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United States Department of TransportationUnited States Department of Transportation

AIP Handbook

Office of Airports

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Chapter 5. How does the grant process work?

Section 1. Basic Grant Steps.

5-1. Basic Grant Steps.

Table 5-1 captures the basic steps in the grant process as outlined in the following sections of this chapter.

Table 5-1 The Basic Steps in the Grant Process
The basic steps are…
a. Pre-Grant Actions.
b. Grant Programming.
c. Grant Application, Offer, and Acceptance.
d. ADO Grant Oversight.
e. Grant Payment.
f. Grant Amendment.
g. Grant Closeouts.
h. Grant Suspension and/or Termination.
i. Post-Grant Actions.

Section 2. Pre-Grant Actions.

5-2. Introduction.

There are many actions that need to be taken before an AIP eligible project is ready to be considered for inclusion in a grant. Table 5-2 captures these major actions. The subsequent explanations in this section discuss which actions apply to which types of projects.

Table 5-2 The Major Pre-Grant Actions
The major actions include...
a. Identification of Potential Projects by Sponsors and ADO.
b. Early Coordination between ADO and Sponsor.
c. ADO Verification of Sponsor Eligibility.
d. ADO Verification that All Project Requirements Will Be Met.
e. ADO Verification that Airport Layout Plan is Current.
f. ADO Notification to New Sponsors of Flood Insurance Requirements.
g. ADO Notification and Verification of Sponsor Civil Rights Requirements.
h. ADO Verification that Risk Level Determination is Current.
i. ADO Review of Open Grant Status.
j. ADO Verification that Competition Plan is Current.

5-3. Identification of Potential Projects by Sponsors and ADO.

Sponsors normally develop 20-year airport development plans and often engage in other planning efforts. From these activities, the sponsor develops their capital improvement plan and submits it to the ADO. The ADO then uses this information, as well as other pertinent information available in house, to identify projects that meet the applicable requirements in Chapter 3.

The FAA Office of Airports uses this data to create a five year National Plan of Integrated Airport Systems (NPIAS) Report outlining the projects that are eligible and justified for AIP funding. The Secretary of Transportation is required to publish this plan every two years per 49 USC § 47103. The FAA Office of Airports then creates an Airports Capital Improvement Plan (ACIP) to identify the projects that may be funded with AIP over the next three years.

FAA inclusion of the project in the NPIAS or the ACIP is not a guarantee of funding, nor is the value of the project considered a final determination by the FAA.

Detailed information on the NPIAS and ACIP processes are found in the current versions of FAA Order 5100.39, Airports Capital Improvement Plan and FAA Order 5090.3, Field Formulation of the National Plan of Integrated Airport Systems.

It is important that during this process the ADO discuss the projects listed in Table 5-3 with the sponsor and determine when the projects will be addressed. This is because these items have been determined by Congress to be of special interest, are required by rule or regulation, or if not implemented, can affect the utility of the airport in the future.

Table 5-3 Important Potential Projects for ADO/Sponsor Discussion
Important projects include…
a. Clear Runway Approaches. Per 49 USC § 47107(a)(9), the sponsor must take appropriate action to ensure that terminal airspace required to protect instrument and visual operations to the airport (including operations at established minimum flight altitudes) will be cleared and protected by mitigating existing, and preventing future, airport hazards.

(Note: 49 USC § 47107(a)(9) uses the term “operations to the airport”, which includes departures and approaches. Because design surfaces are typically described in terms of approach surfaces or missed approach surfaces, the term “approaches” describes the clearance surfaces required to protect operations to or from a runway.)
b. Compatible Land Use Issues. Per 49 USC § 47107(a)(10), the sponsor must take appropriate action (to extent reasonable) to restrict the use of land next to or near the airport to uses that are compatible with normal airport operations. For example, if there are residential uses surrounding the airport, acquisition of the properties or soundproofing the houses may be appropriate.
c. Congressionally Mandated Items. 49 USC § 47101(f) lists high priority projects at commercial service airports (to be given consideration to the extent possible with available money and considering other safety needs). The items on this list include:

(1) Electronic or visual vertical guidance on each runway.

(2) Grooving or friction treatment of each primary and secondary runway.

(3) Distance-to-go signs for each primary and secondary runway.

(4) A precision approach system, a vertical visual guidance system, and a full approach light system for each primary runway.

(5) A non-precision instrument approach for each secondary runway.

(6) Runway end identifier lights on each runway that does not have an approach light system.

(7) A surface movement radar system at each category III airport (per FAA policy, not eligible for AIP).
(8) A taxiway lighting and sign system.

(9) Runway edge lighting and marking.

(10) Radar approach coverage for each airport terminal area (per FAA policy, not eligible for AIP).

(11) Runway and taxiway incursion prevention devices, including integrated in-pavement lighting systems for runways and taxiways (per FAA policy, may have limited eligibility).
d. 14 CFR 139 Violations. 14 CFR part 139 requires certificated airports to meet certain standards, including required safety and signage. The ADO is encouraged to review the latest 14 CFR part 139 inspection report to determine if there are any AIP eligible equipment or development items that need to be addressed.

5-4. Early Coordination between ADO and Sponsor.

The ADO has the option to give the sponsor some preliminary indication (for planning purposes only) of the likelihood of the FAA being able to consider funding for a given project, focusing not just on eligibility and justification but also on whether and when funds might become available (including all categories of AIP funds). In such cases, the ADO must make it clear to the sponsor that such early indications do not represent a decision or commitment, and that many factors, including national, regional and local issues may affect the ultimate decision. The ADO must also make it clear that it is the sponsor’s decision whether and when to initiate any steps that might be required in order to be ready if and when the FAA is ultimately able to award a grant. Finally, the ADO must ensure that such early indications, as well as any early actions by the sponsor, cannot be misconstrued as pre-decisional, particularly if environmental review processes are still underway.

The ADO also has the option to notify the sponsor of the favorable potential for receiving Federal funding in the upcoming fiscal year. This is not a commitment nor a guarantee of funds but simply a notice that funding for the project appears favorable and that the sponsor has the option to initiate actions that require long lead times in order to avoid potential delays in the grant process.

In addition, the sponsor must develop a realistic project schedule that will ensure that the grant can proceed in a timely manner. The ADO may request sponsor coordination of this schedule. The schedule must set realistic sponsor deadline dates for key steps in the grant process because a sponsor’s failure to complete these steps in a timely manner may seriously impact or delay project funding. Table 5-4 contains common key steps.

Table 5-4 Common Key Steps in the Grant Process
Common key steps include…
a. Submission of a benefit-cost analysis (for projects such as certain NAVAIDS, projects requesting $ 10 million or more in discretionary funding over the life of the project, new airport projects, capacity projects).
b. Submission of environmental review documents.
c. Selection of sponsor’s engineer.
d. Completion of final plans and specifications and engineer’s report.
e. Submission of aeronautical study to coordinate the project with other FAA lines of business and other federal agencies.
f. Submission of construction safety phasing plan.
g. Completion of safety management system (SMS) coordination.
h. Submission of disadvantaged business enterprise (DBE) plan.
i. Completion of necessary land acquisition and relocation of displaced persons.
j. Adoption of a zoning ordinance or other compatible land use measures.
k. Submission of title evidence or attorney certification of title.
l. Coordination with planning agencies.
m. Notice of intent to use entitlement funds (to meet the deadline published in the annual Federal Register Notice).
n. Receipt of current wage rates.
o. Advertisement for bids.
p. Receipt of bids.
q. Submission of Application for Federal Assistance.
r. Acceptance of grant offer.
s. Award of contract.
t. Completion of the pre-construction conference.

5-5. ADO Verification of Sponsor Eligibility.

The ADO must verify that all of the sponsor requirements in Chapter 2 have been met.

5-6. ADO Verification that All Project Requirements Will Be Met.

The ADO must verify that all of the sponsor requirements in Chapter 3 and the appropriate project requirement appendix will be met by the required time in the grant process.

5-7. ADO Verification that Airport Layout Plan is Current.

Per 49 USC § 47107(a)(16), the sponsor must maintain a current layout plan of the airport in order to receive an airport design, construction, or equipment grant as defined under 49 USC § 47102(3). The ALP that is on file with the ADO must reflect the current and proposed conditions at the airport and all proposed and existing access points used to taxi aircraft across the airports property boundary.

5-8. ADO Notification to New Sponsors of Flood Insurance Requirements.

Per the Flood Disaster Protection Act of 1973, sponsors with an airport in a Federal Emergency Management Agency (FEMA) identified area having a special flood hazard must participate in the National Flood Insurance Program.

The ADO is responsible for advising new sponsors of this requirement and advising that there are additional details available at the FEMA website (see Appendix B for link). Sponsor will be certifying in the grant assurances that they comply with this requirement for acquisition and construction projects.

5-9. ADO Notification and Verification of Sponsor Civil Rights Requirements.

Sponsors (including block grant states) receiving AIP funding must follow all applicable civil rights requirements in Table 5-5. Sponsors must work directly with the FAA Office of Civil Rights (ACR) to ensure that all of these requirements have been met.

The ADO is responsible for advising new sponsors to contact ACR to discuss these requirements.

The ADO is also responsible for coordinating with ACR before a grant is issued to verify that the DBE plan, goals and monitoring (and ACDBE plan, goals and monitoring if the airport is a commercial service airport) have been accepted by ACR.

Table 5-5 Sponsor Civil Rights Requirements
Civil rights requirements for sponsors include…
a. Disadvantaged Business Enterprise (DBE) Program. 49 CFR part 26; Airport Sponsors Assurances #1 and #37; Planning Agency Sponsors Assurances #1 and #13; Non-Airport Sponsors Undertaking Noise Compatibility Program Projects Assurances #1 and #22; and 49 USC § 47113. The sponsor must have a DBE program if they will be receiving $250,000 or more in AIP funding during a Federal fiscal year. Contracts solely for the purpose of land are excluded. Block grant states must submit either a single overall goal or multiple goals that cover all of the subgrants funded during a fiscal year.
b. Airport Concessions Disadvantaged Business Enterprise (ACDBE) Program. 49 CFR part 23; Airport Sponsors Assurance #1 and #37; and 49 USC § 47107(e).
c. Americans with Disabilities Act (ADA). Titles II & III. Section 504 of the Rehabilitation Act of 1973; Airport Sponsors Assurances #1, #30, and #34; Planning Agency Sponsors Assurance #1 and #9; Non-Airport Sponsors Undertaking Noise Compatibility Program Projects Assurances #1 and #17; 49 USC § 47123 and § 47107; 49 CFR parts 27, 37, and 38; and 28 CFR parts 35 and 36.
d. Air Carrier Access Act of 1986 (ACAA). 14 CFR part 382.
e. Title VI of Civil Rights Act of 1964. 42 USC § 2000d, et seq. As a condition of receiving any Federal funding assistance, all sponsors are subject to and agree to comply with the Standard Title VI/Non-Discrimination Assurances. In addition, the Standard Title VI/Non-Discrimination Assurances are also binding on subrecipients, subgrantees, contractors, successors, transferees, and/or assignees.

5-10. ADO Verification that Risk Level Determination is Current.

Based on a DOT Office of Inspector General (OIG) audit and findings related to the FAA’s administration of AIP, the FAA has implemented a risk base oversight system to minimize the risk of misuse of funds by sponsors. The FAA uses a tiered ranking system to assign a risk level to each sponsor. The risk level defines the level of oversight needed. Current detailed guidance on how to assign sponsor risk a level is contained in the Airport Improvement Program (AIP) Grant Oversight Risk Model Policy (see Appendix B for link).

At this point in the process, the ADO must verify that a risk level has been assigned to the sponsor and is still current. If not, it is FAA policy that the ADO must complete the original determination or redo the risk level assignment.

5-11. ADO Review of Open Grant Status.

Per FAA policy, the ADO must determine if the sponsor has any open grants older than four years or that have not had a payment request for 18 months or more. If so, the ADO must obtain the reason why and the sponsor’s plans to address the situation.

This is because 49 USC § 47106(a)(4) requires that the sponsor carry out and complete AIP funded projects without unreasonable delay, and a history of old and/or inactive grants may be an indicator that the sponsor may not be able to comply with this requirement.

5-12. ADO Verification that Competition Plan is Current.

For certain medium and large hub airports, the ADO must verify that all required competition plans and updates are approved. The competition plan requirements are discussed in detail in Appendix W.

Section 3. Grant Programming.

5-13. Introduction.

Once the ADO has completed the pre-grant actions in the previous section, there are four major steps before the grant application can be processed.

  • a. Project Evaluation Report and Development Analysis (PERADA)
  • b. Grant Programming
  • c. Congressional Notification
  • d. Sponsor Notification

5-14. Project Evaluation Report and Development Analysis (PERADA) Completion.

FAA Form 5100-109, Project Evaluation Report and Development Analysis (see the AIP Forms link in Appendix B), is an optional checklist that the ADOs may use to ensure that certain important statutory, regulatory and grant requirements listed in this Handbook have been considered prior to a grant being programmed. If the ADO’s PERADA review identifies any items that are not met at the time of programming, this checklist can act as a useful tool for the ADO in following up on these items at the appropriate time during the grant process. For example, if a required aeronautical case was not approved prior to the ADO programming the grant, the ADO must follow up and make sure the aeronautical case was approved prior to the issuance of the grant offer.

While it is mandatory for the ADO to review the items on the PERADA checklist, the use of the checklist itself is not mandatory. By issuing the grant, the ADO confirms that all of the applicable requirements as detailed in this Handbook have or will be met.

5-15. Grant Programming.

Grant programming is defined as the ADO action of creating a proposed grant in the automated AIP system. At this point, the ADO may enter the project into the automated AIP system based on estimates found in the sponsor’s capital improvement plan or in cost estimate updates provided by the sponsor. In the past, sponsors provided these costs to the ADO in a preapplication. Formal preapplications are no longer required.

After this is done, the grant is then reviewed at various levels within the FAA Office of Airports. If the grant is approved, it is then ready to begin the congressional notification process.

5-16. Congressional Notification.

If the FAA Office of Airports approves the grant, the grant then is forwarded to the FAA Office of Government and Industry Affairs (AGI). AGI reviews the grant and forwards it electronically to the DOT Office of the Secretary (OST).

After reviewing the grant, OST notifies the appropriate congressional office that the congressional office can publicly announce the grant. The OST process varies depending on the type and amount of funding involved and current legislative requirements. OST electronically notifies the FAA when this process is complete (often referred to as the OST release date).

The FAA can share specific grant information with the public (including the sponsor) only after the OST release date is entered in the automated AIP system.

5-17. Sponsor Notification.

After the congressional notification process is complete, the FAA Office of Airports posts the grant on the FAA Office of Airports website (see Appendix B for link). This is considered the official FAA notification to the sponsor that the ADO has authority to issue a grant for the project. The ADO has the option of also directly notifying the sponsor.

Section 4. Grant Application, Offer, and Acceptance.

5-18. Introduction.

The ADO and sponsor must complete the steps listed below as part of the grant application, offer, and acceptance process.

  • a. Grant Application Package Submittal
  • b. Grant Application Review
  • c. Funds Reservation
  • d. Grant Offer
  • e. Grant Acceptance
  • f. The FAA Office of Finance and Management, FAA Accounts Payable Section B (AMK-314) Notification

5-19. Grant Application Package Submittal.

a. Timing of Submission. Sponsors must submit a complete and correct grant application package prior to the ADO issuing a grant offer.

b. Grant Application Package Contents. Table 5-6 outlines what a sponsor must submit in a grant application package. The ADO will advise the sponsor how many original and/or copies must be submitted to the ADO.

Table 5-6 Grant Application Contents
For the following… The sponsor submittal requirement is…
a. Application for Federal Assistance (Standard Form 424) Mandatory. Sponsors must sign and submit the latest version this form as part of all grant application packages (see the AIP Forms link in Appendix B). The signed grant application is contractually referenced in the grant agreement and a signed copy must be included in the ADO grant file.
b. Application for Development Projects (Parts II through IV) (FAA Form 5100-100) Mandatory. FAA Form 5100-100, or its equivalent, must be submitted for all projects (see the AIP Forms link in Appendix B). The term its equivalent is intended to allow sponsors to create their own documents that contain the exact information requested in FAA Form 5100-100, but allows them to include sponsor-specific information or data.

This form provides supporting grant information such as the source of the sponsor share, detailed cost breakdowns, project specific information (such as narratives and justifications), and confirmation that items such as coordination with on airport users has been accomplished.

Per FAA policy, contingency costs are not allowed because the ADO has the option to amend an AIP grants, dependent on eligibility and availability of funding, to reflect final costs. Therefore, sponsors must leave Part III, Budget Information Item 18 (Contingencies) blank.

Optional for the State Block Grant Applications. The ADO has the option to request this information, but states do not normally include this in a state block grant application. The state must collect this information for subgrants in accordance with their State Block Grant Program Memorandum of Agreement.
c. Application for Planning Projects (Parts II through IV) (FAA Form 5100-101) Mandatory for Planning Projects if FAA Form 5100-100 is not used. For planning projects, sponsors can submit FAA Form 5100-101, or its equivalent, instead of FAA Form 5100-100 (see the AIP Forms link in Appendix B). The term its equivalent is intended to allow sponsors to create their own documents that contain the exact information requested in FAA Form 5100-101, but allows them to include sponsor-specific information or data.

Optional for the State Block Grant Applications. The ADO has the option to request this information, but states do not normally include this in a state block grant application. The state must collect this information for subgrants in accordance with their State Block Grant Program Memorandum of Agreement.
d. Detailed Project Narratives and/or Cost Breakdowns (beyond that provided in either FAA Form 5100-100 or FAA Form 5100-101) At the Request of the ADO. Sponsors must provide an additional detailed narrative summary statement and/or a detailed project cost breakdown (beyond that provided in either FAA Form 5100-100 or FAA Form 5100-101) if requested by the ADO. The detailed summary will normally include a description and justification for each of the projects in the grant. The detailed project cost breakdowns will normally be in sufficient detail for the ADO to determine whether the project costs for each of the projects are reasonable.

Optional for State Block Grant Applications. The ADO has the option to request this information (especially for discretionary projects), but states do not normally include this in a state block grant application. The state must collect this information for subgrants in accordance with their State Block Grant Program Memorandum of Agreement.
e. Project Sketches At the Request of the ADO. Sponsors must provide an 8 ½” x 11” or larger sketch for each of the projects if requested by the ADO. This sketch must clearly identify the limits of the proposed project and its location on the airport. For land acquisition projects, the sketch must show the boundaries of currently owned land and the boundaries and proposed property rights of each parcel of land or easement to be acquired, and include parcel numbers and acreage.

Optional for State Block Grant Applications. The ADO has the option to request this information (especially for discretionary projects), but states do not normally include this in a state block grant application. The state must collect this information for subgrants in accordance with their State Block Grant Program Memorandum of Agreement.
f. Project Documentation Needed For ADO Reasonableness Determination Mandatory. Sponsors must provide all of the documentation necessary for the ADO to make a cost reasonableness determination for the costs contained in the grant application. The sponsor and ADO requirements are discussed in detail in Section 14 of Chapter 3. It is FAA policy that a sponsor must submit the grant application incorporating actual bid or negotiated agreement amounts. The ADO has an option to accept a grant application based on estimates when actual bids or negotiated agreement amounts are not available, however this practice is suboptimal because it may unnecessarily tie up funding that could be used on other projects.
g. Exhibit A Mandatory (If A Current Approved Version is Not On File in the ADO). The ADO must have a current approved Exhibit A (property inventory map) on file prior to issuing a grant at that airport because it is contractually referenced in the grant agreement. If the airport is a first time sponsor, or the Exhibit A is not up to date, the ADO must require the sponsor to submit an Exhibit A. Otherwise, the ADO may allow the sponsor to include the Exhibit A on file by reference in Part II, Section C of FAA Form 5100-100 (or equivalent).

The following documents contain guidance on Exhibit A requirements:

(1) The current version of Advisory Circular 150/5100-17, Land Acquisition and Relocation Assistance for Airport Improvement Program Assisted Projects

(2) The current version of FAA Order 5190-6, FAA Airport Compliance Manual

(3) The current version of FAA Order 5100.37, Land Acquisition and Relocation Assistance for Airport Projects

Optional for State Block Grant Applications. The ADO has the option to request this information, but states do not normally include this in a state block grant application. The state must collect this information for subgrants in accordance with their State Block Grant Program Memorandum of Agreement.
h. Title Certificate or Long Term Lease Agreement At the Request of the ADO. Sponsors must have good title for the land on which they will be constructing the project. The ADO has the option of requiring copies of the title certificates or long term lease agreement for the grant file.

Optional for State Block Grant Program. The ADO has the option to request this information, but states do not normally include this in a state block grant application. The state must collect this information for subgrants in accordance with their State Block Grant Program Memorandum of Agreement.

5-20. Grant Application Review.

The ADO must review the application and supporting documents for accuracy and completeness. The ADO may adjust the depth and intensity of the review in accordance with the complexity of the project, the amount of the grant, the size of the airport, and past experience with that sponsor. The ADO may also request that the sponsor provide any additional information needed for the ADO to complete this review. By issuing the grant offer, the ADO is officially approving the projects in the grant application.

a. Minimum Grant Amount. Per FAA policy, the ADO must not process applications for grants totaling less than $25,000 in Federal funding unless the ADO has received APP-520 concurrence that it is clearly advantageous to the Federal government. The ADO documents this determination of this being clearly advantageous by issuing the grant. Note that the sponsor has the option to include multiple projects in the grant application to meet or exceed this $25,000 requirement.

b. All Pre-Grant Actions Complete. Before the ADO can issue a grant, the ADO must verify that all of the pre-grant actions in Section 2 of this chapter (verification of sponsor eligibility, current ALP, etc.) have been completed.

c. Determination of Reasonableness of Grant Amounts. Before the ADO can issue a grant, the ADO must determine that all of the applicable requirements for costs are reasonable as required in Section 14 of Chapter 3. This is an important and mandatory part of the ADO grant application review process. The ADO’s reasonableness determination is not covered by sponsor certifications and the ADO cannot delegate this responsibility.

5-21. Reservation of Funds.

If the ADO finds the grant application to be in order, the ADO must reserve the funds in the automated AIP system. The system generates an electronic FAA Form 1413-1, Request for Change in Reservation/Obligation. The ADO has the option of printing a copy of this form and placing it in the grant file, however, this is not mandatory because the form is retained in the automated AIP system. This is reviewed in the system at the regional level and if approved, the system forwards the request to the FAA Office of Finance and Management, FAA Accounts Payable Section B (AMK-314) for AMK-314’s acceptance. Once AMK-314 accepts the reservation in the system, the funds are officially reserved.

Project and funding changes may be made by the ADO after the congressional notification process. Normally this is due to differences between the estimated costs and the actual bid amounts. Occasionally this occurs because the sponsor wants to change, add, or delete a project. In these instances, the ADO must ensure that this is not a substitute for proper planning or estimating. Project and funding changes after congressional notification may require APP approval or additional congressional notification as follows.

a. APP-520 Approval. The ADO must obtain APP-520 approval for the following two types of program changes to projects that have gone through congressional notification:

(1) Replacement of a Project Receiving Discretionary Funds. Replacement of a project that is receiving discretionary funding with another project.

(2) New Lower Priority Entitlement Project at an Airport Receiving Discretionary Funds. Replacement of a project that has a lower priority than a project the airport has or will receive discretionary funds in the same fiscal year. This is because discretionary distributions are based in part on how an airport is using its entitlements.

b. Additional Congressional Notification. If the grant amount is increased after congressional notification, the ADO may be required to send the grant back through the congressional notification process. APP-520 provides the criteria for sending a grant back through congressional notification process based on legislation and OST requirements.

5-22. Grant Offer.

There are multiple items that are part of a grant offer package. The ADO must include all of these items in the grant file and is only required to send some of these items to the sponsor.

a. Grant Offer Package Components. The grant offer package consists of the components listed in Table 5-7. All of these components must be filed by the ADO in the applicable grant file.

b. Items Sent to Sponsor. The grant offer sent to the sponsor must contain items a-f in Table 5-7 (the ADO has the option of sending the sponsor certifications to the sponsor before the sponsor receives the grant offer). The ADO also has the option of attaching any of the other components.

Table 5-7 Grant Offer Package
The following items are components of the grant offer package…
a. Grant Cover Letter.
b. Grant Agreement.
c. Applicable Special Conditions (APP-520 maintains a current list of special conditions that must be used for specific projects or airport situations).
d. Grant Assurances (see Paragraph 2-4 for requirements).
e. Sponsor Certifications.
f. Current FAA Advisory Circulars Required for Use in AIP Funded and PFC Approved Projects.
g. Applicable State Agency Agreements.
h. The Entire Grant Application (see Paragraph 5-19 for requirements).

c. Grant Cover Letter. Traditionally, the grant cover letter highlights important grant information to the sponsor. This may include when the grant needs to be returned, how many copies the ADO requires, and reference to any special conditions the ADO wants to emphasize. The ADO must use the grant cover letter template provided in the automated AIP system. Per 49 USC § 47116, the ADO must include the following sentence in all grant offer letters except those for medium or large hub: Please note that this grant offer may be funded all or in part, with funds from the Small Airport Fund.

d. Grant Agreement. A fully signed and executed grant agreement is a binding agreement obligating the sponsor and the FAA to the terms and conditions of the grant agreement. There are three basic types of grant agreements. These are the traditional, the multi-year, and the state block grant. Table 5-8 contains general requirements that apply to all three types of grants, and Table 5-9 contains specific requirements for each of the types of agreements. Table 5-10 includes examples of grant descriptions.

Table 5-8 Requirements for All Grant Agreement Types
The following requirements apply…
a. Grant Description. The ADO must write the grant description in sufficient detail to clearly identify and define each project (see Table 5-10 for examples).
b. Grant Agreement The ADO must use the grant agreement templates provided in the automated AIP system. Sample traditional, multi-year, state block grant agreements are available on the FAA Office of Airports website (see the AIP Forms link in Appendix B).
c. Standard Conditions. The ADO must not modify the standard grant conditions found in the grant templates. These may only be updated by APP-500.
d. Funding Level. If the grant application is based on actual bid or negotiated agreement amounts, the ADO must issue the grant based on these amounts (not the programmed amount). In addition, the ADO cannot write the grant agreement for more than what is requested in the signed grant application from the sponsor. However, the ADO can write the grant agreement for less than the grant application without requesting an updated application from the sponsor as long as the project components in the grant are included in the signed application and a note is made in the grant file explaining the reduced grant amount.
Table 5-9 Specific Requirements by Grant Agreement Type
For this type of grant agreement… The following applies…
a. Traditional (1) Grant Agreement Format. The ADO must use the grant agreement template (FAA Form 5100-37, Grant Agreement) provided in the automated AIP system. A sample traditional grant agreement is available on the FAA Office of Airports website (see the AIP Forms link in Appendix B).

(2) Type of Funding. The ADO must only use current year funding and funding carried over from prior years.
b. Multi-Year (1) Applicability. 49 USC § 47108(a) allows the ADO to issue multi-year grants when the FAA AIP authorization is for multiple years.

(2) Grant Agreement Format. For a multi-year grant, the ADO must begin with the traditional grant agreement. The ADO must use the grant agreement template provided in the automated AIP system.

(3) Additional Condition. The multi-year agreement must contain the following extra condition: This project is part of a multi-year grant, which is more fully described in the Special Conditions. The total United States share of the project is $[Enter total estimated Federal cost of multi-year project], and the project is planned to be funded in Fiscal Years [List the fiscal years from Year 1 - End Year]. For the fiscal years in which this project is being funded, the FAA will establish that fiscal year’s maximum obligation in a letter to the Sponsor. When the FAA can calculate the funding and incur the obligation, the FAA will issue this letter to the Sponsor. Funding which will be subject to the restriction on the use of such apportionments imposed on FAA by existing and future Appropriations Acts. This commitment does not in itself obligate, preclude, or restrict the FAA in the use of any funds made available for discretionary use to further aid the Sponsor in meeting the cost of this project.

(4) Special Condition. The ADO must also include a special condition regarding the subsequent multi-year amendments to the grant. The automated AIP system contains the current available special conditions.

(5) Type of Funding. Under this type of grant, the ADO allows the sponsor to commit the sponsor’s future year entitlement funds (passenger, cargo, or nonprimary) within the grant. However, the ADO can only commit funds to a multi-year grant for years within the current program authorization. For example, The FAA Modernization and Reform Act of 2012 (Public Law 11295) reauthorization was in effect from fiscal year 2012 through the end of fiscal year 2015. The ADO could have written a multi-year grant written in FY2013 that committed the sponsor’s fiscal year 2013 – 2015 entitlements. The ADO could not have committed the sponsor’s fiscal year 2016 entitlements because it is outside of the authorization period.

(6) Initial Year Requirements. The initial year of a multi-year grant must include sponsor entitlement funds (passenger, cargo, or nonprimary) and may include other types of funds such as discretionary. The initial year funding is shown as the grant amount in the initial grant (the total multi-year grant amount is captured in the additional clause discussed above).

(7) Future Year Requirements. Only sponsor entitlement funds (passenger, cargo, or nonprimary) can be used for the future years of a multi-year grant. The future year funds are added to the initial grant by a multi-year amendment (see multi-year amendments under Paragraph 5-55).

(8) Total Multi-Year Funding Amount. The total multi-year funding amount is the sum of the initial year and future years. This amount is captured in the additional clause discussed above.
c. State Block Grant (1) Grant Agreement Format. The ADO must use the state block grant agreement provided in the automated AIP system.

(2) Type of Funding. The ADO must only use current year funding and funding carried over from prior years.

(3) Number of Grants per Fiscal Year. The ADO may write as many state block grants during a fiscal year as it deems prudent. For example, although one grant could be issued for the year, it may be beneficial to write one grant for state apportionment, one for non-primary entitlement, and one or more for specific discretionary projects.

(4) Passenger, Cargo, and Nonprimary Entitlements. If the state block grant contains entitlements, the ADO must list the airport name, city, and associated entitlement type and amount. (Note that if passenger entitlements are included in the state block grant, these are the passenger entitlements allocated to virtual primary airports under 49 USC 47114(c)(1).)

(5) Discretionary Funds. If the state block grant contains discretionary funds, the ADO must list the airport name, airport city, the discretionary funding amount, and a brief description of the project (see Table 5-10). The ADO has the option to issue these discretionary projects under a separate state block grant, which may be preferable for timing and/or tracking purposes.

(6) Special Conditions. Special conditions are normally included by the state in the specific subgrants. However, the ADO has the option of adding special conditions to the state block grant if the ADO deems it appropriate. The automated AIP system contains the current available special conditions.
d. Grant Amendments (1) Grant Amendments. The requirements for grant amendments are included in Section 7 of this chapter.
Table 5-10 Examples of Grant Descriptions
For the following projects involving… The following description information is appropriate… And examples include…
a. Runways (1) The runway number.

(2) The length, width, and location on the runway where the work is being accomplished.
Reconstruct Runway 13/31 (9,000’ x 150’).
Rehabilitate Runway 10/28 between Taxiway A1 and A2 (500’ x 150’).
Extend Runway 9/27 (200’ x 150’ northeast).
b. Runways (Phased over three grants) (1) The runway number.

(2) The length, width, and location on the runway where the work is being accomplished.
Reconstruct Runway 13/31 Phase 1 Design (9,000’ x 150’).
Reconstruct Runway 13/31 Phase 2 (South 4,000’ x 150’).
Reconstruct Runway 13/31 Phase 3 (North 5,000’ x 150’).
c. Taxiways (1) The taxiway number.

(2) The length, width, and location on the taxiway where the work is being accomplished.
Reconstruct Taxiway A (9,000’ x 75’). Rehabilitate Taxiway B between Taxiway A1 and A2 (500’ x 50’). Extend Taxiway C (200’ x 50’ between Taxiway C and Runway 9).
d. Aprons (1) The name of the apron (or reference by location).

(2) The length, width, and location on the apron where the work is being accomplished.
Rehabilitate the General Aviation Ramp (5000 square feet).

Expand the South Terminal Apron (40,000 square feet).
e. Land Acquisition (1) The tract or parcel number.

(2) The acreage.

(3) The type of acquisition (easement, fee simple).

(4) The purpose of the acquisition (RPZ for runway end XX, approach for runway end XX, new airport, future development).

(5) A short description of any housing relocation.
Acquire Parcel A (40 Acres, Fee Simple) for the Runway Protection Zone of Runway 4.

Acquire an easement for Parcel 54 (20.3 Acres) for approach protection for Runway 12.

Acquire Parcel 84A (5 Acres, Fee Simple) Including Relocation Costs (3 residences, 1 barbershop) for future airport development.
f. Obstruction Removal or Marking (1) The object being removed.

(2) If clearing and grubbing is being accomplished, the acreage.

(3) The runway end on which the obstruction is located.
Remove antenna tower off Runway 4.

Clear and grub Runway 18 runway protection zone (40 acres).

Install obstruction lighting on Hangar 6.
g. Noise Mitigation (1) The type of noise mitigation (such as residential soundproofing, school soundproofing, blast fence).

(2) The associated noise contour, if applicable.

(3) If known, the number of houses/schools or people/students affected.
Provide residential sound insulation (approximately 20 residences) in the DNL 70 dB.

Sound insulate Roosevelt High School (230 students) in the DNL 65 dB.
h. State Block Grant (No Discretionary) (1) If the ADO chooses to write the grant for a specific project or projects, the appropriate information for that project.

(2) If the grant will not be project specific, a general statement is appropriate.
For a project specific grants: See above examples.

For non-project specific grants: Various airport developments under the State Block Grant Program.

e. Special Conditions. Special conditions highlight extra steps the sponsor must take as part of accepting the grant offer and included in the actual grant document. Special conditions are tailored to the type of project, special sponsor circumstances, and/or unique situations and are binding as part of the grant agreement. The automated AIP system contains the current available special conditions. If the ADO determines that an additional special condition is needed, the ADO must receive APP-520 approval to include the special condition in the grant. If appropriate, APP-520 has the option to amend the special condition list to include this additional special condition in the list of special conditions.

f. Grant Assurances. The requirements for the grant assurances are listed in Paragraph 2-4.

g. Sponsor Certifications. 49 USC § 47105(d) allows the FAA to require sponsors to certify that they will comply with statutory and administrative requirements in carrying out an AIP funded project. There are eight certifications as shown in Table 5-11 (see the AIP Forms link in Appendix B). Certifications are considered to be part of the Grant Package.

(1) Sponsor Certification History. It is FAA policy that the sponsor has primary responsibility for complying with AIP requirements.

(2) Sponsor Certification Purpose. The grant agreement and the associated grant assurances are the official, legal-binding documents that obligate the sponsor to AIP policies, regulations and standards. The sponsor’s certifications are an additional measure used by the ADO to focus a sponsor’s attention on certain grant obligations. These certifications are intended to enhance a sponsor’s knowledge and ensure their compliance with the grant obligations.

(3) Sponsor Certification Timing. Per FAA policy, all applicable certifications must be signed by the sponsor on or before the date the sponsor signs the associated grant agreement offer. The ADO normally accomplishes this by sending the applicable sponsor certifications with the grant agreement offer. The ADO has the option of requesting these sponsor certifications at an earlier date, for instance, at the same time as the grant application. If the ADO believes changes have occurred on the project that may affect the sponsor certification on file, the ADO has the option to require the Sponsor re-submit a certification form when it completes the applicable actions that pertain to a specific certification statement. For example, the ADO has the option to require resubmittal of the Construction Project Final Acceptance certification as part of the closeout submittal for the project.

(4) FAA Sponsor Certification Responsibility. The ADO retains the responsibility of maintaining a broad overview of AIP projects and being reasonably assured that the sponsor is meeting all of its obligations. The ADO’s acceptance of a sponsor certification does not limit the ADO from reviewing the appropriate documentation to validate the certification.

(5) False Sponsor Certification. If the ADO determines that the sponsor has not adhered to the certifications, the ADO must review the associated project costs to determine if the costs are still allowable under AIP. In addition, if the sponsor knowingly makes false statements, further penalties may apply under 49 USC § 47126.

(6) Items Specifically Not Covered by Sponsor Certification. The use of sponsor certifications is limited. Table 5-12 contains examples of Federal actions that cannot be covered by sponsor certification.

Table 5-11 Summary of Sponsor Certifications
The following document… Requires the sponsor to…
a. FAA Form 5100-134, Selection of Consultants Certify that they have properly followed or will properly follow key consultation selection requirements.
b. FAA Form 5100-132, Project Plans and Specifications Certify that they have or will prepare the plans and specifications in accordance with key requirements.
c. FAA Form 5100-131, Equipment/Construction Contracts Certify that they have properly followed or will properly follow key Federal procurement requirements.
d. FAA Form 5100-133, Real Property Acquisition Certify that they have properly followed or will properly follow key land acquisition requirements.
e. FAA Form 5100-129, Construction Project Final Acceptance Certify that they have or will complete key requirements prior to final project acceptance.
f. FAA Form 5100-130, Drug-Free Work Place Certify that the work place will be drug-free as required under the DrugFree Work Place Act of 1998 and 49 CFR part 32.
g. FAA Form 5100-135, Certification and Disclosure Regarding Potential Conflict of Interests Certify that there are no conflicts of interest to the FAA or to the state (for state block grant subrecipients). The new requirement for this certification is contained in 2 CFR § 200.112 and became effective for AIP on December 19, 2014. Per FAA policy, this is accomplished by the sponsor completing a Conflict of Interest certification.
h. Certification Regarding Lobbying Certify that no federally appropriated funds have been used to influence a federal employee or member of Congress in connection with the grant. Further details of requirements are found in Appendix A to 49 CFR part 20. Note that for AIP purposes, this is not a separate certification. This certification has been rolled into the grant application forms.
Table 5-12 Examples of Actions Specifically Excluded from Sponsor Certification
Some examples of inappropriate actions for sponsor certification…
a. Review of projects for inclusion in the NPIAS.
b. Entry or deletion of airports from the NPIAS.
c. Determination of AIP eligibility or justification.
d. Review of impacts to the National Airspace System Architecture.
e. Review and approval of modifications to standards.
f. Review and approval of Airspace aeronautical cases.
g. Designation of instrument runways.
h. Determination of AIP project cost reasonableness.
i. Disadvantaged Business Enterprise program approval (this is the responsibility of the FAA Office of Civil Rights (ACR)).
j. Approval of environmental studies.
k. Approval of airport layout plans.
l. Review and approval of construction safety phasing plans.
m. Review and approval of various safety determinations (such as compliance with 14 CFR part 139 requirements and airfield safety determinations by Flight Standards).
n. Issuing waivers to the Buy American Preference requirements.
o. Review and approval of Project Labor Agreements.

h. Advisory Circular List. The FAA publishes a list of certain advisory circulars that set out the applicable policies, standards, and specifications that sponsors must carry out on an AIP funded project. The ADO includes this list directly in the grant agreement, which officially incorporates it as part of the grant conditions. This list, FAA Advisory Circulars Required for use in AIP Funded and PFC Approved Projects, is available online (see Appendix B for link).

i. Applicable State Agency Agreements. Some grants must be cosigned by the state agency. In these cases, the ADO must obtain the state agency agreement with the sponsor and retain this documentation in the ADO office files.

j. The Entire Grant Application. The requirements for the grant application are listed in Paragraph 5-19.

5-23. Grant Acceptance.

If the sponsor(s) agrees with the grant offer, the steps and requirements for the sponsor(s) to accept the grant offer are included in Table 5-13. Once the ADO receives a copy of the executed grant, the ADO must record that the grant was signed by the sponsor(s) in the automated AIP system. The ADO has the option of printing the FAA Form 5100-107, Airport Improvement Program Form (also called AIP Grant Status Report) generated by the automated AIP system and placing the form in the file. However, this is not mandatory because a current version of the form containing the grant history is retained in the automated AIP system.

Table 5-13 Steps and Requirements for Sponsor Grant Acceptance
The steps and requirements include…
a. The sponsor(s) cannot alter the grant agreement. The grant agreement can only be changed by a grant amendment issued by the ADO.
b. The sponsor(s) must sign the grant in one of the two sponsor signature locations.
c. If the sponsor(s) signs where a notary is required, the notary must sign and stamp (or seal) the grant at the same time. Therefore, the notary date must be the same date as the sponsor signature date.
d. Each sponsor’s attorney must sign the grant agreement after the sponsor. Therefore, the attorney’s signature date must be on or after the sponsor’s signature date.
e. The sponsor(s) must keep one original executed grant agreement for its files and send the remaining executed grant(s) back to the ADO by the date required by the ADO.

5-24. The FAA Office of Finance and Management, FAA Accounts Payable Section B (AMK-314) Notification.

The ADO must send the pages of the grant offer that contain the grant description, grant amount, and signatures to AMK-314.

Section 5. ADO Grant Oversight.

5-25. ADO Oversight (and Required Sponsor Documentation) Based on Sponsor Risk Level.

Based on a DOT Office of Inspector General (OIG) audit and findings related to the FAA’s administration of AIP, the FAA has implemented a risked base oversight system to minimize the risk of misuse of funds by sponsors. The FAA uses a tiered ranking system to assign a risk level to each sponsor. The risk level defines the level of oversight required by the ADO and lists the sponsor documentation that the ADO must retain in the grant file. Current detailed guidance on how to assign sponsor risk levels and the associated oversight requirements is contained in the Airport Improvement Program (AIP) Grant Oversight Risk Model Policy (see Appendix B for link).

5-26. Requirement to Include a Copy of FAA Determinations in the Grant File.

If a written ADO determination is required by this Handbook or other FAA policy, the ADO must include a copy in the associated grant file. The ADO also has the option of adding a reference to the grant file of the location (physical or electronic) of the written determination instead of including a written copy in the grant file. The reference must be specific enough for authorized personnel to readily find the document.

5-27. Statutory Requirement for ADO Project Oversight.

AIP is a grant program, and under 31 USC § 6304 and § 6305 (Federal Grant and Cooperative Agreement Act of 1977) Federal agencies must use a grant agreement, rather than a cooperative agreement when limited involvement between the sponsor and the Federal government is expected. ADO involvement in an AIP project is generally limited to the oversight necessary to protect the Federal interests as specified in 31 USC § 6304.

In addition to the other ADO oversight requirements listed throughout this Handbook, the ADO has the following oversight requirements and options during the life of the project.

5-28. Safety Risk Management (SRM) Panels.

ADOs must participate in safety risk management panels associated with the project when it is required by a triggering action listed in the current version of FAA Order 5200.11, FAA Airports (ARP) Safety Management System. There is a separate tracking system for SRM, therefore the ADO is not required to document the ADO’s participation in the grant file.

5-29. Construction Safety Phasing Plans.

The current version of Advisory Circular 150/5370-2, Operational Safety on Airports during Construction, outlines when a sponsor is required to submit a construction safety phasing plan. The ADO must review and approve or disapprove all required construction safety phasing plans in writing. This ADO responsibility cannot be delegated and is not covered by sponsor certification.

5-30. Predesign, Prebid, and Preconstruction Conferences.

Sponsors have the option to hold predesign, prebid, and preconstruction as discussed in the current version of Advisory Circular 150/5370-12, Quality Management for Federally Funded Airport Construction Projects. The ADO has the option to participate in these conferences.

5-31. Equipment Photographs.

The ADO has the option to require a sponsor to submit a picture of the actual delivered equipment unless the sponsor’s risk level makes submitting a photograph mandatory. The ADO must file any submitted photographs in the grant file.

5-32. Construction Photographs.

The ADO has the option to require a sponsor to submit pictures of the project site before, during, and/or after a construction project unless the sponsor’s risk level makes submitting a photograph mandatory. The ADO must file any submitted photographs in the grant file.

5-33. Construction Management Programs.

In 1990, the FAA enacted a construction management plan policy for projects with a total pavement construction contract value over $250,000 to satisfy an DOT Office of Inspector General (OIG) Audit on Airport Construction Materials Conformance finding. The FAA has since raised the dollar value to $500,000. It is FAA policy that a sponsor must submit a construction management program to the ADO prior to the start of construction for projects with a total pavement construction contract value over $500,000. The pavement construction contract value is calculated by totaling the costs of the total pavement structure (including subgrade, base and subbase courses, and surface course). If these costs exceed $500,000, a construction management program is required.

When construction of a project requiring a construction management program is complete, the sponsor is required to submit a summary of the quality assurance test results and the disposition of any problem test results.

The ADO has the option of requiring the sponsor to provide the plan for lower dollar value pavement projects. The ADO also has the option to review and/or comment on the construction management program.

The ADO must place a copy of the construction management program, the summary of the quality assurance test results, and a copy of the ADO comments (if applicable) in the grant file.

5-34. Notices to Proceed.

Once all contract documents have been executed, the sponsor will issue a notice to proceed to the contractor. The sponsor must send a copy of the notice to proceed to the ADO if requested by the ADO.

5-35. Change Orders, Supplemental Agreements, and Contract Modifications.

Sponsors have the option to change contracts through change orders, supplemental agreements, and contract modifications as discussed in Table 5-14.

All change orders, supplemental agreements, and contract modifications must eventually be reviewed by the ADO. This is because these actions are considered noncompetitive proposals per 2 CFR § 200.320(f) (see Paragraph U-18). The notification, submittal, and determination documentation requirements vary as discussed in Table 5-15. As discussed in Paragraph 3-101, the Simplified Acquisition Threshold exception does not apply to change orders, supplemental agreements, and contract modifications.

Unless specifically requested by the ADO, the sponsor does not have to obtain prior ADO approval for contract changes. However, if a sponsor proceeds with a contract change without FAA prior approval, it is at the sponsor’s risk. The ADO review at a later date could determine that the costs in the contract change cannot be paid for under the grant. Sponsors have the option to request prior ADO review of contract changes.

The exception is if the change order includes steel or manufactured goods that are less than 100% domestic materials. In this case, each change order requires separate Buy American review by the ADO before the sponsor proceeds with the change order.

The ADO cannot approve costs that the ADO has determined are due to errors and omissions in the plans and specifications that were foreseeable at the project design. In addition, the ADO must only approve costs that are directly necessary to accomplish the project. Examples of change orders that the ADO can approve and cannot approve are discussed in Table 5-16. Examples of changes to professional services agreements that the ADO can approve and cannot approve are discussed in Table 5-17.

Table 5-14 Types of Contract Changes
For the following type of contract… The following types of contract changes are used… And guidance is contained in the current version of…
a. Construction and equipment contracts Change orders or supplemental agreements The current version of Advisory Circular 150/5370-10, Standards for Specifying Construction of Airports
b. Negotiated professional service agreements Contract modifications or supplemental agreements The current version of Advisory Circular 150/5100-14, Architectural, Engineering, and Planning Consultant Services for Airport Grant Projects
Table 5-15 Sponsor and ADO Requirements for Contract Changes
If the sponsor proposes to… The sponsor must… And the ADO…
a. Execute change orders, supplemental agreements, and contract modifications (1) Conduct a cost analysis. Paragraph U-21 contains guidance to sponsors on how to perform price and cost analyses.

(2) If there is a change in scope, notify the ADO. Otherwise notify the ADO upon ADO request.

(3) If requested by the ADO, submit the following documentation:

(a) Change order or supplemental agreement.

(b) Justification for the change.

(c) A statement signed by the sponsor that the cost analysis was performed that includes the sponsor’s recommendation that the FAA accept the statement and analysis as evidence of cost reasonableness.

(d) Any other support documentation requested by the ADO.
Has the option to request that the sponsor submit associated documentation.

Has the option to conduct a pre-award review.

Has the option, if the ADO chooses to conduct a review, to provide the sponsor with a written response containing the ADO finding and/or keep a copy available for future reference.
b. Request a grant amendment (1) Have conducted a cost analyses for all change orders, supplemental agreements, and contract modifications. Paragraph U21 contains guidance to sponsors on how to perform price and cost analyses.

(2) Submit (or have submitted) the following documentation:

(a) All associated change orders, supplemental agreements, and contract modifications.

(b) Justification for the changes.

(c) A statement signed by the sponsor that a cost analysis was performed for all change orders, supplemental agreements, and contract modifications that includes the sponsor’s recommendation that the FAA accept the statement and analysis as evidence of cost reasonableness.

(d) Any other support documentation requested by the ADO.
Must review the project costs to ensure that all of the requirements in Chapter 3 have been met, including cost reasonableness.

By signing the grant amendment, the ADO is documenting that the associated project costs in the amendment meet the requirements in Chapter 3.
c. Submit the grant closeout package (1) Have conducted a cost analyses for all change orders, supplemental agreements, and contract modifications. Paragraph U21 contains guidance to sponsors on how to perform price and cost analyses.

(2) Submit (or have submitted) the following documentation:

(a) All associated change orders, supplemental agreements, and contract modifications.

(b) Justification for the changes.

(c) A statement (or statements) signed by the sponsor that a cost analysis was performed for all change orders, supplemental agreements, and contract modifications that includes the sponsor’s recommendation that the FAA accept the statement and analysis as evidence of cost reasonableness. (d) Any other support documentation requested by the ADO.
Must review the project costs to ensure that all of the requirements in Chapter 3 have been met, including cost reasonableness.

By signing the FAA final project report, the ADO is documenting that the final project costs in the grant meet the requirements in Chapter 3.
Table 5-16 Examples of Change Orders that Can and Cannot be Approved by the ADO for AIP Participation
For the following change order… The ADO…
a. To revise quantities of items to reflect actual quantities used for the project. Has the option to approve the request for adjustment (increase/decrease) in construction cost.
b. To address differing site conditions or materials that were not found during the site investigation. Has the option to approve the request.
c. To remove subsurface materials that were shown in the soil borings taken during the site investigation. Has the option to approve the request. Even though this work must be accomplished to finish the project, the existing field condition was readily apparent but was overlooked. (The difference between this and the preceding entry is that while the construction costs may be allowable, the costs to redesign are not allowable as discussed in the next table.)
d. To make changes in a terminal building using the proration that was used to determine initial AIP participation. Must not approve the request unless the ADO has determined that the initial AIP proration is valid for the work included in the change order. If the initial AIP proration is not valid, the ADO must not approve the change order until the change order amount is calculated based on actual cost information.
e. For construction costs to add work outside of the grant description. Must not approve the request unless the ADO has coordinated the steps needed to add work to a project.
Table 5-17 Examples of Changes to Professional Services Agreements that Can and Cannot be Approved by the ADO for AIP Participation
For the following request… The ADO…
a. To revise contract documents to rebid a package because of a bid protest that was upheld by the ADO Must not approve the request.
b. To revise contract documents because the project specifications were deficient. This includes failure to use FAA standards, unapproved modifications, unduly restrictive requirements Must not approve the request.
c. To rebid a project as a result of a non-competitive bid environment or high bids due to factors outside of the sponsor’s control Has the option to approve the request for additional professional services fees provided the sponsor’s actions were not the cause of the non-competitive environment or high bids.
d. To address via redesign differing site conditions or materials that were not found during the site investigation Has the option to approve the request.
e. To address via redesign the removal of subsurface materials that were shown in the soil borings taken during the site investigation Must not approve the request. Even though this work must be accomplished to finish the project, and the construction costs may be allowable, the existing field condition was readily apparent but was overlooked during the design phase. (The difference between this and the preceding entry is that while the construction costs may be allowable, the costs to redesign are not allowable.)
f. To add work outside of the grant description. Must not approve the request unless the ADO has coordinated the steps needed to add work to a project.

5-36. Periodic Inspections.

The ADO has the option of conducting periodic inspections of the worksite.

5-37. Construction Progress and Inspection Report.

Per the current version of Advisory Circular 150/5370-12, Quality Management for Federally Funded Airport Construction Projects, the sponsor’s engineer must complete FAA Form 5370-1, Construction Progress and Inspection Report, or the equivalent for all AIP funded construction projects. The sponsor must submit the requested reports to the ADO at least quarterly (or more frequently at the ADO’s request).

5-38. Meetings for Planning and Environmental Study Grants.

Sponsors (and sometimes the ADO) are often required to hold meetings in association with planning and environmental study grants. The ADO has the option of attending these meetings unless otherwise required by an FAA order or other FAA policy. For instance, the current version of FAA Order 5050.4, National Environmental Policy Act (NEPA) Implementing Instructions for Airport Projects, requires that the ADO not only attend required EIS meetings (not optional), but also organize and lead the meetings. The specific requirements for these meetings are discussed in the current versions of the following documents.

a. Advisory Circular 150/5070-7, The Airport System Planning Process

b. Advisory Circular 150/5070-6, Airport Master Plans

c. FAA Order 5050.4, National Environmental Policy Act (NEPA) Implementing Instructions for Airport Projects

5-39. Forecasts in Planning or Environmental Projects.

If the grant contains planning or environmental projects that require forecasts, the sponsor is required to submit the forecast to the ADO. The ADO must approve or disapprove the forecast before it is used as part of the project. This ADO responsibility cannot be delegated and is not covered by sponsor certification.

5-40. Performance Report (formerly called Quarterly Performance Report).

2 CFR § 200.328 requires sponsors of Federal grants to submit performance reports. Table 5-18 provides the performance report requirements for AIP projects by project type. Note that this performance reporting provides project schedule and dates, and is not the same thing as the Standard Form 425, Federal Financial Report.

Table 5-18 Performance Report Requirements by Project Type
For the following type of project… The FAA policy is…
a. Non-construction (1) Per 2 CFR § 200.328, the sponsor must submit FAA Form 5100-140, Performance Report (see the AIP Forms link in Appendix B) at least annually, but not more than quarterly, until the non-construction project is completed. The ADO has the option of requiring the performance report quarterly.

(2) The sponsor must submit each performance report within 30 days of the end of quarter if required quarterly or semiannually; and within 90 days of the end of the fiscal year if required annually. Sponsors must not submit the performance reports in batches or at the end of the project.

(3) If a major project or schedule change occurs between performance reports, the sponsor must submit an out of cycle performance report to the ADO.

(4) Guidance on the current ADO review requirements is contained in the Airport Improvement Program (AIP) Grant Payment and Sponsor Financial Reporting Policy (see Appendix B).
b. Construction (1) The FAA has determined that sponsor submittal of FAA Form 5370-1, Construction Progress and Inspection Report, satisfies the performance reporting requirement.

(2) FAA Form 5370-1 (see the AIP Forms link in Appendix B) is discussed in more detail in the current version of Advisory Circular 150/5370-12, Quality Management for Federally Funded Airport Construction Projects.

(3) 2 CFR § 200.328 establishes general reliance on inspection reports and certified percentage of completion for Federal monitoring of construction project status. Per FAA policy, the sponsor must submit FAA Form 53701 to the ADO at least quarterly, however, the ADO has the option to require the sponsor submit these reports on a more frequent basis. Per FAA policy, the quarterly frequency for this report will generally provide adequate ADO monitoring for construction projects.

(4) The sponsor must submit FAA Form 5370-1 to the ADO for each fiscal quarter until the construction project is completed.

(5) The sponsor must submit each FAA Form 5370-1 within 30 days of the end of the quarter (not in batches or at the end of the project).

(6) The sponsor must include the certified percentage-of-completion information on FAA Form 5370-1. If not, the ADO must require the sponsor to resubmit the form with this information.

(7) If a major project or schedule change occurs between the reporting cycles, the sponsor must submit an out of cycle FAA Form 5370-1 to the ADO.

(8) Guidance on the current ADO review requirements is contained in the Airport Improvement Program (AIP) Grant Payment and Sponsor Financial Reporting Policy (see Appendix B for link).

5-41. Annual Reporting of Residential Population Benefits.

The ADO must report the residents and students that benefit from noise compatibility projects. This reporting is done on a yearly basis by APP-400 with the assistance of the regional offices and ADOs.

5-42. Final Inspection.

For construction projects, the sponsor must provide the ADO with documentation confirming that the project was completed in accordance with the terms and conditions of the contract(s). The ADO must include a copy of this documentation in the grant file.

The ADO has the option of attending the final inspection. If the ADO does not attend the final inspection, then the ADO has the option to rely on the sponsor Construction Project Final Acceptance certification and the sponsor final inspection report as confirmation that the work has been completed in accordance with the approved plans and specifications.

Section 6. Grant Payments.

5-43. Summary of Payment Request Requirements and Limitations.

The requirements and limitations for grant payment requests are summarized in Table 5-19. These items are discussed in more detail in the following paragraphs.

Table 5-19 Grant Payment Request Requirements and Limitations
The grant payment requirements and limitations include…
a. The sponsor and ADO must process all grant payment requests through the currently approved Department of Transportation (DOT) grant payment system unless otherwise approved by the ADO.
b. The sponsor must submit payment requests at least annually unless the ADO requires more frequent payment requests.
c. The sponsor must base payment requests on costs incurred (based upon invoices, billing statements, or other appropriated payment support provided to the ADO by the sponsor).
d. The ADO must not approve any payment requests for the last 10% of the federal share of the grant (or the last 10% of the estimated federal share of the grant after amendment, whichever is less) unless the requirements in Paragraph 5-46 are met. The ADO has the option of excluding a state block grant from this requirement only if the state is following this requirement for all of the subgrants within the state block grant and the ADO is confident that the state will submit the state block grant closeout documentation in a timely manner.
e. The ADO is allowed to determine the timing and amount of the payment and may reduce or withhold the payment if the ADO follows the applicable requirements.
f. The sponsor must stay within the contract retainage limitations.
g. The sponsor must stay within the disputed cost limitations.
h. The sponsor must stay within the land acquisition cost limitations.
i. The sponsor must not request a payment that is improper.
j. The sponsor must document and/or report their payment requests on the following forms (see the AIP Forms link in Appendix B) as required in the Airport Improvement Program (AIP) Grant Payment and Sponsor Financial Reporting Policy (see Appendix B for link).

(1) Standard Form 425, Federal Financial Report.

(2) Standard Form 271, Outlay Report and Request for Reimbursement for Construction Programs (or ADO approved equivalent) or Standard Form 270, Request for Advance or Reimbursement (for non-construction projects in lieu of Standard Form 271or ADO approved equivalent).
k. The sponsor must maintain all of the documentation supporting the grant payment for the required time period and must make this information available upon request.

5-44. Requirements and Process for Using the Current DOT Electronic Payment System.

a. Sponsor Payment Requests. Sponsors must submit all grant payment requests and related supporting documentation electronically through the currently approved Department of Transportation grant payment system. Sponsors that are unable to use the DOT system must submit a waiver request to the ADO for review by the DOT. Guidance and help desk contact information for the current DOT electronic payment system is available on the FAA Office of Airports website (see AIP Grant Payments link in Appendix B). Note that it is the sponsor’s responsibility to keep their banking information up to date.

b. ADO Payment Approval. The sponsor’s risk level determines the level of payment review required by the ADO within the currently approved DOT grant payment system. Current detailed guidance on ADO review responsibilities and how the ADO is to use the electronic system is contained in the Airport Improvement Program (AIP) Grant Payment and Sponsor Financial Reporting Policy (see Appendix B for link).

c. Method of Payments. Once ADO and AMK-314 approve the payment request, AMK314 will request the U.S. Treasury to transfer funds to the sponsor’s bank through an electronic funds transfer. If a sponsor requires a Treasury check, the sponsor must work with AMK-314 to determine the process.

5-45. Requirements for Frequency of Payment Requests and Expenditure Rate.

Per 2 CFR § 200.400, the sponsor must efficiently and effectively administer the grant by applying sound management practices. In addition, 49 USC § 47106(a)(4) requires that a project be completed without unreasonable delay. The ADO ensures compliance with these requirement by monitoring Performance Reports as required in Paragraph 5-40 and ensuring that regular grant payments are being made to support project accomplishments.

a. Frequency of Sponsor’s Payment Requests. Per FAA policy, sponsors must submit payment requests at least every twelve months starting from the date of the grant acceptance. An ADO also has the option to require the sponsor to submit payment request as often as every three months (quarterly). This mirrors the financial reporting frequency provided in 2 CFR § 200.327. This does not limit the sponsor from submitting payment requests more frequently than every three months.

b. Requirements for Payment Request Frequencies Exceeding 12 Months. If a sponsor has not submitted a payment request for more than 12 months, it is FAA policy that the ADO must notify the sponsor in writing of this delinquency and request the sponsor to submit a payment request or, if applicable, close the grant. If the sponsor is unable to submit a payment request or close the grant, the sponsor must provide the ADO with the reason for the delay and the sponsor’s proposed resolution. If the ADO finds the reason for the delay or the proposed resolution unacceptable, the ADO has the option to suspend the grant as outlined in Section 9 of this chapter and/or, upon further coordination with ACO-100, delay issuing any future grants to the sponsor until the issue is resolved.

c. Expenditure Rate. If the sponsor is drawing down the grant funding at a pace that is not consistent with the project progress or completing the project in a timely manner, the ADO has the option of asking the sponsor to submit the reason for the delay and the proposed resolution to the ADO in writing. If the ADO finds the reason for the delay or the proposed resolution unacceptable, the ADO has the option to suspend/terminate the grant as outlined in Section 9 of this chapter and/or, upon further coordination with ACO-100, delay issuing any future grants to the sponsor until the issue is resolved.

5-46. Requirements for Approving Payment within the Last 10% of the Federal Share.

Per 49 USC § 47111, no more than 90% of the Federal share of a project’s estimated allowable costs may be made before the project is complete. The language in this section of the statute has been misinterpreted in the past to only apply to advance payments. The intent and origination of this language has been researched by the FAA, and it has been determined that this requirement applies to all types of payment requests, not just advance payments.

Per FAA policy, the ADO has the option to approve payment requests for a portion of the remaining 10% for a project that the ADO determines meets all of the requirements in the latest version of the Airport Improvement Program (AIP) Grant Payment and Sponsor Financial Reporting Policy (see Appendix B for link).

5-47. Requirements for Payment Requests to be Based on Incurred Costs.

Per 2 CFR § 200.305, the advance payment method is the standard method used by the Federal government to pay a sponsor. In order for an ADO to allow a sponsor to be paid in this manner, the sponsor must meet the conditions in Table 5-20.

When a sponsor is not able to satisfy the advance payment method requirements in Table 5-20, then the ADO must require the sponsor to submit payment requests under the reimbursement method. The ADO must document the reasons a sponsor has been placed on the reimbursement method of payment in the sponsor’s file. The ADO has the option to revisit this decision if conditions with the sponsor change that may warrant the sponsor returning to the advance payment method.

If the FAA has determined that the sponsor lacks sufficient working capital to even operate on an advance payment basis, 2 CFR § 200.305(b)(4) allows sponsors to request cash advances prior to receiving invoices and billing statements. Under this procedure, the FAA advances cash payments to the sponsor to cover its initial capital start up needs for the grant. After this initial advancement(s), normal payment requirements apply. This is a very unusual situation requiring adequate justification, and APP-520 must approve or disapprove all requests of this nature.

Table 5-20 Conditions the Sponsor Must Meet for Advance Payments
The following conditions must be met for a sponsor to receive advance payments…
a. The Advance Payment Request is Based on Invoices and Billing Statements. Per FAA policy, the sponsor must provide documentation showing that the advance payment is based upon invoices, billing statements, or other appropriated payment support. For direct or indirect sponsor costs such as administrative costs, force account costs, or costs not supported by a contract, the sponsor must be able to provide documentation that supports the amount and validity of the cost. This ensures that the advance payment is based upon defined costs as opposed to estimated amounts.
b. The Sponsor Provides Prompt Payment to the Vendor. Per 2 CFR § 200.305(b)(1), the sponsor must maintain or demonstrate the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability.
c. The Sponsor Meets Payment Requirements in Their Contracts and in Local/State Law. Per FAA policy, the sponsor must not withhold payment from their vendors beyond the time frame addressed in their contract or by local and state law, regardless of the timing of the grant or advance payment.

5-48. Requirements for Reducing or Withholding Payments.

Under 49 USC § 47111, the ADO is allowed to decide when and in what amounts payments under the grant may be made. The unique situations where the ADO would reduce or withhold a sponsor payment request are discussed in Table 5-21.

Table 5-21 Situations Where an ADO Would Reduce or Withhold a Sponsor Payment Request
For the ADO to… The ADO must…
a. Approve less than the sponsor payment request due to unallowable, unreasonable, or unjustified costs (1) Determine that the payment request contains unallowable, unreasonable, or unjustified costs.

(2) Notify the sponsor of the adjusted amount and the reason behind the adjustment.

(3) Reject the payment back to the sponsor and require the payment to be resubmitted.
b. Withhold a sponsor payment request pending satisfactory backup (1) Determine that there is insufficient information in the payment request for the ADO to determine the reasonableness, allowability, and necessity of the claimed costs.

(2) Reject the payment back to the sponsor and require the payment to be resubmitted.
c. Withhold a sponsor payment request from a sponsor who is indebted to the U.S. Government (1) Have been notified by the FAA Office of Finance and Management, FAA Accounts Payable Section B (AMK314) that the sponsor owes money to a Federal agency.

(2) Determine if withholding payments will significantly impact the progress on the AIP project.

(3) Notify the sponsor of the indebtedness and request documentation of resolution.

(4) Reject the payment back to the sponsor and require the payment to be resubmitted once the indebtedness has been resolved.
d. Withhold payment requests for a sponsor in noncompliance with a grant assurance (or other egregious violation) (1) Have been notified by ACO-100 that ACO-100 has found the sponsor to be in noncompliance with a grant assurance (or other egregious violation).

(2) Coordinate with ACO-100 to determine whether to withhold payments.

(3) Not withhold payment for proper charges for more than 180 days unless the sponsor has been notified and given an opportunity for a hearing (if required by either 49 USC § 47106(d) or 47111) and ACO-100 concurs with this action.

5-49. Limitations for Contract Retainage.

The current version of Advisory Circular 150/5370-10, Standards for Specifying Construction of Airports, allows a sponsor to retain a percentage of a contractor’s invoices until the contractor satisfactorily completes the work. A summary of these retainage requirements and the associated limitations for the sponsor to include them in payment request is included in Table 5-22.

Table 5-22 Contract Retainage Limitations
If the sponsor opts to… The sponsor is required to… And the sponsor’s payment request…
a. Hold retainage, but not in an escrow account. (1) Include a clause in the contract obligating prime contractors to make prompt and full payment of any retainage to their subcontractors.

(2) Ensure that the retainage percentage that the prime contractor sets for the subcontractor does not exceed the retainage percentage the sponsor sets for the prime contractor.

(3) Ensure prompt and full payment of retainage from the prime contractor to the subcontractor within 30 days after the subcontractor’s work is satisfactorily completed (as required in 49 CFR § 26.29).
Must not include the retainage amount.

This is because the sponsor has not paid the cost after the subcontractor’s work is satisfactorily completed.
b. Hold retainage in an escrow account (1) Include a clause in the contract obligating prime contractors to make prompt and full payment of any retainage to their subcontractors.

(2) Ensure that the retainage percentage that the prime contractor sets for the subcontractor does not exceed the retainage percentage the sponsor sets for the prime contractor.

(3) Ensure prompt and full payment of retainage from the prime contractor to the subcontractor within 30 days after the subcontractor’s work is satisfactorily completed (as required in 49 CFR § 26.29).
May include the retainage amount.

By placing the retainage in an escrow account, the sponsor is paying the cost and is allowed to include the cost in a payment request cost after the subcontractor’s work is satisfactorily completed.
c. Not hold retainage (1) Ensure that the prime contractor does not set a retainage percentage for the subcontractor. (2) Require a contract clause obligating prime contractors to make prompt and full payment of any retainage kept by prime contractor to the subcontractor within 30 days after the subcontractor’s work is satisfactorily completed. Must not deduct a retainage amount from the payment request. All costs are based on actual paid costs.

5-50. Limitations for Contractor Disputed Costs.

When the sponsor and the contractor do not agree on the amount owed to the contractor, and the dispute is likely to go to court, the sponsor is still allowed to submit a payment request for any undisputed costs.

5-51. Limitations for Land Acquisition Costs.

It is FAA policy that costs associated with a land acquisition (such as cost of land, appraisals, legal fees, etc.) are not allowable until after the sponsor has submitted evidence satisfactory to the ADO that the sponsor will receive good title to land. The sponsor must submit a binding purchase agreement that will convey good title, evidence of a condemnation deposit, a condemnation award, or a court settlement. Until the sponsor meets this requirement, there is no guarantee that the land acquisition will be completed. Therefore, sponsors must not submit payment requests until these conditions are met.

5-52. Requirements for Avoiding Improper Payments.

a. Background, Definition, and Examples. The Improper Payments Elimination and Recovery Improvement Act of 2012 (Public Law 112-248) outlines Federal requirements regarding improper payments. An improper payment occurs when the funds go to the wrong sponsor, the sponsor receives an incorrect amount of funds, or the sponsor uses the funds in an improper manner. Sponsors must avoid requesting and the ADO must avoid approving improper payments. Examples of improper payments are listed in Table 5-23.

Table 5-23 Examples of Improper Payments
Some examples include payments that are made…
a. To the wrong AIP sponsor.
b. To an ineligible sponsor.
c. To the wrong AIP grant.
d. For an ineligible or unallowable work (see Chapter 3 for requirements).
e. That duplicates previous payments.
f. For costs that have not been paid (unless the ADO has approved an advance payment).
g. For an incorrect amount (either over or under the correct amount).
h. Where the sponsor cannot provide documentation to support that the payment was made correctly.

b. Identification and Remediation of Improper Payments. Improper payments may be identified through a number of avenues. This may include audits under the Single Audit Act, by the DOT Office of Inspector General (OIG), by state or local authorities, by the U.S. General Accountability Office. Improper payments may also be identified by the ADO or the sponsor. In all cases, the ADO must take action as outlined in Table 5-24 and the sponsor must take action as outlined in Table 5-25.

c. Costs Incurred to Recover Improper Payments. By FAA policy, the costs incurred by a recipient to recover improper payments are not allowable as either direct or indirect costs.

Table 5-24 ADO Remediation Actions for Improper Payments
The ADO must…
a. Notify the OIG if the ADO has reason to believe the improper payment was a deliberate attempt to defraud the FAA. The OIG hotline may be used for this purpose (see Appendix B for link).
b. Notify the sponsor in writing of the improper payment, including a description of the error or problem that was found (unless otherwise directed by the OIG).
c. Work with the sponsor to determine how the error or problem will be corrected (unless otherwise directed by the OIG).
d. Document the steps that will be taken to resolve the improper payment and include the documentation in the grant file.
Table 5-25 Sponsor Remediation Actions for Improper Payments
If the sponsor… The sponsor must…
a. Has not received the payment. Withdraw and resubmit the payment request that contains the improper payment.
b. Has received the payment. Per 31 CFR § 901.2(b)(3), pay the improper payment within 30 days of the initial ADO notification using the established process for returning AIP funds electronically through the currently approved Department of Transportation grant payment system. Any alternate forms of returning funds to the FAA must be coordinated with the ADO and the FAA Office of Finance and Management, FAA Accounts Payable Section B (AMK-314).

5-53. Requirements for Financial Reporting (Standard Forms 425, 271, and 270).

Sponsors are required to submit certain financial reports to summarize grant expenditures and the status of project funds. Sponsors must submit the following financial reporting forms as required in the current version of Airport Improvement Program (AIP) Grant Payment and Sponsor Financial Reporting Policy (see Appendix B for link). The forms are also available on this website (see the AIP Forms link in Appendix B). 2 CFR § 200.327 requires sponsors to report at least annually, but not more than quarterly.

a. Standard Form 425, Federal Financial Report, or ADO approved equivalent (see the AIP Forms link in Appendix B). This requirement is found in 75 Federal Register 54215 (September 3, 2010). Per this Federal Register Notice, the Standard Form 272 is replaced by the Standard Form 425 (Federal Financial Report) and outlines the timing of the sponsor submittal.

b. Standard Form 271, Outlay Report and Request for Reimbursement for Construction Programs (see the AIP Forms link in Appendix B), or ADO approved equivalent. The ADO may allow the use of a Standard Form 270, Request for Advance or Reimbursement (see the AIP Forms link in Appendix B), for non-construction projects in lieu of Standard Form 271.

5-54. Requirements for Retaining/Providing Supporting Documentation.

The sponsor is responsible for maintaining all of the documentation supporting a grant payment and making this information available upon request.

Per 2 CFR §§ 200.333- 200.337, the sponsor is required to keep these records for at least three years from the date the sponsor submits the last payment request. If any litigation, claim, negotiation, audit or other action involving the records has been started before the end of the three year period, the sponsor must retain the records until the completion or resolution of the action, or the three year period, whichever is later.

Section 7. Grant Amendments.

5-55. Criteria for Amending a Grant.

49 USC § 47108 allows the ADO to amend a grant once it has been issued. The ADO is allowed to issue an amendment as long as the ADO adheres to the criteria in Table 5-26 through Table 5-28. The appropriate amendment formats are described in Table 5-29.

Table 5-26 Criteria for an ADO to Amend a Grant
If the grant description… The ADO can amend the grant if the following criteria are met…
a. Remains the same (regular amendments) (1) If the grant amount will be increased, the sponsor must make the request in writing and fully document the amount and justification.

(2) Decreases to the grant amount can be requested by the sponsor in writing or can be initiated by the ADO. The standard practice is for the sponsor to submit a written request fully documenting the amount and reason for the decrease, which the ADO must include in the grant file. However, the ADO has the option to decrease a grant, even if the sponsor is in disagreement, as long as the ADO documents the decision in the grant file.

(3) The ADO must determine that it is advantageous to the federal government.

(4) The ADO must not increase the grant amount for planning projects. This restriction is based on 49 USC § 47108(b)(3) which only allows increasing the grant amount for airport development or land acquisition projects.

(5) Normally, the ADO only amends a grant at closeout to adjust the grant amount to reflect final costs. However, the ADO has the options to amend the grant more than once and at times other than at closeout.

(6) In the rare case where a grant is based on estimates, the ADO must amend the grant to remove excess funds as soon as the actual costs are known.

(7) The ADO has confirmed that the applicable requirements in Chapter 3 have been met.

(8) The ADO has confirmed that the amendment increase is within the limits found in Table 5-27.
b. Remains the same (amendment to correct the federal share percentage) (1) Unless the grant is a multi-year grant (see multi-year amendment below) or the ADO needs to correct a mistake in the federal share percentage, the federal share percentage must remain the same throughout the life of the grant., the ADO may not amend a grant to change the federal share unless the amendment is needed to correct a mistake in the federal share percentage.
c. Remains the same (adding future year funds to a multi-year amendment) (1) Unless otherwise required by the ADO, the sponsor is not required to submit a written request.

(2) The multi-year amendment will not increase the total federal share for the multi-year agreement beyond the amount listed in the original grant agreement.

(3) The ADO is only allowed to include sponsor entitlement funds (passenger, cargo, or nonprimary) in the multi-year amendment.

(4) If the federal participation rate changes during the course of the multi-year grant, the ADO must write the amendment using the current fiscal year rate (not the rate that was in affect when the grant was issued).
d. Remains the same (adding additional funds to a multi-year amendment) (1) If the federal share of the eligible project costs exceeds the total multi-year amendment amount established in the initial grant agreement, the ADO has the option to issue a regular amendment.

(2) The ADO must follow the amendment rules for increases in Table 5-27 and use the total multi-year amendment amount as the basis of these calculations.

(3) The total multi-year funding amount is the sum of the initial year and future years.
e. Is changed to clarify a project (1) If the ADO is clarifying the project with no change in funding, then the ADO can initiate this action. Unless requested by the ADO, the sponsor does not need to request the change in writing or provide additional information.

(2) The change to the grant description must simply provide a corrected grant description for the originally intended project. For this situation, work can only be added to the description if the ADO inadvertently omitted it from the original grant description. For example, the ADO might change the grant description to add relocation of a PAPI associated with a runway extension if the PAPI was always intended to be included in the project.

(3) If the ADO wants to also adjust the funding for final project costs in the same amendment, then all of the criteria in Item a of this table also apply.

(4) To avoid the risk of an improper payment, the ADO must issue the clarifying amendment prior to the start of the affected work.
f. Is changed to add a project and increase funding in the grant (1) FAA policy is to avoid adding both a new project and funding to a grant. The ADO should only consider using this option in rare circumstances. The standard accepted practice is to issue a new grant. An example of a suitable situation to add both a new project and funding is when it will help rapidly implement an emergency fix related to the original grant scope (i.e., during a runway rehabilitation, to replace a failure of a taxiway lighting system on the taxiway that is used to move aircraft around the closed runway). In this example, replacement of a taxiway lighting system would normally be a separate grant. This work is closely related to the current project, and the taxiway lighting system must be operational in order to support existing night operations on the airport.

(2) The sponsor must make the request in writing and fully document the amount and justification.

(3) The ADO must determine that it is advantageous to the federal government.

(4) FAA policy is that the ADO must have requested, and received separate regional approval from the 610 branch in advance of adding a new project to the grant.

(5) The ADO must determine that the need for the additional project is closely related to a project contained in the original grant.

(6) If there is enough sponsor entitlement in the grant to cover the new project, then the sponsor can begin the work on the new project before the amendment is issued. Otherwise, the ADO must follow the reimbursement rules in Paragraph 3-100, replacing grant execution date with grant amendment execution date.

(7) The ADO has confirmed that the applicable requirements in Chapter 3 have been met.

(8) All other statutory and regulatory requirements (such as environmental clearance, airspace determination, ALP) that may apply to the new project have been or will be met.
g. Is changed to add a project (with no increase in funding over the original grant amount) (1) The sponsor must make the request in writing and fully document the amount and justification.

(2) The ADO must determine that it is advantageous to the federal government.

(3) The sponsor must document that all work in the existing grant has been completed or have progressed to the point that all costs in the existing grant projects are known.

(4) The ADO must determine that the need for the additional project is closely related to a project contained in the original grant.

(5) The ADO must not add the project to the grant for the purpose of using excess funds remaining in the grant. The reason for this prohibition is that it delays the timely closeout of the grant and in the case of discretionary funding, bypasses the discretionary funding competition process.

(6) If there is enough sponsor entitlement in the grant to cover the new project, then the sponsor can begin the work on the new project before the amendment is issued. Otherwise, the ADO must follow the reimbursement rules in Paragraph 3-100, replacing grant execution date with grant amendment execution date.

(7) FAA policy is that the ADO have requested, and received separate regional approval from the 610 branch in advance of adding a new project to the grant.

(8) The ADO has confirmed that the applicable requirements in Chapter 3 have been met.

(9) All other statutory and regulatory requirements (such as environmental clearance, airspace determination, ALP) that may apply to the new project have been or will be met.
h. Is changed to delete a project (not land) (1) Deletion of a project from a grant can be requested by the sponsor in writing or can be initiated by the ADO. The standard practice is for the sponsor to submit a written request, and ADO initiation of an amendment to delete a project is normally only done when the sponsor does not agree with the amendment. Unless the deletion is initiated by the ADO based on information the ADO has in house, the sponsor must fully document the amount and reason for the deletion.

(2) The ADO must determine that it is advantageous to the federal government to delete the project.

(3) The ADO must adjust the grant amount by the federal share of the deleted project.

(4) The amendment does not prejudice the interests of the United States. This is a rare occurrence and APP-500 will notify the ADO if the situation exists.

(5) To avoid the risk of an improper payment, the ADO must issue the amendment so that the sponsor does not inadvertently draw down funding for the deleted work.
i. Is changed to delete a land project from the grant (1) Deletion of land acquisition from a grant can be requested by the sponsor in writing or can be initiated by the ADO. The standard practice is for the sponsor to submit a written request, and ADO initiation of an amendment to the land project is normally only done when the sponsor does not agree with the amendment. Unless the deletion is initiated by the ADO based on information the ADO has in house, the sponsor must fully document the amount and reason for the deletion.

(2) The ADO must determine that it is advantageous to the federal government to delete the land project.

(3) The ADO must adjust the grant amount by the federal share of the deleted land project.

(4) The amendment does not prejudice the interests of the United States. This is a rare occurrence and APP-500 will notify the ADO if the situation exists.

(5) Because AIP cannot pay twice for the same costs, if the sponsor has received payment on any incurred land acquisition cost, the sponsor must repay those costs or provide written confirmation to the ADO that the costs for performing that work again will be locally funded.

(6) To avoid the risk of an improper payment, the ADO must issue the amendment so that the sponsor does not inadvertently draw down funding for the deleted work.
j. Is changed to modify a project (1) The sponsor must make the request in writing and fully document the amount and justification for the modification.

(2) If a portion of a project is deleted, the ADO must determine a usable unit will still be obtained.

(3) If the project scope is being increased, the ADO must determine that the need for the additional work is closely related to the original project.

(4) The ADO must determine that it is advantageous to the federal government.

(5) FAA policy is that the ADO must have requested, and received separate regional approval from the 610 branch in advance of modifying a project within the grant.

(6) Examples of a project modification are increasing a runway extension from 400’ to 500’ or reducing scope of a fencing project.

(7) To avoid the risk of an improper payment, the ADO must issue the amendment to modify the project prior to the start of the affected work.

(8) The ADO has confirmed that the applicable requirements in Chapter 3 have been met.
k. Is changed to substitute a project (1) The sponsor has made the request in writing and has fully documented the amount and justification for the substitution.

(2) All of the criteria for adding and deleting a project have been met.

(3) If the cost of the substituted project is less than the deleted project, the ADO decreases the federal share of the grant accordingly.

(4) The ADO must determine that the funding rules for the projects do not prohibit the substitution.

(5) FAA policy is that the ADO must have requested, and received separate regional approval from the 610 branch in advance of substituting a project within a grant. The regional office must provide a higher level of scrutiny if the existing project is funded with discretionary and the new project is of a lower priority.

(6) To avoid the risk of an improper payment, the ADO must issue the amendment to substitute a project prior to the start of the affected work.

(7) The ADO has confirmed that the applicable requirements in Chapter 3 have been met.
Table 5-27 Grant Amendment Limits for Increases
Type of Grant Primary Airport Rules Nonprimary Airport Rules
a. Land Acquisition Not more than 15% of the grant amount. Up to the greater of:
• 15% of the grant amount for land (federal share is used here, not project cost).

• 25% of the total increase in allowable land costs (project cost is used here, not federal share).

This is currently the only instance where the ADO has the option to amend the original grant amount by more than 15%.

See Table 5-28 for example calculations.
b. Airport Development Not more than 15% of the grant amount. Not more than 15% of the grant amount.
c. Planning May not be increased above the grant amount. May not be increased above the grant amount.
d. Noise Compatibility Projects (implementation, not planning) Not more than 15% of the grant amount. Not more than 15% of the grant amount.
e. Design Only Grants Not more than 15% of the grant amount. Not more than 15% of the grant amount.
f. Mixed Project Types Not more than 15% of the grant amount after the planning portion of the grant is deducted. Not more than 15% of the grant amount after the planning portion of the grant is deducted. If the increase includes land, also take into account the above rules for land and see Table 5-29 for example calculations.
g. State Block Grants Not applicable. As of the publication date of this Handbook, it is FAA policy that the ADO must not amend a state block grant to increase the grant amount.

If the ADO does not issue all of the available funds to the state in the first grant of the fiscal year, the ADO must issue the remaining funds in one or more separate grants.

If the state chooses to cover an eligible project overrun with AIP funds, the state must only do this with unused entitlements (following all applicable transfer rules per Paragraph 4-11), state apportionment, or discretionary from their open state block grants.

Per FAA policy, states are prohibited from using unused discretionary for new projects. This policy aligns the use of discretionary between state block and non-state block grants.

The only adjustment an ADO can make to the grant amount is a deobligation to remove any unused funds. Because the State Block Grant Program provides states with the flexibility to reobligate entitlement and state apportionment on new or existing projects, it will be rare for the ADO to deobligate these types of funds. However, for discretionary projects, if the state has not used unused discretionary toward existing projects, then the ADO must deobligate the unused discretionary at grant closeout.

If the ADO needs to reduce the funding in the grant at closeout, a separate amendment is not required (the decrease is entered into the system when the closeout is initiated).
Table 5-28 Examples of Grant Amendments with Land Increases for a Nonprimary Airport
Some examples include…

Example 1
Nonprimary airport given a grant for development and land at 90% federal share.

Item Original Project Cost Grant Amount Final Project Cost
Development $800,000 $720,000 $800,000
Land $200,000 $180,000 $260,000
Total $1,000,000.00 $900,000.00 $1,060,000.00
Development: No change in development cost. Therefore, grant amount portion remains at $720,000.
Land: Total cost of land increases by $60,000. The grant amount may be increased by 25% of the difference between the final total project cost and the original total project cost of the land (($260,000-$200,000) x 25% = $15,000), or by 15% of the original federal share of the grant pertaining to the land ($180,000 x 15% = $27,000), whichever is greater. Consequently, the land portion of the original grant amount of $180,000 can be increased by $27,000 to $207,000.
Final Grant Amount: $720,000 + $207,000 = $927,000

Example 2
Nonprimary airport given a grant for development and land at 90% federal share.

Item Original Project Cost Grant Amount Final Project Cost
Development $800,000 $720,000 $950,000
Land $200,000 $180,000 $400,000
Total $1,000,000.00 $900,000.00 $1,350,000.00
Development: Development cost increases by $150,000. The development portion of the grant amount can be increased by a maximum of 15%. Therefore, the maximum increase is ($720,000 x 15% = $108,000). The amended grant amount for development is $828,000.
Land: Total cost of land increases by $200,000. The grant amount may be increased by 25% of the difference between the final total project cost and the original total project cost of the land (($400,000-$200,000) x 25% = $50,000), or by 15% of the original federal share of the grant pertaining to the land ($180,000 x 15% = $27,000), whichever is greater. Consequently, the land portion of the original grant amount of $180,000 can be increased by $50,000 to $230,000.
Final Grant Amount: $828,000 + $230,000 = $1,058,000
Note: In this case, the amended total grant amount is increased by an amount which is more than 15% of the original grant amount.
Table 5-29 Appropriate Amendment Formats
The following format is appropriate… When all of the following criteria apply…
a. Formal Amendment (FAA Form 5100-38)

(See the AIP Forms link in Appendix B.)
If one or more of the following conditions exist:

(1) The amendment will change the grant assurances.

(2) The amendment will change the grant conditions.

(3) A project within the grant is controversial.

(4) A project within the grant is in litigation.

(5) The amendment reduces the grant by equal to or more than $25,000 or 5% of the current approved grant obligation, whichever is greater, and the grant is not being closed out.
(For a grant reduction at closeout, a separate amendment is not required because the decrease is entered into the system when the closeout is initiated.)
b. Final Payment Notification and FAA Final Project Report

(See Table 5-33)
(1) The ADO is basing the final grant amount upon the FAA final project report and completes the sponsor notification as outlined in Table 5-33.

(2) The grant amount will be reduced, and the reduction is less than $25,000 or 5% of the current approved grant obligation, whichever is greater.
c. Multi-Year Amendment

(Letter from the ADO to the sponsor)
(1) The sole amendment purpose is to add multi-year funding as described in the grant agreement.
d. Letter Amendment

(Letter from the ADO to the sponsor)
(1) None of the above formats are applicable.

5-56. Procedure for the ADO to Process an Amendment.

After all of the criteria in Paragraph 5-55 have been met, the ADO processes the amendment using the steps in Table 5-30.

Table 5-30 Amendment Steps
The amendment steps are…
a. Reductions as part of a closeout. If the ADO is simply reducing the funding in the grant as part of the closeout and is not required to complete a formal or letter amendment per Table 5-29, the ADO must follow the steps in Table 5-33 instead of those in this table.
b. Amendment Programming. The ADO creates an amendment in the automated AIP system from an open grant. If the grant is closed, the ADO must reopen the grant following regional policy and/or approval. The amendment is then reviewed at the regional level. If the amendment is approved, it is then ready to begin the congressional notification process, if required. If congressional notification is not required, the amendment skips to the funds reservation step.
c. Congressional Notification (if applicable). If the grant amount is increased, the ADO may be required to send the amendment through the congressional notification process. APP-520 provides the criteria for sending an amendment through congressional notification process based on legislation and OST requirements.
d. Funds Reservation (if applicable). If amendment is to increase funds, the ADO must reserve the funds in the automated AIP system. The system generates an electronic FAA Form 1413-1, Request for Change in Reservation/Obligation. This is reviewed in the system at the regional level and if approved, the system forwards the request to the FAA Office of Finance and Management, FAA Accounts Payable Section B (AMK-314) for AMK-314’s acceptance. Once AMK-314 accepts the reservation in the system, the funds are officially reserved.
e. Recovery of Funds (if applicable). If the amendment is to decrease funds, the ADO must decrease the funds in the automated AIP system. The system generates an electronic FAA Form 1413-1, Request for Change in Reservation/Obligation. This is reviewed in the system at the regional level and if approved, the system forwards the request to AMK-314 for AMK-314’s acceptance. Once AMK-314 approves the decrease, the system forwards the request to the FAA Office of Budget and Performance – Operations and Capital Execution Branch (ABP-410) for ABP-410 approval. Once ABP-410 approves the decrease in the system, the funds are officially recovered.
f. Amendment Offer. The ADO issues the amendment offer to the sponsor using the format required in Table 5-29.
g. Amendment Acceptance (if applicable). If a formal amendment is used, the sponsor and the sponsor’s attorney must sign and return the executed amendment to the ADO. The sponsor’s attorney must sign the amendment after the sponsor in order for the amendment to be properly executed. The amendment cannot be altered by the sponsor without ADO concurrence and issuance of another grant amendment. The sponsor must keep one executed amendment for its files.
h. AMK-314 Notification. If the funding amount has been changed, the ADO must send a scanned copy of the signed amendment to AMK-314.

Section 8. Grant Closeouts.

5-57. Grant Closeout Steps and Requirements.

In order for the ADO to close a grant, the ADO and sponsor must have completed three basic steps. These are:

  • a. Physically complete all projects in the grant (as discussed in Table 5-31).
  • b. Complete all grant administrative and financial requirements (as discussed in Table 5-32).
  • c. Complete the closeout processing steps (as discussed in Table 5-33).
2 CFR § 200.210 requires Federal agencies to identify a period of performance for Federal grants. The FAA has established this period of performance as a maximum of four years from the date of grant execution. 2 CFR § 200.331 also requires pass through entities such as block grant states to identify a period of performance for subgrants.

2 CFR § 200.343 requires that the sponsor submit all required closeout documentation to the ADO within 90 days after the period of performance ends. However, per 2 CFR § 200.343(a), APP-520 has the option to extend this time frame to beyond the 90 days.

Per 2 CFR § 200.343, the FAA has a maximum of one year from receipt and acceptance of the closeout documentation to complete all closeout actions. This includes all closeout actions from all FAA offices (including the FAA Office of Finance and Management, FAA Accounts Payable Section B (AMK-314)). APP-520 has the option to further define ADO specific closeout time frames within this one year period.

Table 5-31 Project Physical Completion Requirements
For the following type of project… The project is not complete until the following requirements are met…
a. Planning (1) The sponsor has submitted the final planning deliverable to the ADO.

(2) The FAA has reviewed, accepted, or approved the planning document as applicable.
b. Land Acquisition (1) The sponsor has obtained satisfactory property interest in all parcels included in the grant description.

(2) The sponsor has submitted an updated Exhibit A to the ADO that properly reflects the land acquisition.
c. Equipment Acquisition (1) The sponsor has full ownership of the equipment (must be delivered, installed, and tested in accordance with plans and specifications).

(2) The FAA Air Traffic Organization (ATO) has completed all required commissioning, inspection, initial flight check, and/or acceptance requirements (if applicable to the project).

(3) The sponsor has submitted any FAA required equipment inventory updates to the ADO.
d. Construction (1) The ATO has completed all required commissioning, inspection, initial flight check, and/or acceptance requirements (if applicable to the project).

(2) The sponsor has completed the final inspection and verifies that all punch list items have been addressed.

(3) A complete and useable facility is fully available for its intended use (except in the case of phased projects).

(4) The sponsor has received the as-built plans. The ADO has the option to require the sponsor to submit an electronic or paper copy of these plans to the ADO.
Table 5-32 Grant Administration Closeout Requirements
For the following item… The ADO must verify that the following requirements are met prior to the ADO processing a grant closeout…
a. Standard Required Sponsor Documentation per 2 CFR § 200.343 (1) The sponsor has submitted all documentation required based on the sponsor’s risk level and the type of project including the following closeout specific documentation:

(a) The final Standard Form 425, Federal Financial Report (see the AIP Forms link in Appendix B), equivalent. This requirement for a final Standard Form 425 is included in the instructions for this form.

(b) An advance paper copy of the final Standard Form 271, Outlay Report and Request for Reimbursement for Construction Programs (see the AIP Forms link in Appendix B), or equivalent, that summarizes the final project costs. The ADO may allow the use of a Standard Form 270, Request for Advance or Reimbursement (see the AIP Forms link in Appendix B), for non-construction projects in lieu of Standard Form 271. This advance copy provides the information that the ADO needs to determine the final allowable project cost. Note that the sponsor will still have to make a final payment request once the ADO completes their determination.

(c) The final vendor invoices (unless the final vendor invoice is less than $1,000). For state block grants, the ADO has the option to only require a list of subgrants that shows the projects and final project amounts as long as the state has obtained the final vendor invoices.
b. Additional Sponsor Documentation Required by the ADO (1) The ADO has the option to require the sponsor to submit any other documentation the ADO determines necessary to support the grant closeout. This may include a formal closeout package or separate items such as a final construction report that summarizes major project issues, a summary of project events, a project timeline, a summary of any Department of Labor issues, and the final DBE participation rates.
c. Additional Sponsor Documentation Required by the ADO for AWOS projects (1) The FAA must have determined that the AWOS has been successfully commissioned, and the sponsor must have provided the ADO with the FAA initial inspection and successful commissioning documentation.

(2) The sponsor must have provided the ADO with a copy of the Weather Message Switching Center reporting contract with the third party interface provider if the sponsor has a connection to the Weather Message Switching Center Replacement (WMSCR).

(Note that AWOSA, A/V, I and II are not eligible for reporting, so this is not required.)
d. Grant Special Conditions (1) The sponsor has met all of the grant special conditions required to be accomplished during the grant.
e. Updated Airport Layout Plan (1) The sponsor has updated the ALP to reflect that the project has been completed (vs. proposed). Not all projects are shown on the ALP (such as runway rehabilitation or equipment acquisition) and in those cases an ALP update is not required. This does not normally require an additional aeronautical study.
f. Exhibit A (1) The sponsor has updated the Exhibit A to reflect that the property acquisition has been completed.
g. Noise Land Inventory and Reuse Plan (1) The sponsor has updated the Noise Land Inventory and Reuse Plan to reflect that the property acquisition has been completed. Noise Land Management and Requirements for Disposal of Noise Land or Development Land Funded with AIP (see Appendix B for link) contains guidance for these plans.
h. Environmental Requirements (1) All project related environmental requirements found in the environmental determination have been completed.
i. Program Income, Including Interest Earned (1) The sponsor has identified any program income, including interest earned and liquidated damages on Federal grant funds, in the Program Income section of Standard Form 425 Federal Financial Report (or equivalent) (see the AIP Forms link in Appendix B).

(2) The sponsor must have deducted this income from the Federal share of the grant.
j. Disputed Costs (1) The sponsor has identified any disputed costs in the Remarks section of Standard Form 425, Federal Financial Report (or equivalent) (see the AIP Forms link in Appendix B).

(2) If the sponsor and the contractor do not agree on the amount owed to the contractor, and the dispute is likely to go to court, the sponsor has only requested reimbursement for the amount that is not in dispute.

(3) Following review of the sponsor’s closeout documentation, the ADO may choose to continue with the project closeout or leave the grant open until all litigation is completed.
k. Overpayment (1) If Standard Form 425, Federal Financial Report (or equivalent), indicates that payments have been made which exceed the Federal share of the allowable costs, the sponsor must repay this amount (see the AIP Forms link in Appendix B).

(2) The ADO must notify the DOT Office of Inspector General (OIG) if the ADO has reason to believe the overpayment was a deliberate attempt to defraud the FAA. The OIG hotline is available for this purpose (see Appendix B for link).

(3) The ADO must notify the FAA Office of Finance and Management, FAA Accounts Payable Section B (AMK-314) in writing of the overpayment.

(4) The sponsor must send a check for the overpayment amount as directed in the Airport Improvement Program (AIP) Grant Payment and Sponsor Financial Reporting Policy (see Appendix B for link) which is based on DOT requirements. The overpayment processing must follow the DOT electronic grant payment system policy through the Delphi eInvoicing system.
Table 5-33 Closeout Processing Steps
The closeout processing steps are…
a. FAA Final Project Report. Once all of the project physical completion requirements in Table 5-31 and the grant administration closeout requirements in Table 5-32 have been met, the ADO must conduct a final project review that results in an FAA final project report. The report must contain information deemed necessary for a subsequent examination or evaluation of the project. The report will normally be prepared and signed by the ADO project manager. The report must then also be reviewed and signed by the regional division manager (the regional division manager may delegate the approval authority down, but the authority must remain at one level higher than the project manager in the chain of command). This constitutes a routine element of program checks and balances as required by 2 CFR §§ 200.343 and 200.303 (OMB Circular A-123, Management’s Responsibility for Internal Control).
b. Final Payment Notification. Once the ADO completes the FAA final project report, the ADO must provide a written notification to the sponsor. This notification must include:

(1) the maximum obligation amount calculated in the FAA final project report,

(2) the reason for any differences between the maximum obligation amount and the sponsor’s requested amount, and

(3) the FAA final project report.

The ADO must place a copy of this notification in the grant file. Until the ADO completes the FAA final project report and completes this sponsor notification, the ADO must follow the requirements in Paragraph 5-46 for payment within the last 10% of the Federal share of the grant (or the last 10% of the estimated Federal share of the grant after amendment, whichever is less). The ADO has the option of excluding a state block grant from this requirement only if the state is following this requirement for all of the subgrants within the state block grant and the ADO is confident that the state will submit the state block grant closeout documentation in a timely manner.
c. Amendments. If the ADO needs to change the work scope or increase the funding, the ADO must follow the amendment requirements and process listed in Paragraphs 5-55 and 5-56. If the ADO needs to reduce the funding in the grant, a separate amendment is not required (the decrease is entered into the system when the closeout is initiated).
d. Final Payment Request Approval. Once the ADO notifies the sponsor of the final payment amount and completes any necessary amendment actions, the sponsor must submit the final payment request through the currently approved Department of Transportation grant payment system.
e. Validation of Draw Downs. The ADO must not process a closeout in the automated AIP system until the sponsor has drawn down the entire final grant amount calculated in the ADO’s final project report. The ADO must validate this by reviewing the draw downs on the grant in the current financial system being used by the FAA Office of Finance and Management, FAA Accounts Payable Section B (AMK-314).
f. Initiating Closeout. After the ADO has validated the drawdowns, the ADO must initiate a closeout in the automated AIP system for the grant. The ADO can reduce the grant amount at this time to reflect the final project cost. The closeout is then reviewed at the regional level. If it is approved, the system will generate an electronic FAA Form 1413-1, Request for Change in Reservation/Obligation (if the grant is decreased) and will send the decrease (if applicable) and closeout request to AMK-314. The ADO has the option of printing this form and placing a copy in the grant file, however, this is not mandatory because the form is retained in the automated AIP system.
g. AMK-314 and the FAA Office of Budget and Performance – Operations and Capital Execution Branch (ABP-410) Review and Acceptance. Once AMK-314 makes any necessary funding adjustments in their financial system and approves the closeout; and all recoveries (if applicable) are approved in the automated AIP system by ABP-410; the grant is officially closed in the automated AIP system.
h. Grant Closeout Letter. After AMK-314 and ABP-410 review and acceptance is complete, the ADO must notify the sponsor of the grant closeout in writing. This closeout letter must include the grant closeout date and the final grant amount. The ADO must send a scanned copy of this letter to AMK-314 and include a copy in the grant file.
i. Printing FAA Form 5100-107, Airport Improvement Program Form (also called AIP Grant Status Report). At this point, the ADO has the option of printing the FAA Form 5100-107, Airport Improvement Program Form (also called AIP Grant Status Report) generated by the automated AIP system and placing the form in the grant file. However, this is not mandatory because a current version of the form containing the grant history is retained in the automated AIP system.

5-58. Block Grant Closeout.

In order for the ADO to close a block grant, the ADO and block grant sponsor must have completed three basic steps as shown in Table 5-34: The required state and ADO closeout time frames are discussed in Paragraph 5-57.

Table 5-34 Block Grant Closeout Requirements
In order for the ADO to close a block grant, the ADO and block grant sponsor must have…
a. Physically, administratively, and financially closeout all of the projects that were issued under the specific state block grant.
b. Followed the requirements in the block grant master agreement regarding which documents must be submitted to the ADO and which documents must be retained by the sponsor.
c. Completed the financial closeout steps in Table 5-33 for the specific state block grant.

Section 9. Grant Suspension and/or Termination.

5-59. Reasons for Possible Grant Suspension or Termination.

Table 5-35 includes examples of when the ADO would consider suspending or terminating a grant. Note that for civil rights violations and non-compliance issues, there are additional legislative requirements. The FAA Office of Civil Rights (ACR) and ACO-100 are responsible for providing the ADO with direction on meeting these requirements.

In addition, if the suspension or termination of the grant will involve withholding an existing grant payment request, the ADO must follow the requirements in Paragraph 5-48.

Table 5-35 Examples of Reasons for Grant Suspension or Termination
Some examples include…
a. The circumstances that justify the project no longer exist.
b. The sponsor has not incurred any cost on the project and has requested that the grant be deferred.
c. The ADO has determined that progress on the project has stopped.
d. The ADO has determined that the project cannot be commissioned and accepted into the National Airspace System.
e. The ADO has determined that the sponsor has not met the requirements of a grant special condition.
f. ACO-100 has notified the ADO that the sponsor is in non-compliance and has advised the ADO to suspend or terminate the grant. The applicable compliance requirements are contained in 14 CFR part 16, Rules of Practice for Federally-Assisted Airport Enforcement Proceedings, and the current version of FAA Order 5190.6, FAA Airport Compliance Manual.
g. The FAA Office of Civil Rights (ACR) has determined that the sponsor has violated a civil rights requirement and has advised the ADO to suspend or terminate the grant. This is because ACR, not the ADO, is the point of contact for civil rights enforcement procedures, while the ADO normally handles any required grant suspension or termination procedures.

5-60. Suspension of a Grant.

The ADO may suspend the grant in whole or in part if the sponsor fails to comply with conditions of the grant. The ADO does this through a written notice to the sponsor. Costs incurred by the sponsor on the grant project after the sponsor has received the suspension notice are not allowable, unless specifically authorized in writing by the ADO. The ADO may allow costs which are otherwise allowable and could not be avoided during the period of suspension. The notice of suspension must contain the following:

  • a. The reasons for the suspension and the corrective action necessary to lift the suspension.
  • b. A date by which the corrective action must be taken.
  • c. Notification that the sponsor has a right to request that the Associate Administrator for Airports (ARP-1) reconsider the suspension or termination.
  • d. Notification that the ADO will be giving consideration to terminating the grant if the sponsor does not take the corrective action by the required date.
In addition, if the suspension of the grant will involve withholding an existing grant payment request, the ADO must follow the requirements in Paragraph 5-48.

5-61. Termination for Cause.

The ADO may unilaterally terminate the grant for cause if the sponsor fails to comply with the conditions of the grant. This is done by written notice to the sponsor. The ADO must use the following procedures for termination:

  • a. First, the ADO must have already suspended the grant.
  • b. The ADO must only use factual and objective language in all correspondence which may lead to termination for cause.
  • c. The ADO must send a written notification of the proposed termination to APP-1 and ACO-100 at the earliest possible opportunity. The ADO must also forward a copy of the notice of suspension and the ADO assessment of the sponsor’s action to remedy the situation to APP-500 and ACO-100.
  • d. Upon receipt, ACO-100 will acknowledge the proposed termination to the ADO via telephone or e-mail. Within 30 days of ACO-100’s acknowledgement, ACO-100 will notify the ADO, in writing, of the procedures to be followed.
  • e. The ADO must notify the sponsor of the termination in writing. This notice must include the reasons for the termination and must inform the sponsor of their right to request the Associate Administrator (ARP-1) reconsider the suspension or termination.
  • f. The ADO must ensure that payments or recoveries of payments under the grant are in accordance with the legal rights and liabilities of all parties involved.
  • g. ACO-100 may require the ADO to provide further coordination and action as a result of the termination for cause in accordance with 14 CFR part 16, Rules of Practice for FederallyAssisted Airport Enforcement Proceedings, and the current version of FAA Order 5190.6, FAA Airport Compliance Manual.
  • h. The FAA Office of Civil Rights (ACR) may require the ADO to provide further coordination and action as a result of the termination for cause in accordance with the applicable civil rights requirements.
In addition, if the termination of the grant will involve withholding an existing grant payment request, the ADO must follow the requirements in Paragraph 5-48.

5-62. Termination for Convenience.

The ADO has the option of terminating a grant for convenience if there is no beneficial reason to continue the project. This can be initiated by either the ADO or the sponsor. Termination for convenience requires:

  • a. A written agreement that details the termination conditions, including the effective date and, in the case of partial terminations, the portion to be terminated.
  • b. The termination agreement must state that the sponsor may not incur new obligations for the terminated portion of the grant after the effective date and must cancel as many obligations relating to the termination as possible.
  • c. The ADO can reimburse the sponsor for allowable project costs that were incurred prior to the effective cancellation date if, in the opinion of the ADO, incurring the costs was unavoidable and could not be canceled.
In addition, if the termination of the grant will involve withholding an existing grant payment request, the ADO must follow the requirements in Paragraph 5-48.

Section 10. Post-Grant Actions.

5-63. Sponsor Records Retention.

2 CFR §§ 200.333-200.337 requires that a sponsor retain all grant related documentation for three years after the sponsor submits the final payment request. If a sponsor becomes involved in litigation or other action involving the records, the sponsor must retain the records until the issue is resolved or the end of the three year period, whichever is later.

Sponsors are also required to provide copies of this documentation upon request to the FAA, the DOT Office of Inspector General (OIG), General Accountability Office and independent auditors acting on behalf of those offices, and independent auditors under the Single Audit Act of 1984.

Table 5-36 contains examples of documentation that the sponsor must retain.

Table 5-36 Examples of Documents that a Sponsor Must Retain
Some examples include…
a. Invoices and inspection reports for third party contracts and suppliers.
b. Detailed employee pay records (including supporting labor distribution records) for force account work.
c. Detailed labor distribution for project administration costs.
d. Records of land purchases (including relocation costs).

5-64. ADO Records Retention.

The ADO must retain grant records according to the requirements of the current version of FAA Order 1350.14, Records Management.

5-65. Reopening Grants.

In extraordinary circumstances, a grant can be reopened by the ADO if the ADO finds that the sponsor has either not been reimbursed for allowable costs or has been reimbursed for costs that are not allowable. The ADO must notify APP-520 in writing before the ADO reopens any closed grant explaining the reason that this action is necessary.

5-66. Audit Requirements.

2 CFR part 200, Subpart F (OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations), establishes audit requirements for states, local governments, and nonprofit organizations receiving Federal funding, which includes AIP. Table 5-37 contains the guidance on when AIP audit are required by entity, including privately owned sponsors that do not fall under 2 CFR § 200.501 (OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations ).

A grant can be audited at any time whether the grant is open or closed. Audit standards and requirements are included in 2 CFR part 200 ) and in the Single Audit Act of 1984. Revenue use compliance reviews are also required as part of the ACO-100 requirements and are discussed in the current version of FAA Order 5190.6, FAA Airport Compliance Manual.

The ADO has the option of requesting that the DOT Office of Inspector General (OIG) conduct additional audits where the ADO determines a need exists. Examples of reasons for the ADO to request an additional audit include where there is evidence of financial discrepancies or evidence of an unusual financial situation.

Table 5-37 Requirements for AIP Audits by Entity
For the following entity… The following audit requirements apply…
a. Publicly Owned Sponsor If the sponsor expends Federal grants for more than $500,000 in a fiscal year in Federal funding, the sponsor must have a single or program-specific audit conducted for that fiscal year. This $500,000 requirement applies to all Federal funding, not just AIP.
b. Block Grant Subgrant Recipient If the sponsor expends Federal grants for more than $500,000 in a fiscal year in Federal funding, the sponsor must have a single or program-specific audit conducted for that fiscal year. This $500,000 requirement applies to all Federal funding, not just AIP.

For block grant states, it is the opinion of the FAA that the airport receiving the subgrant, not the state, is responsible for obtaining the single audit.

The airport that received the subgrant must report the grants on their Schedules of Expenditures of Federal Awards (see 2 CFR § 200.331 (OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations)). The airport must report the grant on their Schedules of Expenditures of Federal Awards as subrecipients.
c. Block Grant State For block grant states, it is the opinion of the FAA that block grant states are responsible for ensuring the airports under the block grant obtain single audits, if required.

For block grant states, both the state must report the grants on their Schedules of Expenditures of Federal Awards (see 2 CFR § 200.331 (OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations)). The states must report the grants to airports as a pass through.
d. Privately Owned Sponsor 2 CFR part 200 Subpart F (OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations) does not apply to privately owned sponsors.

However, the ADO must require the privately owned sponsor to have an audit of the grant conducted for all but the most basic projects (such as acquisition of a snow removal vehicle). The ADO must include a special condition in the grant to require this. The automated AIP system contains the current available special conditions.

This audit must be conducted at the completion of the project and must be done in accordance with accepted standard audit practices. The sponsor must provide copies to both the ADO and the OIG.

5-67. Disposal of AIP Funded Equipment.

The criteria for a sponsor to dispose of equipment that is no longer needed, is being replaced, or has exceeded its useful life (per Paragraph 3-12) are listed in Table 5-38. The criteria are consistent with 2 CFR § 200.33. A sponsor can determine the fair market value by advertising the equipment to determine the amount a willing purchaser would pay, or by hiring an accredited appraiser. Advertising is different than soliciting specific companies. Advertising opens up the arena to a large audience. Soliciting narrows that audience and therefore is not allowable.

Table 5-38 Criteria for Disposing or Replacing AIP Funded Equipment
If the equipment is… And, per 2 CFR § 200.33, the fair market value is… The following applies…
a. Retained by the airport (for any use) or donated or sold to any another entity Less than $5,000. No reimbursement to the FAA is required.
b. Retained and used for airport purposes $5,000 or more. No reimbursement to the FAA is required.

No AIP funds may be used to provide building space for this equipment.
c. Retained and used for non-airport purposes $5,000 or more. Reimbursement to the FAA is required (for an amount equal to the fair market value multiplied by the current federal share).

The reimbursement to the FAA is accomplished by the ADO reducing the total project cost of the next grant received by the sponsor by an amount equal to the total fair market value of the equipment.

No AIP funds may be used to provide building space for this equipment.
d. Donated at no cost to another sponsor and the equipment is both eligible and justified at the receiving airport $5,000 or more. The grant obligations for the equipment are transferred to the other sponsor.

No reimbursement to the FAA is required.
e. Sold (at fair market value or less) to another sponsor and the equipment is both eligible and justified at the receiving airport $5,000 or more. This is not the preferred scenario. Donation of the equipment is a much more effective way to transfer the equipment.

The grant obligations for the equipment are transferred to the other sponsor.

Reimbursement to the FAA is required (for an amount equal to the fair market value multiplied by the current federal share).

The reimbursement to the FAA is accomplished by the ADO reducing the total project cost of the next grant received by the sponsor by an amount equal to the total fair market value of the equipment.

The purchasing airport may request a grant for the purchase price, provided the equipment meets FAA specification and has an acceptable useful life based on the purchase price.
f. Sold (at fair market value or less) or donated to a non-eligible entity $5,000 or more. Reimbursement to the FAA is required (for an amount equal to the fair market value multiplied by the current federal share).

This reimbursement amount is required even if the equipment was donated at no cost or sold for less than fair market value.

The reimbursement to the FAA is accomplished by the ADO reducing the total project cost of the next grant received by the sponsor by an amount equal to the total fair market value of the equipment.

5-68. Disposal of Excess/Unneeded AIP Funded Land (and ADO/Sponsor Tracking).

49 USC § 47107(c)(2) requires a sponsor to promptly dispose of AIP funded land when the land is no longer needed for airport purposes. In this specific case, airport purpose includes land is needed for an existing or future aeronautical purpose (including runway protection zone) or that serves as noise buffer land.

If the ADO determines that the land is no longer need for these purposes, the sponsor has the choice of either selling or keeping the land for non-airport purposes. In either case, the sponsor must use the Federal share of the fair market value on projects in the order of precedence listed in Table 5-39 per 49 USC § 47107(c)(4). This is done outside of the grant process and requires a

land release approval from the ADO (see the current version of FAA Order 5190, FAA Airport Compliance Manual). The ADO must also review and approve or disapprove the sponsor’s choice of how to apply the funding prior to the funds being used for sponsor’s requested purpose.

The ADO and regional office may contact APP-400 and ACO-100 for assistance on the ADO and sponsor requirements for tracking and disposal of AIP, Federal Aid to Airports Program (FAAP), or Airport Development Aid Program (ADAP) acquired land.

Table 5-39 Order of Precedence for Applying Sale Proceeds of AIP Funded Land
Order of precedence to apply the Federal share of the fair market value is…
a. Reinvestment in an approved noise compatibility project.
b. Reinvestment in an approved project that is eligible for funding under 49 USC § 47117(e). The only projects in this section of the law are projects eligible for noise and environmental set aside funding. A complete list of projects eligible for noise and environmental set aside funding is contained in Paragraph 4-7.
c. Reinvestment in all other approved airport development projects at the airport.
d. Transfer to a sponsor of another public airport for a noise compatibility project at the other airport.
e. Send the ADO a check as directed by the FAA Office of Finance and Management, FAA Accounts Payable Section B (AMK-314) for deposit in the Airport and Airway Trust Fund.

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