Procurement and Contracting Requirements

This section examines the eligibility of costs related to procurement and contracting.

FEMA provides Public Assistance funding for contract costs based on the terms of the contract if the Applicant meets Federal procurement and contracting requirements.

• The Program Delivery Managers should remind Applicants of this requirement early in the process
• FEMA Public Assistance staff coordinates with the Office of Chief Counsel when evaluating whether the Applicant complied with federal procurement requirements
• In the case of non-compliance with federal procurement requirements, eligible funding will be determined based on a reasonable cost analysis based on all available information and documentation

FEMA's Procurement Guidance for Recipients and Subrecipients Under 2 C.F.R. Part 200 (Uniform Rules) provides additional details regarding Federal procurement and contracting requirements.

Procurement Standards - State and Territorial Government Applicants

Applicants must comply with Federal procurement standards as a condition of receiving Public Assistance funding for contract costs for eligible work. Federal procurement standards for State and Territorial governments are different than those for Tribal and Local governments and private nonprofits.

State and Territorial government Applicants must:

• Follow the same policies and procedures they would use for procurements with non-Federal funds
• Comply with 2 Code of Federal Regulations 200.322, Procurement of recovered materials
• Ensure that every purchase order or other contract includes any clauses required by 2 Code of Federal Regulations 200.326

Procurement Standards - Non-State Applicants

Non-State Applicants (Tribal and Local governments and private nonprofits) must use their own documented procurement procedures that reflect applicable State, Territorial, Tribal, and Local government laws and regulations, provided that the procurements conform to applicable Federal law and standards. This requirement applies to Tribal Governments even when the Tribe is a Recipient.

For more information on procurement, refer to course: Procurement Under FEMA Awards: Requirements for Recipients and Subrecipients When Procuring Services and Supplies with Funding under Stafford Act Grant Programs or FEMA's Procurement Disaster Assistance Team website: https://www.fema.gov/procurement-disaster-assistance-team.

Procurement Standards - Non-State Applicants

Non-state Applicants must conduct procurement transactions in a manner that complies with the following Federal standards:

• Provide full and open competition;
• Conduct all necessary affirmative steps to ensure the use of minority businesses, women's business enterprises, and labor surplus area firms when possible;
• Exclude contractors that develop or draft specifications, requirements, statements of work, or invitations for bids or requests for proposals from competing for such procurements to ensure objective contractor performance and eliminate unfair competitive advantage;
• Maintain written standards of conduct covering conflicts of interest and governing the performance of employees who engage in the selection, award, and administration of contracts; and
• Maintain records sufficient to detail the history of the procurement. These records will include, but are not limited to:

• Historical documentation
• Rationale for the method of procurement
• Selection of contract type
• Contractor selection or rejection
• The basis for the contract price

Non-State Applicant Procurement Methods

Non-State Applicants must use one of the following procurement methods:

• Micro-purchases
• Small purchase procedure
• Sealed bid (formal advertising)
• Competitive proposal

FEMA may reimburse costs incurred under a contract procured through a noncompetitive proposal only when at least one the following apply:

• The item is only available from a single source
• The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation
• FEMA or the Recipient expressly authorizes a noncompetitive proposal in response to a written request from the Applicant
• After solicitation of a number of sources, competition is determined inadequate

Non-State Applicant Procurement Methods

Applicants must perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications. The method and degree of analysis depends on the particular procurement situation. The Applicant must first make independent estimates before receiving bids or proposals and negotiate profit as a separate element of the price for each contract.

Public Assistance staff and FEMA's Office of Chief Counsel coordinate when evaluating the compliance with Federal procurement requirements.

In the case of non-compliance, FEMA determines a reasonable cost for the eligible work completed based on all available information and documentation.

Contracts

FEMA reimburses costs incurred using three types of contract payment obligations:

• Fixed-price
• Cost-reimbursement
• Time and materials

The Applicant must include required provisions in all contracts awarded and maintain oversight to ensure contractors perform according to the conditions and specifications of the contract and any purchase orders.

• FEMA does not reimburse costs incurred under a cost plus a percentage of cost contract or a contract with a percentage of construction cost method

Contracts

FEMA advises against the use of time and materials contracts and generally limits the use of these contracts to a reasonable time based on the circumstances during which the Applicant could not define a clear scope of work.

Time and materials contracts do not provide incentives to the contractor for cost control or labor efficiency. FEMA will only reimburse costs under a time and materials contract if all of the following apply:

• No other contract was suitable
• The contract has a ceiling price that the contractor exceeds at its own risk
• The Applicant provides a high degree of oversight to obtain reasonable assurance that the contractor is using efficient methods and effective cost controls

Costs Associated with Aid from External Sources

This section discusses the eligibility of costs associated with aid from external sources. This includes Mutual Aid, Direct Federal Assistance, and Donated Resources.

Costs Associated with Mutual Aid

When an Applicant does not have sufficient resources to respond to an incident, it may request resources from another jurisdiction through a "mutual aid" agreement. There are two types of entities:

• Requesting Entity: the entity requesting resources
• Providing Entity: the entity providing the requested resources

Public Assistance funding is only provided to the Requesting Entity because it is legally responsible for the work. FEMA does not provide Public Assistance funding directly to the Providing Entity. For the work to be eligible, the Requesting Entity must have requested the resources provided.

Mutual Aid: Statewide Mutual Aid Agreements

Some States have a statewide mutual aid agreement that designates the State as being responsible for reimbursing mutual aid costs. In these States, the Providing Entity may request funding directly from the State, with prior consent of the Requesting Entity, in accordance with applicable State laws and procedures.

If the Requesting Entity and the State approve the request and the State pays the Providing Entity, FEMA provides Public Assistance funding to the State. The Requesting Entity may be responsible for reimbursing the State for any non-Federal Local cost share, depending on specific State requirements.

The Requesting Entity or State, if applicable, must provide a description of the services requested and received, along with documentation of associated costs (e.g., labor, equipment, supplies, materials) to FEMA in support of a request for Public Assistance funding.

Mutual Aid Eligibility

Three types of mutual aid are eligible:

• Emergency Work
• Emergency utility restoration (regardless of whether it is deemed Category B or F)
• Grant management

Mutual aid work is subject to the same eligibility criteria as contract work. Costs to transport the Providing Entity's equipment and personnel to the declared area are eligible.

Ineligible work performed by a Providing Entity includes:

• Preparing to deploy or "standing-by"
• Dispatch operations outside the receiving State, Territory, or Tribe
• Training and exercises
• Support for long-term recovery and mitigation operations

The Emergency Management Assistance Compact, a national interstate mutual aid agreement, enables States and Territories to share resources in response to an incident.

Work performed outside the receiving State or Territory that is associated with the operation of the Emergency Management Assistance Compact, including tracking of resources, is not eligible unless the work is associated with the receiving State's or Territory's emergency operations for the incident.

Mutual Aid: Eligibility

The Providing Entity's straight-time and overtime labor are eligible, including fringe benefits. When the Requesting Entity is a State, Territorial, Tribal, or Local government and the Providing Entity is another division within the same State, Territorial, Tribal, or Local government, straight-time for budgeted employees of the Providing Entity is not eligible.

If the Providing Entity backfills deployed personnel, overtime for backfill personnel is eligible even if they are not performing eligible work. However, straight-time for backfill personnel is not eligible.

FEMA reimburses the use of equipment provided to a Requesting Entity based on either the terms of the agreement or equipment rates. FEMA provides Public Assistance funding to repair damage to this equipment the same way as it provides Public Assistance funding to repair damage to Applicant-owned equipment.

Mutual Aid: Post-Incident Agreements

In some cases, the Requesting and Providing Entities do not have a written agreement, OR where such an agreement exists but is silent on reimbursement, the entities may verbally agree on the resources to be provided and on the terms, conditions, and costs of such assistance.

The agreement should be consistent with past practices for mutual aid between the entities. For example, if the Requesting Entity does not normally reimburse a Providing Entity for its costs, it should not agree to do so specifically for the declared incident.

Prior to funding, the Requesting Entity must document the verbal agreement in writing, have it executed by an official of each entity with the authority to request and provide assistance, and submit it to FEMA (preferably within 30 days of the Applicant's Briefing).

Direct Federal Assistance

When the impact of an incident is so severe that the State, Territorial, Tribal, and local governments lack the capability to perform or contract eligible Emergency Work, the Recipient may request that the Federal Government provide this assistance directly. FEMA may task another Federal agency to perform or contract the work provided it is an eligible activity.

FEMA issues a "Mission Assignment" to task the work and refers to it as Direct Federal Assistance.

FEMA cannot task work that another Federal agency has its own authority to perform. Direct Federal Assistance has the same cost-share provisions applicable to the declaration.

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