Summary Paragraph From June 1 to July 3, 2008, the Applicant’s high school (Facility) sustained severe damage due to storms and flooding. FEMA determined that, based on FEMA Policy 9524.4, Eligibility of Facilities for Replacement under 44 CFR 206.226(d)(1)(The 50% Rule), the Facility was eligible for replacement. FEMA prepared Project Worksheet (PW) 978 to address the scope of work and associated costs for the replacement project. Following a DHS OIG audit, FEMA deobligated $2,667,274.74 from PW 978 for improperly procured A&E contract costs and unused funds. Final eligible costs were obligated following closeout in October 2013. In its first appeal, the Applicant challenged FEMA’s decision to deobligate funding because it asserted that “exigent/emergency” circumstances existed and FEMA, as the awarding agency, implicitly authorized noncompetitive proposals. The Applicant also argued that it relied on statements by FEMA staff advising it to not submit all invoices. Finally, the Applicant stated that it had not submitted all paperwork to FEMA because payment to its contractor was pending completion of work related to the project. The FEMA Region V Regional Administrator (RA) denied the first appeal finding that the Applicant did not provide documentation demonstrating that exigent circumstances made properly procuring the A&E contract “infeasible.” In addition, the RA determined that FEMA had not erroneously made $1,861,644.74 in project funding ineligible. In its second appeal, the Applicant asserts that FEMA wrongly deobligated funding based on the OIG audit. The Applicant adds that, at all times, it acted in good faith and was simply unaware that it had violated procurement laws by not properly bidding the contract. In addition, the Applicant states FEMA prematurely initiated closeout and did not include several eligible costs. Authorities and Second Appeals 44 C.F.R. §§ 13.36, 206.202, 206.205 and 207.8(c)-(d). Headnotes Under 44 C.F.R. § 13.36(d)(4)(i), FEMA allows for noncompetitive procurement when the award contract is infeasible under small purchase procedures, sealed bids, or competitive proposals and the item is only available from a sole source, a public exigency or emergency does not allow for delay, the awarding agency allows for noncompetitive bids, or after solicitation from a number of sources, competition is determined inadequate. The Applicant failed to demonstrate that competitive procurement was infeasible or that circumstances met any of the criteria for noncompetitive procurement. According to 44 C.F.R. § 206.205(b), following the Grantee’s accounting of documented actual costs for each approved large project, FEMA will determine the eligible amount of reimbursement and approve eligible costs. Pursuant to 44 C.F.R. § 207.8(d), when the project is completed, the Grantee will initiate closeout and reconciliation of final costs, at which time, FEMA obligates final costs for the project. As the Applicant did not request a time extension from FEMA, closeout of PW 978 was proper and all final eligible costs were appropriately reconciled. The Applicant did not demonstrate that additional costs incurred were eligible.