Key takeaways from FEMA’s PAPPG V5
Updates to the Public Assistance Program and Policy Guide
FEMA’s Public Assistance Program and Policy Guide, commonly referred to as the PAPPG, promotes consistent application of the federal statutes and regulations related to the Public Assistance (PA) program. FEMA updates the PAPPG annually when necessary and conducts a comprehensive review at least every three years.
Version 5 (V5) of the PAPPG includes significant policy changes, additional guidance, and formatting updates that improve clarity and readability. Note, this version applies to disasters declared on or after January 6, 2025. Make sure to follow the guidelines in the PAPPG that correspond to the disaster date.
- PAPPG V4 is applicable to incidents declared on or after June 1, 2020. V4 superseded V 3.1 and pertains to incidents declared after June 1, 2020, and before January 6, 2025.
- PAPPG V3.1 is applicable to incidents declared on or after August 23, 2017. It also applies to any application for assistance that was pending before FEMA as of August 23, 2017, and was not finally resolved as of January 1, 2018.
Several key changes are outlined below.
Insurance ‘obtain and maintain’ requirements
After any federally declared disaster, FEMA requires subrecipients of federal funds for permanent work to obtain and maintain insurance in the amount specified in the federal grant—also known as “obtain and maintain” requirements.
Complying with "obtain and maintain" requirements can be challenging. Considering this, FEMA included new guidance in PAPPG V5 to assist with one aspect of the "obtain and maintain" requirement. Under V5, if an applicant is unable to insure a facility prior to approval of the grant, the applicant may provide a Letter of Commitment stating they will obtain the appropriate insurance coverage as soon as they are able. This Letter of Commitment is often used for buildings that cannot be insured due to ongoing construction or significant damage. In addition to the Letter of Commitment, the applicant must provide proof of insurance at a later date to stay compliant. The Letter of Commitment has been referenced in FEMA Recovery Policy, FP 206-086-1, Section F (2) and this wording is now referenced in V5.
Insurance “obtain and maintain” requirements and the impact on eligibility have historically been a contentious topic for FEMA, recipients, and subrecipients. It is recognized that insurance was intended to be the primary source of funding, but insurance market capacity and budgetary constraints prevent some applicants from being able to fully fund the required “obtain and maintain” amounts. The law provides authority to the insurance commissioner in each state to review the insurance program of an applicant to determine if the amount of coverage purchased was reasonable, readily available, and appropriate, even though the coverage limit may fail to meet the “obtain and maintain” amount required by FEMA. This process is referred to as the Insurance Commissioner Certification (ICC). While the state insurance commissioner cannot waive federal requirements, the commissioner can certify that the amount purchased was reasonable.
The Section on Insurance Reductions and Impact on Facility Eligibility in Subsequent Disasters (included in V4 on Pg. 145) is omitted as a subheading in V5. It is important to note that although not specifically mentioned in a subheading, FEMA is required by law to modify the subrecipient’s “obtain and maintain” requirement to the amount certified by the commissioner of insurance in the state or territory.
Simplified procedures
Another key change in PAPPG V5 is that the large- versus small-project threshold changed from $139,000 to $1.063 million. This change aims to support equitable delivery of assistance to underserved communities and expedite disaster recovery by reducing the administrative burden. Applicants can now submit summary documentation and “self-certify” eligibility rather than providing a burdensome amount of specific documentation to support eligibility. However, applicants must maintain all source documentation for three years after the date the recipient submits to FEMA certification of completion of the last small project. This means that while the Project Worksheet (PW) may be written based on summary documentation, all documents need to be collected and memorialized in case of future audit.
While this change seems like it would simplify the funding process, there’s a catch. The new small project threshold creates a risk dilemma between FEMA, the recipient, and the applicant. FEMA was already risk averse when the small project threshold was $130,000. They will likely be even more risk averse to funding a $1 million project and will want detailed information to justify any funding.
This situation can also make a recipient nervous, since they must ensure the funds are spent on eligible scope of work within the grant. When a scope of work is written on summary documentation, it can complicate the process of matching construction invoices with completed work during the drawdown process. Additionally, the subrecipient must make sure the grant amount is sufficient to cover the repair or replacement of the facility damaged in the event. More detailed information, rather than summary information, is essential. Ultimately, FEMA aims to be cautious and keep estimates low, and the recipient will want enough detail to be reimbursed for eligible work and ensure they have enough funds to complete the project(s). These factors can and have slowed down the recovery process.
While the simplified procedures aim to speed up recovery and reduce administrative burden, they also require careful documentation and management to ensure compliance and proper use of funds.
Sampling methodology
Recent disasters, coupled with the increasing volume of documentation required to support recovery projects, have prompted FEMA to apply sampling to more than just document validation. For example, Hurricane Maria caused significant damage to numerous facilities in Puerto Rico. In many cases, the inspected facilities not only shared similar characteristics but also experienced similar types of damage. The only noted differences in the damages were due to the proximity of a facility to the path of the storm. These similarities allowed FEMA, COR3, and ICF to develop a sampling methodology that could be applied to the damaged facilities. This facilitated the creation of a large 428 Alternative Procedures grant based on a sample of the site visits and the extrapolation of the damage, method of repair, and cost estimates across all sites. The sampling of sites and extrapolating the information across all sites possibly shaved off 24 months from the project formulation process.
When Hurricane Laura impacted the western parishes of Louisiana, FEMA, ICF, and the Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP) again realized an opportunity for sampling to expedite the recovery process. The effort needed to review Damage Description and Dimensions (DDDs) line by line and validate the damage described is time consuming and exhaustive. ICF proposed that the FEMA team sample lines from the DDD and validate those lines. If the sample proved to be properly documented and in compliance with eligibility requirements then FEMA would accept the whole package as being properly documented and in compliance with the Public Assistance Program.
Noncompetitive procurement
FEMA will work with recipients to remedy non-compliance of competitive procurement requirements.
Under V4, FEMA could disallow costs if an applicant did not adhere to proper procurement requirements, without considering working with the recipient for remedies for non-compliance. In V5, if an applicant does not adhere to competitive procurement requirements, FEMA will work with the recipient to identify remedies. The non-compliant costs will only be disallowed if the situation cannot be remedied.
It should be clear that FEMA is really concentrating on procurement, and applicants should be very cognizant of how they are procuring goods and services. Applicants should adhere to 2CFR Part 200 when procuring goods and services. Sounds easy, but compliance with the regulations immediately after an event is near impossible. There are times when exigent circumstances force you off the compliance path. However, there are remedies for when you stray from the procurement path and now FEMA will work with the recipient to identify and implement those remedies.
Category I
Following a disaster, repairs or replacement of damage must comply with current codes and standards. This ensures the health and safety of occupants and serves as the foundation for maintaining a resilient community. After a disaster, permitting offices often experience a high volume of review requests and permit requests, which can be overwhelming since these offices typically have limited staff.
FEMA recognized this and added language to PAPPG V5 that allows subrecipients to seek reimbursement for staff augmentation post-disaster to ensure construction plans are reviewed for code and standard compliance and permits are issued quickly. This is especially important for facilities located within Special Flood Hazard Areas (SFHA). Non-compliance with the NFIP regulations and policies not only increases the chances of future flooding but also adversely impacts the community’s rating in the Community Rating System (CRS), which directly affects the cost of flood insurance in that community. Overall, this is a great idea and a very good addition to the policy guide.
However, the timeline to initiate the exercise and complete the work is very tight and will be hard to work with. In the future we foresee FEMA increasing the timeline for eligibility. The Disaster Recovery Reform Act, Section 1206 (1206) provides the details for the implementation of Category I. Section 1206 only allows 180 days from the date of the major disaster declaration for eligible activities to occur. There are many things that can be done in these 180 days, such as performing windshield surveys, depth/damage calculations, and notifying the public of the need to comply with local codes and standards, including the NFIP. There may be an extended need for staff augmentation for construction plan review and permitting activities. The local Authority Having Jurisdiction (AHJ) might be able to meet demand at times, but there will undoubtedly be instances when they cannot keep up. Thus, the need for some way to extend the timeline or allow for long- term assistance to cover all of the time needed for plan review, permitting, and site visits to validate compliance.
Ultimately, FEMA has made an effort to simplify the language, increase accessibility, and make the PAPPG more user friendly. Version 5 also emphasizes equity, compliance with civil rights laws, and resilience and mitigation measures while aiming to reduce the administrative burden on applicants. As the document is used, we will see if the intended outcomes are achieved. Thus, the PAPPG will remain a living document, continuously evolving to adapt to our ever-changing world.
We only discussed a few of the changes in PAPPG V5. Since the PAPPG will impact strategies for recovery, it’s important to understand the document in its entirety and follow the appropriate procedures. Contact us to learn more about developing your disaster preparedness and recovery strategies.