This article is the first in our Introduction to Grants series.
The vast network of transportation infrastructure is critical to keeping communities across the U.S. connected physically. However, expanding, upgrading, and maintaining this vital infrastructure comes with a large price tag. States, counties, cities, regional planning organizations, and private entities looking to make necessary repairs or improvements often face a daunting question: “How will we pay for this?”
Federal discretionary grant funding is one way an entity can obtain financial assistance for transportation infrastructure projects. Understanding the key features and requirements of grants better positions an applicant for a productive grant pursuit and readies recipients for the ongoing management process if awarded funds.
Here, our team of grants experts at Bluejay Advisors breaks down:
- The basics of grant funding, including key terms and concepts
- Evaluating your entity’s readiness to pursue funding
- Near term to-do’s to prepare for a funding pursuit
What are Federal Discretionary Grants?
Discretionary grant funding is a form of financial assistance the U.S. government offers to benefit the public using taxpayer funds. Congress authorizes grant programs that align with policy objectives and then appropriates funds for each program—often through annual budget appropriations or through advanced appropriations, such as the Infrastructure Investment and Jobs Act (IIJA) which allocated funding from 2022 through 2026. After the President signs the appropriation bills into law, the grant-making agencies responsible for administering the funding prepare policies and procedures that align with all statutes, laws, and objectives before opening the program to applications.
Federal grant funding is typically awarded through reimbursable payments, that is, an awardee pays for project costs as they occur, submits receipts to the government, and receives reimbursement payments. As long as the incurred costs comply with the grant award terms, the funds do not have to be repaid to the government.[i]
For nearly all programs, only project costs incurred after the grant is awarded, a grant agreement is executed, and the funds are obligated would comply with the basic grant award terms. We cover these important terms more fully in our article detailing the Post-Award Phase, but the basics to understand now are:
- Grant Award: When you are notified by the Federal government that you have been selected for a grant award. The money is not yours yet.
- Grant Agreement Execution: When you and the Federal government agree to the terms of your award as outlined in a legally binding contract. The money is not yours yet.
- Grant Obligation: When the terms of the agreement are signed and your project can officially commence, as per the contract. The money is now available to be drawn down after submitting receipts.
Types of Federal Transportation Infrastructure Grants
Both competitive and non-competitive grant programs exist. Bluejay Advisors focuses on competitive grant opportunities because non-competitive grants, also known as formula funds, are distributed to all recipients in a specific group based on calculations and parameters set by Congress and are not typically available by application. However, formula fund recipients—often State departments of transportation (DOTs)—sometimes redistribute Federal formula funds to subrecipients via a state-level competitive grant which comes with its own application process.
The U.S. Department of Transportation (USDOT) offers numerous discretionary grant programs for transportation infrastructure projects, each designated to address specific goals and outcomes. USDOT discretionary grants are available through the Office of the Secretary (OST) or through individual operating administrations, such as the Federal Railroad Administration (FRA), Federal Highway Administration (FHWA), Maritime Administration (MARAD), and others. Additionally, transportation infrastructure–related grants are sometimes available through other federal departments and agencies such as the Environmental Protection Agency (EPA), United States Department of Agriculture (USDA), Department of Energy (DOE), and more.
Regardless of funding agency, the grant lifecycle for a transportation infrastructure project follows a general trajectory as all Federally funded projects must adhere to the same Federal procurement laws and regulations and are administered through the same platform. The Bluejay team views this process in two phases: Pre-Award and Post- Award. We have outlined the Pre-Award and Post-Award phases as a part of our Introduction to Grants series.
Bluejay has prepared numerous successful applications under many of the USDOT grant programs, including:
- FRA’s Consolidated Rail Infrastructure and Safety Improvements (CRISI) program
- OST’s Better Utilizing Investments to Leverage Development (BUILD) program, formerly RAISE and TIGER
- FHWA’s Bridge Investment Program (BIP)
- OST’s Reconnecting Communities Pilot (RCP) Program
- FRA’s Rail Crossing Elimination (RCE) Program
- OST’s Nationally Significant Multimodal Freight & Highway Projects (INFRA) program
- FHWA’s Charging and Fueling Infrastructure (CFI) Grant Program
Funding for Federal Discretionary Grants
Federal grants contribute funding for important transportation projects including construction, planning, research, and procurement that benefit the traveling public. The funds are allocated to address objectives such as safety, technology advancements, state of good repair, and improving disadvantaged areas.
Most Federal grants have cost share requirements. Applicants can seek a portion of the total project cost through Federal funds but must secure the remaining funds through other means such as state or local funding, private donors, tolls, etc.
Cost share requirements vary by grant program and are sometimes reduced for projects that meet specific criteria. Additionally, cost share expectations vary by presidential administration. Under the Biden administration, applicants were often limited to 80 percent Federal funding to 20 percent local funding. Under the first Trump administration, applicants were limited to 50 percent Federal funding to 50 percent local funding.
Am I ready to pursue a Federal Discretionary Grant?
Determining if your entity is ready to embark on a Federal grant pursuit requires significant introspection on your organization’s goals, a project’s status, your team’s availability, and more.
Federal grant applications are often 20–30-page reports that include a project narrative, budget description, benefit-cost analysis (BCA), and supplemental documentation. Producing a competitive grant application requires your project to be at a high level of readiness. Construction projects that are still in development or in the early phases of internal discussion at your organization are likely not the best candidates for grant funding. Your organization may be able to seek project development or planning funds under a grant program, but those project types still require significant documentation demonstrating need and expected outcomes.
Project readiness expectations vary by Federal administration and grant program. When evaluating your project’s readiness, it is helpful to view grant programs through the lens of the Federal government. The government wants to award funding for projects that are low risk, high reward, and ready to build.
The most successful grant pursuits are projects that:
- End in a guaranteed ribbon-cutting: The project should have few, if any, barriers to reach project completion. This includes minimal environmental or historical concerns that would require significant permitting and review; dedicated financial backing from local or private entities; and enthusiastic support from impacted communities, political leaders, and businesses.
- Produce a balanced budget sheet: The project should have limited risk of financial overruns. This is often demonstrated by thorough cost estimates, realistic timelines, and non-Federal funding commitments to address any unexpected costs.
- Can supply detailed plans, needs, and outcomes…today: It is a tricky balance between having a project that is ready to break ground but also can wait for federal funding. However, construction projects should have thorough plans, including design drawings and scoping studies, at the 10-percent level. The project should also have a demonstrated need and directly contribute to positive outcomes—both of which must align with the grant program’s goals. Program goals vary by program, but often include criteria for safety, efficiency, workforce development, and more.
Our team at Bluejay can help your organization review these areas through a brief introductory call and can become involved in the preparation process if it is determined that your project is not quite ready for a grant pursuit.
Critical Do’s and Don’t’s
As mentioned previously, funding from Federal Discretionary Grants is often distributed through reimbursement payments, but allowable costs are only those that are made AFTER a grant is awarded, a grant agreement is executed, and the funding is obligated. If your organization is hoping to secure funding through a Federal grant:
- Don’t start spending money: Most early development costs will not be allowable costs for construction grants, so early spending for design drawings, scoping studies, and planning work is necessary; however, do not procure equipment, engage construction teams, or make any other purchase that you anticipate will be an allowable cost. Our team at Bluejay can help you understand what allowable costs are based on past funding opportunities.
- Don’t issue bids, RFPs, or hire any project contractors: Federal grant procurement must comply with all Federal guidelines which include requirements for transparent, competitive bidding and accountability, as outlined in the Department of Labor’s Uniform Guidance for Federal Awards. Some programs have strict rules against single-source contracts or bundled contracts. It is best to wait until you have a signed grant agreement before entering into any contracts to complete the project work.
- Don’t break ground or move dirt: Just as you should not start spending money, do not put a shovel in the ground or move any dirt until you receive the go-ahead AFTER grant obligation. The use of Federal funds requires compliance with National Environmental Protection Act (NEPA) requirements and is subject to historical evaluation from the State Historic Preservation Offices (SHPO). Work done in advance of a grant agreement could be interpreted as your organization trying to avoid those responsibilities and can make your project ineligible for consideration.
- Do prepare plans: For a construction project, come ready with the data that illustrates the need for the improvements, the anticipated impacts to the community, the costs and benefits of implementation, and expected volumes for use. Many grant programs require project design to be completed at the 10- to 15-percent level upon submission and up to the 30-percent level upon obligation. Those costs will likely be 100-percent out-of-pocket unless your organization is seeking a planning grant.
- Do understand Buy American Act regulations: Will your project include procuring steel or iron, including products manufactured with those materials? The Buy American Act requires Federal agencies to prioritize domestic goods in procurements—including for grant-funded projects. Steel and iron are often the big ticket items that fall into this category but other products, such as batteries, vehicles, and general construction materials, are also included in the regulations. While waivers do exist for some circumstances and programs, they are not guaranteed and are often only available under very narrow conditions.
Get started with Bluejay Advisors today
Pursuing a Federal grant is not a task for the weary, but our team of experts at Bluejay Advisors can guide you through the first steps of determining if and when your project is ready through to the final ribbon cutting and grant closeout. We are ready to learn about your project and answer questions about funding opportunities that may be appropriate for your organization. Our initial discussions do not require a contract, any form of payment, or a long-term commitment. Contact us today to unlock funding for transportation and infrastructure projects.
[i] https://www.transportation.gov/rural/grant-toolkit/funding-and-financing/grants-overview
