The department is hereby authorized to accept grants of funds from the President of the United States, or other Federal agency, for the construction of public highways and related projects. Such money shall be held by the State Treasurer as custodian for the department and shall be paid out, on requisition of the department, without further appropriation. If required by the Federal government, the Department of Property and Supplies¹ shall provide the necessary bonds for the State Treasurer in his capacity as custodian.

Where any highway or bridge which is not a part of the State highway system of the Commonwealth has been, or may be, designated to be improved with funds received from the Federal government, the department shall have all of the powers and authority in the relocation, widening or construction of such highway which are now, may hereafter be, conferred upon it with respect to State highways. Any damages sustained by reason of taking property in the relocation, widening or construction of any such highway shall be ascertained in accordance with the provisions of this act applicable to the ascertainment of damages in relocating, widening or constructing State highways. Such damages, when ascertained, shall be paid by the county or political subdivision, or both, as may be agreed upon between the political subdivision and county. No work shall be undertaken until the county or political subdivision, or county and political subdivision, affected by the liability for damages, shall have agreed thereto.

Where any highway or bridge is to be constructed under contract and to be paid for wholly or in part from Federal funds, and the project involves additional work to be contracted and paid for by political subdivisions or local authorities, the advertisement by the department, in compliance with the rules and regulations of the proper Federal authorities, shall be the only advertising necessary, any other acts or requirements to the contrary notwithstanding.

The department shall have authority to make and carry out contracts and to do every other act necessary to carry out any project heretofore or hereafter undertaken which is to be paid for in whole or in part from Federal funds, and in every way to conform to the requirements and rules and regulations of the proper Federal authorities with respect to such projects, but no limitation contained in this act shall in anywise diminish any authority or powers conferred on the department by this act.