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Is Federal Funding the Right Fit for My Organization?

Four professional colleagues sit in a circle with their papers and laptops, debating an issue.Federal funding can play a critical role in ensuring that your community has the necessary resources to undertake critical transportation projects—in many states, Federal grant programs can provide foundational resources for the planning and execution of efforts ranging from public transit expansion to highway and bridge maintenance to airport improvements, among many others.

However, there are strict eligibility and accountability requirements for Federal funding that applicants should be prepared to meet.

DOT funding opportunities are posted on and on DOT’s Grants page, and additional information is available on the Bipartisan Infrastructure Law.

The following considerations are not intended to supplant official grant program information but to help those applying who are less familiar with Federal processes.

Step 1. Is Federal Funding Right for My Organization?

Before you begin the application process for a Federal discretionary grant funding opportunity, consider the following:

  • Is the scale of my project or activity a good fit for Federal grant funding? Consider the full range of potential funding resources from Federal to state and local resources as you determine which are the best fit for your project and organization.
  • Do I have access to sufficient non-Federal resources to meet the grant’s match requirements? Identify potential sources for the grant’s non-Federal cost share requirement and explore whether the grant opportunity provides any flexibilities that may lower your match requirements.
  • Do I have the time and resources to successfully navigate the Federal grant application, award, and post-award steps? Ensure that your organization fully understands the grant funding cycle, requirements, and time and resource commitments. Look to see if there are organizations, philanthropic organizations, or local governments or other available tools that to help navigate this process.
  • Is my proposed project or activity eligible? Am I an eligible applicant? Review the Notices of Funding Opportunity (NOFOs) and other informational materials prepared by DOT for that specific grant program, such as published Frequently Asked Questions (FAQs), to ensure that your organization and project meet eligibility requirements.

Consider exploring partnerships with eligible entities, if necessary, to meet improve your chances of successfully getting and managing a Federal grant. There may be other public, private, or philanthropic resources that could be a better fit for you project.

Working with your state DOT, metropolitan planning organizations (MPOs), or transit agencies is also a pathway to access Federal funding.

Step 2. What Should My Organization Consider Before Applying?

If applying for a Federal grant is the right path, ensure that you have and understand the information and resources needed to successfully complete your application.

  • Am I prepared to navigate If needed, register on and with the System for Award Management (SAM). This can take several weeks. Refer to the USDOT Discretionary Grant Process overview to ensure you are familiar with the various steps and navigation resources.
  • Do I fully understand the grant application and evaluation criteria? A clear understanding of the grant’s NOFO and evaluation criteria is important for developing a successful application that is tailored to the program’s unique application requirements. DOT often provides program information through webinars, answers to Frequently Asked Questions (FAQs), and other guidance. If you apply for a discretionary grant and are unsuccessful, you can request a debriefing from DOT to understand how your application could have better addressed the full set of eligibility or evaluation criteria. This can be very helpful if you may re-apply in future years.
  • Does my organization have the ability to complete the application and demonstrate the capacity to effectively manage awarded funds? Consider whether your organization has the necessary staff and technical expertise to develop a strong application. Check to see if there are any local resources that may enable you to hire a grant writer, or whether to partner with another organization for this support. Based on the NOFO requirements you may need to develop a detailed project budget and timeline, provide a benefit cost analysis (BCA), and/or verify that you’ve undertaken necessary environmental reviews and acquired project approvals. If you have questions on these requirements, check with your state DOT, MPO, or USDOT state contacts.
  • Has my organization secured the required amount of non-Federal match funding? Applicants are required to document the source of the non-Federal cost share in their grant applications, which may involve time to collect local approvals or funding commitments. 
  • If required, is my project on the metropolitan and/or statewide transportation improvement program (STIP/TIP)? TIPs and STIPs are a federally required multi-year program of planned transportation projects. Projects that utilize DOT funding must be included on these documents. States and MPOs allow for periodic amendments and/or updates through a formal process coordinated by the State DOT for STIPs and the MPO for TIPs. (See the Process of Making Transportation Decisions from DOT’s Leadership Academy Transportation Toolkit.) 

Step 3. If Awarded, Can My Organization Successfully Meet Federal Requirements?

Accepting Federal funds creates a legal duty by the recipient to prudently use these funds; to comply with Federal statutes and regulations; and to meet the terms and conditions of the award. The following is not an exhaustive list of Federal requirements, but offers a snapshot of some key questions to consider:

  • Can my organization meet Federal program reporting requirements? Ensure that your organization is aware of and has the capacity to meet reporting requirements and deadlines. Review the program NOFO to ensure that you understand the specific grant reporting requirements. All DOT grant recipients must also comply with all applicable Federal requirements set forth in 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.
  • Will my organization be able to verify its financial viability? Before grant funds are obligated, the recipient will need to provide audited or compiled financial statements, single audits, or filed tax returns typically for the two most recent accounting years. Organizations may also be requested to provide interim financial statements, verification documentation, detailed budgets, financial projections of anticipated revenues, credit documentation, and other requested documentation to comply with 2 CFR 200.
  • Does my organization have the necessary financial management systems in place? DOT awardees must have financial management/accounting systems that meet the requirements of 2 CFR 200, Subpart D – Post Federal Award Requirements – Standards for Financial and Program Management for reporting and monitoring use of Federal funds.
  • Is my organization prepared to meet Federal auditing requirements? Federal grantees are required to conduct audits as required by 2 CFR 200, Subpart F - Audit Requirements. Audits with questioned cost findings can result in cost disallowances and require organizations to make repayments to DOT. Therefore, it is critical to consider whether your organization will be able to meet reporting, financing management, and auditing requirements to sufficiently document use of funds, ensure that direct and indirect costs are allowable, and that appropriate consulting, invoicing, and subaward agreements are in place throughout the grant lifespan.

Step 4. Can My State DOT Play a Role in Administering Funds?

Non-State recipients may enter into a contractual agreement with their State DOT for assistance with project activities that comply with state law and the applicable procurement standards (see 2 CFR 200.318 through 200.327).

In this relationship, the non-State recipient would reimburse the State DOT for eligible project activities as outlined in their contractual agreement. Direct costs incurred by the non-State recipient during the period of performance that satisfy the requirements in 2 CFR part 200, subpart E, including 2 CFR 200.403, are allowable and eligible for reimbursement by the Federal agency.

Note that if a State DOT is compensated for activities via a contractual agreement with a non-State recipient, the costs associated with those activities cannot be included under the State DOT’s indirect cost rate. (See 2 CFR 200.403). It is essential that each item of cost incurred for the same purpose be treated consistently in like circumstances, either as a direct or an indirect cost, in order to avoid possible double-charging of Federal awards. (See 2 CFR 200.412). The Federal agency has no direct relationship with a contractor or subrecipient under a Federal award. As such, management of contracts or subawards is the responsibility of the recipient.

State DOTs can be reimbursed for assisting non-State recipients with grant administration assistance outside of a contractual agreement with a non-State recipient. 

Providing support to local communities is considered an administrative cost which may be eligible as an indirect cost. State DOTs may be reimbursed with Federal funds for assisting non-State direct recipients with grant administration assistance if they have an approved indirect cost rate. Grant administration assistance is considered an indirect cost because it supports the entire program. Indirect costs may include labor, rent, capital expenditures, and supplies that benefit multiple projects (see 2 CFR 200.414, and Appendix VII, paragraph A.4). State DOTs must have an approved indirect cost rate that allocates those costs to all benefitting programs (see 2 CFR 200.414 and appendix VII to part 200, paragraph D.1.b). If the State DOT does not have an approved indirect cost rate, the State DOT cannot bill indirect or administrative costs unless specifically authorized in legislation. (See 2 CFR part 200, Appendix VII, paragraph D.1.a)

If this type of assistance impacts the amount of resources necessary to maintain the transportation program at the State DOT in that the information upon which the cost allocation plan was originally negotiated is materially incomplete, the State DOT may renegotiate its indirect cost rate with the Federal cognizant agency. (See 2 CFR part 200, Appendix VII, paragraph E).

Additional Resources

Talk with the Operating Administration grant or program representative or staff in your FHWA state office or one of USDOT’s regional offices for more specific and expansive guidance on program requirements. The following resources may also be of use, but this is not an exhaustive list: