Companion Guide to Video November 2015

www.fhwa.dot.gov/federal-aidessentials

The Uniform Administrative Requirements for 

Grants and Cooperative Agreements, known as 

the Common Grant Rule, are the general 

administrative requirements pertaining to all U.S. 

Department of Transportation grants and subgrants, including those awarded to State, local and 

federally recognized Indian tribal governments. 

You should recognize that administrative 

requirements differ from the programmatic 

requirements of the project grant. Programmatic 

requirements, which include items such as how 

the project must be designed, built, and carried 

out, are specific to a project or program. 

Administrative requirements address items such 

as financial management standards, reporting, 

and records retention.

These administrative requirements are broken 

down into four main sections in the Common 

Grant Rule: general, pre-award, post-award, and

after-the-grant requirements. Let’s take a look

at each section’s requirements.

The first section deals with general rules regarding

grants. For local public agencies, or LPAs, it is 

especially important to know that statutory 

requirements supersede general requirements of 

the Common Grant Rule. This means that if Title 

23, the U.S law that governs the Federal-aid 

Highway Program has a requirement that differs 

from the Common Grant Rule, then Title 23 takes 

precedence and must be followed. For example, 

the Federal-aid Highway Program generally does 

not use the standard forms used by other grant 

programs that fall under the Common Grant Rule. 

For many Federal programs, State and local 

agencies must meet pre-award requirements.

Usually, the first of these requirements is the 

submission of a grant application to request 

Federal funds. However, the Federal-aid Highway 

Program generally does not require State 

departments of transportation, or DOTs, to apply 

for Federal funds. The reason is because the funds 

are automatically distributed to the States

Finance

Administrative Requirements

Agencies are responsible for meeting all Federal requirements for 

grants and cooperative agreements to State and local governments
Federal-aid Essentials for Local Public Agencies

based on a formula established in the Federal-aid 

Highway Program legislation.

However, there are some discretionary programs 

administered by the Federal Highway 

Administration, or FHWA that do require 

applications. 

While no application is required, planning 

requirements of the Federal-aid Highway Program 

dictate that States program projects to the funds 

they receive in an FHWA-approved State 

Transportation Improvement Program, or STIP. 

This planning document is a prioritized, statewide 

listing of transportation projects expected to 

receive Federal funding within the next four years. 

The STIP must include an assurance that the 

State will comply with all applicable Federal 

statutes and regulations. Only projects in an 

approved STIP are eligible for funds administered 

by FHWA, and FHWA must approve any 

amendments to the STIP proposed by the State. 

Typically, State DOTs develop their own process 

for LPAs to get a project into the STIP and to seek 

authorization for project funding. 

Prior to awarding subgrants or agreements for 

projects to an LPA, the State DOT has the 

responsibility to ensure that the LPA is 

responsible, financially stable, and has adequate 

management systems. Once these pre-award 

requirements are satisfied, the State DOT may 

enter into a subgrant with the LPA, establishing 

authorization and funding for the project. 

After a project is authorized, your agency must 

meet the post-award requirements of the Common 

Grant Rule.

The State, as grantee, and the LPA, as subgrantee, 

must have controls and procedures in place to 

support financial management, financial reporting, 

and tracking and accounting of grant funds. All 

cash, assets, real and personal property must be 

tracked and protected. Fiscal control and 

accounting procedures must be adequate to permit 

production of necessary reports, trace the source of 

funds to a particular expenditure or expenditures, 

and demonstrate compliance with applicable 

Federal laws and regulations. Your agency needs 

to properly document project activity, grant access 

to the records, and maintain these records for three 

years after the final expenditure report is submitted, 

unless the regulations state otherwise. 

Some additional post-award requirements are 

important for LPAs to know. If your agency expends 

$750,000 or more in Federal awards in a fiscal 

year, it will need to hire an independent auditor to 

perform a single audit in accordance with generally 

accepted government auditing standards. Your 

agency must also maintain a written code of ethics, 

which governs employee performance for award 

and administration of contracts. In addition, in order 

to make any changes to the scope or objectives of 

a project, your agency must obtain approval from 

the State DOT.

Because the Federal-aid program is a reimbursable 

program, project costs must be incurred before you 

can submit claims for reimbursement.

Additionally, most FHWA-administered grants or 

projects include a non-Federal matching 

requirement. This matching requirement may be 

met through either the project costs incurred by 

grantees, subgrantees, or contractors, by the value 
Federal-aid Essentials for Local Public Agencies

of third party in-kind contributions of property or 

services, or through a combination of both.

Before using a third party in-kind contribution as a 

cost-sharing or matching requirement, contact 

your State DOT for eligibility guidance.

Once the work on the project is completed, the 

after-the-grant requirements apply.

After-the-grant requirements include the project 

closeout once the final voucher has been 

submitted. You should know the submission date 

of the final voucher because this date marks the 

beginning of the records retention period. Some 

projects slip into an inactive status because they 

are not closed out in a timely manner. It is 

important to close out the project so it doesn’t get 

labeled as inactive, as this will bring about 

additional reporting requirements. Closing out a 

project also has the benefit of releasing any 

remaining funds, which can be used to authorize 

new projects.

The State DOT is responsible for administering and 

monitoring subgrants. However, as subgrantees, 

LPAs are required to ensure that they are meeting 

all Federal requirements, including the Common 

Grant Rule.

Contact your State DOT for more 

information and guidance.
Federal-aid Essentials for Local Public Agencies

The content of this 

document is not a 

substitute for 

information obtained 

from State departments 

of transportation, 

appropriate FHWA 

Division Offices, and 

applicable laws. 

Scenarios have been 

simplified for emphasis 

and do not necessarily 

reflect the actual range of 

requirements applicable 

to the scenario or this 

topic. This document

was created under 

contract number 

DTFH61-11-D-00023 by 

the Federal Highway 

Administration, U.S. 

Department of 

Transportation, and is 

offered to the public to 

heighten and focus 

awareness of Federal-aid 

requirements within the 

local public agencies 

community and 

reinforces the 

importance of these 

necessary policies, 

procedures, and 

practices.

This Companion Resource 

is the script content for 

the video production of 

the same name. 

Additional Resources

• Link to uniform administrative requirements for grants and cooperative 

agreements to State and local governments 2CFR200 Subparts A-D 

Administrative Requirements

http://www.ecfr.gov/cgi-bin/textidx?SID=92f6d84323140c5a78ce38233c232210&mc=true&node=pt2.1.200

&rgn=div5

• Description of free FHWA Web-based training course on the Administrative 

Requirements 2CFR200 Subparts A-D NHI Course # 151047

http://www.nhi.fhwa.dot.gov/training/course_search.aspx?tab=1&key=151

047&course_no=151047&typ=3&res=1