Establishing a strong subrecipient framework for CDBG-DR programs

As several communities nationwide enter the initial phases of their Community Development Block Grant Disaster Recovery (CDBG-DR) programs, establishing a strong subrecipient framework is pivotal to achieving desired outcomes. Setting clear expectations for all stakeholders is essential for streamlining processes and helping communities rebuild stronger. This approach not only addresses immediate recovery needs but also fosters long-term economic vitality.

For CDBG-DR grantees, the success of their subrecipient programs is largely determined long before the first award is made. Decisions regarding the number of projects to fund, how awards are distributed across subrecipients, and how requirements are structured have a direct impact on internal workload, processing timelines, and overall program performance. These impacts are also keenly felt at the subrecipient level, particularly in small, fiscally constrained, and rural communities, creating barriers to achieving resiliency goals in a timely manner.

When selecting awards, grantees should consider that less is often more. Funding fewer, larger projects can create a greater impact than funding many small ones. Over-awarding can overwhelm staff and divide attention, leading to project delays. Additionally, grantees should consider consolidating projects with similar scopes for the same applicant to reduce administrative burdens, streamline environmental reviews, and shorten overall project timelines.

It’s also important to maintain a healthy balance between projects that rely solely on awarded funds and those that bring leverage funds to the table. While leveraging other funds can accelerate progress, subrecipients must exhaust these funds before accessing CDBG-DR money. This can potentially delay invoicing and impact the U.S. Department of Housing and Urban Development (HUD) 50% expenditure requirement. Grantees should support subrecipients in setting realistic expectations for project scope, timelines, and budget, and should prioritize applications with feasible and achievable work plans.

While grantees focus on strategic award distribution, subrecipients are integral to grounding each project in robust planning. Effective project scoping is one of the most critical risk-management tools in a CDBG-DR program. A well-defined scope focuses on essential activities, eliminating overly ambitious plans that can jeopardize timelines and budgets.

To start, subrecipients should outline specific project objectives and engage stakeholders early to build consensus on priorities. By narrowing the scope, necessary permits and pre-construction activities, like property acquisitions, can be identified sooner. This reduces risks, prevents scope creep, and allows time for plan adjustments if needed. Grantees should remain involved throughout this process, providing support and perspective to help identify potential risks and constraints to project completion. Strong, early lines of communication are key to guiding subrecipients through the layers of regulatory compliance and ensuring projects are completed on time and within budget.

Thoughtful management of pre-construction activities enables programs to move faster without compromising environmental compliance. By leveraging parallel workflows, programs can advance eligible pre-work tasks—such as surveys, zoning verification, site inspections, and preliminary engineering—while the environmental review is underway. Conducting these activities concurrently helps preserve project momentum, identify site constraints early, and reduce delays once environmental clearance is obtained. Grantees should encourage early coordination between project, environmental, and technical teams so allowable pre-work can move forward without delaying review outcomes.

Procurement strategies that prioritize competition help programs broaden bidder participation, manage pricing risk, and support compliant project delivery. For less complex projects, consider making bidder meetings optional, as mandatory attendance can sometimes hinder true competition. If you anticipate not meeting criteria by the solicitation opening, consider returning unopened bids and extending the solicitation period. This approach allows for more responses and avoids the need for separate procurements, while keeping contractor rates confidential to prevent pricing issues.

For larger projects, consider organizing them into smaller, logical groups. Highly specialized work might require a prime contractor to engage subcontractors, and breaking the project down can alleviate bonding requirements. Large project sizes may make it difficult for contractors to secure the necessary performance bonds, which might prevent them from bidding.

Effective CDBG-DR subrecipient management starts long before construction begins. For decades, KPMG LLP has worked alongside state and local governments to create opportunities that strengthen communities and build long-term resiliency. The insights shared here are drawn from decades of hands-on experience helping state and local governments build stronger, more resilient communities. By investing time in strategic planning and establishing a strong subrecipient framework, programs can confidently navigate compliance and deliver recovery projects that stand up to both audits and community expectations.