122 Communities Won a SMART Grant to Prototype the Future. Congress Just Took Away the Stage That Builds It.

The Strengthening Mobility and Revolutionizing Transportation program was designed around a promise: win a small planning grant, prove your concept works, and come back for the money to build it. Stage 1 gave you up to $2 million and 18 months to plan and prototype. Stage 2 gave you up to $15 million and 36 months to implement. Only Stage 1 winners could compete for Stage 2. The two-step structure was the program's central innovation — a way for the Department of Transportation to fund risky technology in small communities without writing an eight-figure check to an untested idea.

That ladder now has 122 people standing on the first rung and no second rung.

The Consolidated Appropriations Act, 2026 (H.R. 7148) reallocated $204,912,000 in unobligated balances from the SMART Grants Program. DOT's guidance is unambiguous: no new notices of funding will be issued. Existing agreements — 122 Stage 1 grants and seven Stage 2 grants — will continue to be honored.

Do the subtraction. One hundred fifteen Stage 1 grantees built a prototype, in many cases with local match and staff time they could not easily spare, on the expectation of a Stage 2 competition that will never be held.

How a $500 million program ends without an announcement

SMART was created by Section 25005 of the Infrastructure Investment and Jobs Act with $500 million in advance appropriations, released in $100 million increments across fiscal years 2022 through 2026. Eligible applicants covered essentially the full universe of public transportation entities: states, political subdivisions, tribal governments, public transit agencies and authorities, public toll authorities, metropolitan planning organizations, and collaborations among them.

Eligible technology areas were deliberately broad — advanced data, technology, and applications aimed at safety and resiliency, equity and access, climate mitigation, public-private partnerships, and infrastructure integration. In practice that meant connected vehicle deployments, smart traffic signals, drone-based inspection, sensor networks, digital twins, and a long tail of municipal experiments that would never have survived a conventional infrastructure competition.

Demand was real. The FY2022 round drew 392 applications and funded 59 Stage 1 projects, with an average funding request around $1.54 million. The FY2024 Stage 1 round awarded $54 million across 34 projects in 21 states, announced in December 2024.

And then it stopped — not by repeal, not by a policy announcement, but by an appropriations line moving unobligated balances somewhere else. This is the quietest of the mechanisms by which a funded federal program dies, and it is worth understanding precisely because it leaves no announcement to react to. We have written before about the five ways federal grants get killed after Congress funds them; reallocation of unobligated balances in an omnibus is the version that generates no litigation, no press release, and no notice to the affected grantees beyond a changed line on a program webpage.

What the 115 stranded grantees actually lost

A Stage 1 SMART grant was not primarily a $1.5 million transfer. It was an option on a $15 million one.

Communities budgeted accordingly. A mid-size city that stood up a connected-intersection pilot at four signals did so with a deployment plan for 200 signals sitting behind it. A rural transit authority that prototyped demand-response dispatch software did it with a regional rollout in the capital plan. The prototype was never the point — it was the qualifying round.

The practical consequences fall in three places:

Sunk local match and staff capacity. SMART Stage 1 awards carried local contributions in cash and in kind. Small agencies assigned their scarcest resource — technical staff who understand both transportation operations and procurement — to an 18-month effort whose payoff was eligibility.

Vendor commitments. Many Stage 1 projects were structured with technology partners who priced the prototype on the expectation of a Stage 2 deployment contract. Those relationships now need to be renegotiated on their own merits.

Capital plans with a hole in them. An MPO that programmed a Stage 2 deployment into its TIP for FY2027 or FY2028 has to find replacement funding or drop the project, and the replacement has to come from a program that did not design itself around unproven technology.

Where the work can still go

The Stage 2 door is closed. Several adjacent doors are not, and the Stage 1 prototype is a genuine competitive asset in each of them — because the single hardest thing to demonstrate in a transportation technology application is that the technology works in your specific operating environment. You now have data proving exactly that.

Highway formula and discretionary programs that survived. The September 2026 continuing appropriations act extended contract authority for the Bridge Investment Program, INFRA, the Rural Surface Transportation Grant Program, and the Wildlife Crossing Pilot through September 30, 2027. Technology components embedded inside an eligible capital project are frequently allowable even when a standalone technology grant is not. A connected-signal deployment that could not win as a technology project can ride along inside a corridor reconstruction.

Congestion Mitigation and Air Quality funds, where applicable, remain one of the most flexible sources for operational technology, and ITS deployments have a long CMAQ eligibility history.

Transit-specific lanes. FTA's programs remain active, including the $610 million FY2026 Buses and Bus Facilities / Low or No Emission round closing September 21 and the $10 million Bus Safety, Accessibility, and Innovation Research program (FTA-2026-004-TRI) closing September 28. Transit agencies holding SMART prototypes in safety, accessibility, or operations should read the research NOFO carefully — it is a natural home for exactly this kind of validated pilot.

But there is a caveat that should shape every one of those applications: the IIJA Division J advance appropriations were not extended in the September CR. Transit accounts face roughly a 20 percent reduction from FY2026 levels beginning October 1, and passenger rail roughly 81 percent, with the next decision point on December 11. The lanes that remain open are narrower than they were, and the competition inside them is about to intensify with an influx of applicants whose own programs went away. We covered the mechanics of that cliff in detail here.

The lesson worth carrying into the next two-stage program

Multi-stage federal competitions are proliferating. NSF's SBIR pipeline, DOE's concept-paper-then-full-application structures, ARPA-H's phased solicitations, and a growing number of NOFOs that gate a large award behind a small one all share SMART's basic architecture. The design is genuinely good — it lets agencies fund risk cheaply and scale only what works.

It also concentrates a specific failure mode: the second stage is a policy choice, not a contractual right. Nothing in a Stage 1 award obligates an agency to hold a Stage 2 competition, and nothing protects the later stage from an appropriations rider. Applicants should treat the first stage as a complete project with standalone value, budget the local match as if there will never be a second round, and ask one concrete question during scoping: if Stage 2 never happens, what do we still have?

For the 115 communities holding a SMART prototype and no ladder, the honest answer is: a working demonstration, a trained team, and a dataset that most applicants to the remaining programs do not have. That is not what they were promised. It is not nothing, and the agencies still writing checks this fall are exactly the audience for it.

If you are re-homing a stranded project into whichever federal lane is still open — and trying to figure out which ones actually fit before the fall deadlines land — Granted can help you match the work you have already done against the opportunities that remain.