicable after FEMA has obligated the funds.
Large projects are funded on documented actual costs. Because of the nature of most large projects, work typically is not complete at the time of project approval; therefore, FEMA will obligate grants based on an estimated cost. Such monies may not be immediately drawn down by the State. Instead, progress payments are made to the applicant as actual costs are documented.
Upon completion of a large project, an applicant must submit documentation to account for all incurred costs to the grantee. The grantee is responsible for ensuring that all incurred costs are associated with the approved scope of work and for certifying that work has been completed in accordance with FEMA standards and policies. The grantee then submits documentation of project costs to FEMA for review. FEMA may conduct a final inspection as part of this review. Once the review is complete, FEMA determines whether funds should be obligated or deobligated for the project.