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5311 Grant Management Requirements

As a subrecipient of federal funding, you have agreed to certain terms, conditions and grant management requirements that are tied to Section 5311 funding.  This section begins by explaining the role of the FTA and the state in program administration, and it summarizes each requirement with which you are expected to be in compliance.  The information in this section is taken primarily from FTA Circular 9040.1G, “Formula Grants for Rural Areas: Program Guidance and Application Instructions,” which discusses program requirements under the MAP-21 and FAST Act authorizations.  

 
NOTE: This page is in the process of being updated to apply exclusively to MAP-21 and FAST Act funding, instead of SAFETEA-LU, and some of the information may not be fully accurate.  If you have any questions, contact us at info@nationalrtap.org.
 

FTA role in program administration

The role of FTA headquarters is broad, and it deals with program-level concerns about the administration of the program.  Examples of this from Circular 9040.1G include:

(1) provides overall policy and program guidance for the Section 5311 program;
(2)  apportions funds annually to the states;
(3) develops and implements financial management procedures;
(4) initiates and manages program support activities; and
(5) conducts national program reviews and evaluations.

The role of FTA regional offices is closer to the ground as they take care of the day-to-day concerns of the administration of the program.  According to Circular 9040.1G, FTA regional offices are responsible for the following:

(1) reviewing and approving state grant applications;
(2) obligating funds; managing grants; overseeing the state’s implementation of the annual program, including revisions to the program of projects;
(3) receiving state certifications;
(4) reviewing and approving State Management Plans (SMPs);
(5) providing technical assistance, advice and guidance to the states as needed; and 
(6) performing state management reviews every three years, or as circumstances warrant.

You can find contact information for your regional office on the FTA website.  

To read more, see page II-4 of Circular 9040.1G
 

State role in program administration


The FTA gives the states a great deal of freedom to design and manage 5311 programs that address their specific public transportation needs.  Additionally, the Common Grant Rule (see “Basic Grant Management Requirements under SAFETEA-LU” below for additional information) allows states to use their own, rather than federal, laws and procedures for financial management systems, equipment and procurement.  State laws and procedures can be passed down to subrecipients that are public agencies and to private providers of public transportation services that enter into third party contracts with a state or subrecipient.  As a subrecipient, it is important to be aware that, at times, a state policy, law or procedure can supersede a published federal policy, law or procedure.  In order to find this information, you should consult your contract with the state agency that administers the 5311 program.  The contract will give detailed instructions on the regulations with which you will be expected to be in compliance.  The Common Grant Rule, and the federal regulations, will be addressed in more detail later in this section.  

The Governor designates a state agency that will administer the 5311 program, and that state agency will be responsible for the following tasks found in Circular 9040.1G:
 

(1) document the state’s procedures in a State Management Plan (SMP);  
(2) notify eligible local entities of the availability of the program;  
(3) plan for future transportation needs, and ensure integration and coordination among diverse transportation modes and providers;  
(4) solicit applications;  
(5) develop project selection criteria;  
(6) review and select projects for approval;  
(7) forward an annual program of projects and grant application to FTA;  
(8) certify eligibility of applicants and project activities;  
(9) ensure compliance with federal requirements by all subrecipients;  
(10) monitor local project activity;  
(11) oversee project audit and closeout; and  
(12) file a NTD report each year for each subrecipient.        

To read more, see page II-3 of Circular 9040.1G.   

Basic grant management requirements under SAFETEA-LU

The Common Grant Rule gives the basic grant management requirements for state and local governments, and it comprises two U.S. Department of Transportation (DOT) regulations:  49 CFR Part 18, “Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments” and 49 CFR Part 19, “Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations.”  Subrecipients that are units of government, including Indian tribal governments, must follow the requirements stated in Part 18.  Subrecipients that are private and non-profit organizations are to follow the requirements of Part 19.   
Your state enters into a written agreement with you, the subrecipient, stating the terms and conditions of assistance for the project, and this agreement also states which federal and/or state requirements for which you must be in compliance.  Your state is responsible for assuring the federal government that all of its subrecipients are in compliance with the federal requirements that are explained below. Please note that this section does not give all of the details of each requirement, and for more information, or to view the source of all information and quotes in the text, you should refer to Circular 9040.1g.  The subheadings contain the page numbers that correspond with that requirement’s location in Circular 9040.1G.

Equipment management (page VI-2)

“States may use, manage, and dispose of equipment acquired under a Section 5311 grant according to state law and procedures.”  As a subrecipient, it is important to consult your contract to find out whether you will be following state or federal procedures.  The following are the federal regulations regarding equipment management.  Under federal regulations, states can transfer Section 5311-funded facilities and equipment to another entity that provides public transportation as long as that new entity complies with state and federal 5311 requirements in their use of the facilities and equipment.   For all vehicles purchased with 5311 funds, the states establish and implement their own rolling stock requirements.  This includes the following list from Circular 9040.1G:
 

(1) establish their own minimum useful life standards for vehicles;
(2) use their own procedures for determining fair market value; and  
(3) develop their own policies and procedures for maintenance and replacement of vehicles.  

As a subrecipient, you should follow any available state laws and procedures for disposing of equipment, and you are not required to return to FTA the proceeds from the disposition of equipment.

Satisfactory continuing control and responsibility (page VI-3)

When acquiring, building, or improving capital equipment or facilities with Section 5311 funds, you must have a system that can “assure the satisfactory continuing control of that capital and facilities.”  Even if your vehicles or equipment are operated by a contractor, as the subrecipient of the funds you maintain this responsibility unless control and responsibility was transferred to another subrecipient (as authorized by your designated state agency).

Procurement (page VI-3)

To the extent permitted by federal statutes and regulations, the state can use the same policies and procedures for procurements funded by both federal and non-federal sources.  It may also set a threshold for small purchases that is lower than the federal threshold of $150,000 for itself and subrecipients.  As a subrecipient you should follow state procurement procedures.  For more information about procurement, please see the section on Procurement

Financial management (page VI-6)

States must expend and account for federal grant funds using the same laws and procedures it does for its own funds.  According to Circular 9040.1G, the fiscal control and accounting procedures used by the state, and you its subrecipient, must be sufficient to:
 

(1) Permit preparation of reports described in this circular and reports necessary to comply with other program and statutory requirements; and
(2) Permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions applicable to the program.

If your state purchases vehicles for you, the subrecipient, and you do not receive any cash through this transaction, then this requirement does not apply to you. The state agency (and you, the subrecipient) must retain all financial records, supporting documentation, and all other records pertinent to a grant through TrAMS.  These records must be maintained and readily available for three years after the submission date of the final Financial Status Report.  

Allowable costs (page VI-8)

There is now one circular issued by the Office of Management and Budget (OMB) that details what is an allowable cost under federal guidelines: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, commonly referred to as the “Super Circular," effective December 26, 2014.  See specifically §200.403 - Factors Affecting Allowability of Costs.  First and foremost the cost must "be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles" (§200.403 (a)). For example, transit marketing and promotion are allowable project costs as they promote the goal of increased transit ridership, as long as they are reasonable. The Circular also documentation of costs and indirect costs.  

Closeout (page VI-8)

According to Circular 9040.1G, the FTA expects that projects funded with federal grants should be completed within a “reasonable, specified timeframe.”  This is generally defined as two to three years.  Within 90 days after you, the subrecipient, have expended all of the federal funds you received and have completed all project work activities, your state should initiate project closeout with you.  

Audit (page VI-8)

If you, the subrecipient, only receive assistance in the form of capital equipment procured directly by the state, you are not required by the FTA to have an annual financial audit.  While you may not be required to have an annual financial audit, your state may wish to review audit reports if the total amount of federal funds you receive exceeds a certain threshold.  At the very least, your state may require you, the subrecipient, to make them aware of audit findings that are related to the FTA funds you have received.

OMB "Super Circular": Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards

Real property (page VI-9)

To find the real property acquisition standards, look in the most current FTA Circular 5010.E, “Award Management Requirements” and in Chapter X, “Other Provisions.”  You, as a subrecipient, may use your state’s staff appraisers to prepare required independent appraisals.

FTA Circular 5010.E “Award Management Requirements"

Construction management and oversight (page VI-9)

The state has responsibility for construction management and oversight, and FTA does not approve subrecipients’ design plans for construction projects.

Reporting requirements (page VI-9)

The state is required to submit the following reports:

Annual Program of Projects Status Report– the state must submit to FTA a program status report for each active grant, and this may include notes about Section 5311 subrecipients.

Milestone Activity Reports—the state must enter any revised milestone dates in the annual report.  These are based off of activity line items (ALIs) for which milestones were required at the time of grant application (for example, for vehicle procurements, construction projects, and program reserve).

Financial Status Report—the state must electronically submit an annual Financial Status Report for each active grant, and a grant is considered “active” when subrecipients sign their agreements with the state.  

Disadvantaged Business Enterprise (DBE) Reports– please see the Civil Rights section.

NTD Reports– All recipients, subrecipients and beneficiaries of FTA’s Section 5311 program grants are required to submit data to the NTD.  As a subrecipient that benefits from the Section 5311 grant program, your state will report on your behalf.  Visit the NTD website to get a better idea of what information is collected and to view the most recent rural reporting manual.

State management plan (page VI-10)

“The State Management Plan (SMP) is a document that describes the state’s policies and procedures in administering the Section 5311 program” (including the state’s objectives, policies, procedures, and administrative requirements) in a readily accessible form, and it should be useful to the state, its subrecipients and the FTA.  The state shall provide an opportunity for review by stakeholders when it develops a new plan or significantly revises an existing plan.  

If you are unsure about how reporting information is exchanged between your organization and the state, you should consult the State Management Plan.  All states are required to have an approved State Management Plan on file in FTA’s regional office.     

FTA management review (page VI-10)

As stated earlier in this section, FTA has little involvement in the day-to-day 5311 program activities, and it is not regularly involved in the review of individual applications from subrecipients. In order to ensure that Section 5311 program funds are being used appropriately, the FTA employs contractors to conduct state management reviews every three years (or as necessary).  According to Circular 9040.1G, the review includes the following: 

  • inspection of documentation on file at the regional office 
  • visit to the state offices to examine the procedures the state uses in administering the program 
  • local subrecipient site visits 

If your state undergoes an FTA Management Review, as a subrecipient you could be randomly selected for a site visit to evaluate the state’s effectiveness in meeting Federal requirements and its own State Management Plan (SMP). According to Circular 9040.1G, FTA also conducts more specific compliance reviews of recipients and subrecipients in particular areas, for example financial management, procurement, drug and alcohol testing compliance, and the various aspects of civil rights compliance, usually in response to a risk assessment or other indication of a possible problem.  This is done through questionnaires and supporting documents providing the details of required programs, and this is coordinated through the state. 
 

The following are both FTA requirements and other federal requirements that apply to Section 5311 grants 

Project inclusion in STIP/TIP (page X-1)

In order to receive an FTA grant for a project, it must be a product of the metropolitan planning process and/or the statewide planning process.  For projects outside metropolitan planning boundaries, they are only required to be in the STIP (Statewide Transportation Improvement Program).

Consult your regional, county, or metropolitan transportation planning agencies to find out how to ensure your projects are included in the STIP.  

Public hearing requirements (page X-2)

The public must have an opportunity to review and comment on capital projects, and the state (or agency that is proposing the new project) must provide notice of, and hold, a public hearing on any project that affects significant economic, social or environmental interests.  According to Circular 9040.1G, “Under 49 U.S.C. 5323(b), any application for a project that will ‘substantially affect a community, or the public transportation service of a community’ shall include a certification to the effect that the applicant has:  provided an adequate opportunity for public review and comment on the project; after providing notice, held a public hearing on the project if the project affects significant economic, social or environmental interests; considered the economic, social and environmental effects of the project; and found that the project is consistent with official plans for developing the community.”  

These public hearing requirements are not the same as the public participation requirements for statewide and metropolitan planning.

Environmental protections (page X-3)

Due to FTA’s procedures, most Section 5311 projects are categorical exclusions from the National Environmental Policy Act (NEPA), and the state should screen potential projects to determine which projects clearly meet the FHWA/FTA criteria for categorical exclusions.

NEPA was signed into law on January 1, 1970, and its purpose is to ensure that environmental issues are considered alongside social, economic, and other competing concerns that arise when planning a project.  For more information, please see the National Environmental Policy Act website.

Clean Air Act (CAA) (page X-5)

The conformity process is the main requirement with which FTA-funded projects must comply, and these requirements can be found in Environmental Protection Agency (EPA) regulation 40 CFR Part 93.  The project sponsor will determine the conformity for individual projects, however many transit projects are exempt from these requirements and can be processed easily.

For more information about conformity, please see the EPA website.  

Private sector participation (page X-5)

According to Federal law, the public must be involved in the transportation planning process.  This law was designed to require that private providers are brought into the development process of transportation plans and programs (in both urban and rural areas).  

For more information regarding private enterprise requirements, please see “Private Enterprise Participation in Transportation Planning and Service Delivery” on the FTA website.  

Pre-award and post-delivery reviews (page X-7)

Under SAFETEA-LU, if 20 or fewer vehicles are procured to serve a rural area (or city with a population less than 200,000), these procurements are exempt from both pre-award and post-delivery reviews. There is also no review requirement when procuring unmodified vans, regardless of the quantity that is purchased.  In the case of a state that does a consolidated procurement on behalf of several subrecipients, the resident inspector review will be triggered by the number of buses that a particular subrecipient will receive from the procurement.   

If you need more information about this topic, “Pre-Award and Post-Delivery Reviews for Bus Vehicles” is a useful document that can be obtained from FTA’s regional offices.  

Labor protections (page X-7)

a. Davis-Bacon Act – for FTA programs, this act applies prevailing wage requirements only to construction projects.  The Act states that laborers and mechanics “be paid wages at rates not less than those prevailing on similar construction in the locality as determined by the Secretary of Labor in accordance with the Davis-Bacon Act, as amended.”  

b. Transit Employee Protection – according to Circular 9040.1G, this requires that “the interests of employees affected by assistance under most FTA programs shall be protected under arrangements the Secretary of Labor concludes are fair and equitable.”

Civil rights requirements (page X-8)

Please see the Civil Rights section of this toolkit.  

Buy America (page X-11)

Under this requirement, all steel, iron and manufactured products used in federally-funded public transportation projects must be produced in the United States.  This applies to all Section 5311 recipients and subrecipients.  Buy America requirements apply to any purchase that exceeds the threshold for small purchases (currently $150,000). See the Procurement page of this toolkit for more information.

Charter service

Under the Charter Service Rule, 49 CFR Part 604 (January 14, 2008), the FTA has set regulations to “protect private charter operators from unauthorized competition from recipients of Federal financial assistance under the Federal Transit Laws.”  The updated rule redefines “charter services” and also includes new exceptions to the Charter Service Rule.  For more information about charter service, please see the FTA Charter Bus Service webpage

Please note that the 9040.1G circular does not include the updated information about the Charter Service Rule.  You should refer directly to the 49 CFR Part 604 regulations or the FTA Charter Bus Service webpage.  

Drug and alcohol testing (page X-12)

Please see section on Drug and Alcohol Programs.

Drug-free workplace (page X-13)

Provisions under the Drug-Free Workplace Act of 1988 (41 U.S.C. 701 et seq.) only apply to FTA’s direct grantees (for example, states and tribes receiving Tribal Transit Program funding), and they do not apply to subrecipients. 

Restrictions on lobbying (page X-14)

According to Circular 9040.1G, “federal financial assistance may not be used to influence any Member of Congress or an officer or employee of any agency in connection with the making of any Federal contract, grant or cooperative agreement.”  If you, the subrecipient, or your contractors receive more than $100,000 of FTA funding you must sign a certification saying you will not participate in any of the activities above and you must disclose the use of non-federal funds for the activities listed above.  

Debarment and suspension (page X-14)

According to Circular 9040.1F, federal grant funds cannot be provided to anyone who has been “debarred, suspended, ineligible or voluntarily excluded from participation in federally-assisted transactions.”  According to Circular 9040.1G, before awarding a contract you must use one of the following methods to ensure that you are not entering into an agreement with someone who has been excluded or disqualified from the process:  

 

  • You can check the U.S. General Services Administration’s System for Award Management  available at https://www.sam.gov/portal/public/SAM/  [this is strongly recommended by FTA]; 
  • You can collect a certification from the prospective awardee; or 
  • You can add a clause or condition to the third party contract or subagreement with that awardee.

Safety and security (page X-16)

According to Circular 9040.1G, “FTA may conduct investigations into safety hazards and security risks associated with a condition in equipment, a facility, or an operation financed under Chapter 53 in order to establish the nature and extent of the condition and how to eliminate, mitigate, or correct the safety hazard and/or security risk.”  If a grantee is made aware of a safety or security deficiency, and does not correct it, the FTA may not continue to provide financial assistance to that grantee.

Lease vs. buy considerations (page X-17)

If a grantee finds that it is more cost effective to lease capital assets rather than purchase or construct them, capital funds may be used for this purpose.  You should consult with your state about this topic as your state may have a policy in its State Management Plan about leasing versus buying capital assets.

School transportation (page X-17)

You are prohibited from using FTA funds to provide service that is school bus transportation exclusively for school students and school personnel.  You can, however, modify your regular service to accommodate school students as well as the general public.  

Commercial driver’s license (page X-17)

According to Circular 9040.1G, “all drivers of vehicles designed to transport 16 or more passengers, including the driver, must have a commercial driver’s license (CDL).  Mechanics who drive the vehicles must also have a CDL.”

Certifications and assurances

Certifications and assurances focus only on those federal requirements the applicant must fulfill before the FTA may fund its project.  As a subrecipient, the state will provide these certifications and assurances each year to the FTA on your behalf, and in doing so both you and your state are agreeing to comply with FTA’s terms.  The required certifications and assurances are published each fiscal year in the Federal Register and are updated in the TrAMS system, and the Federal Register Notice details which certifications and assurances apply to all grantees and which are specific to the type of award or grant section.  Most of the requirements for a Section 5311 subrecipient have been summarized above.  Please check each year’s list of certifications and assurances for any changes that might be made, available here: FTA Certifications & Assurances webpage.

 

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