Noncompetitive contracts. Given the Federal contracting requirements or full and open competition, applicants must avoid awarding noncompetitive contracts unless the exceptions in FAQ #4 above apply.

Cost plus percentage of cost contracts. Cost plus percentage of cost contracts are strictly prohibited. Such contracts have four elements:

3. Payment is based on a pre-determined percentage rate;

4. Percentage rate is applied to actual performance costs;

5. Contractor entitlement is uncertain at the time of contracting, and;

6. Contractor entitlement increases commensurately with increased performance costs.17

Debarred or suspended contractors. Applicants must not employ disbarred or suspended contractors. In addition, applicants must report contractors who demonstrate a lack of integrity, ethical lapses, or perform inadequately. Applicants should check against the General Services Administration list of debarred and suspended contractors

at: https://www.epls.gov/.

Conflicts of interest. The procurement regulations forbid awarding contracts "if a conflict of interest, real or apparent, would be involved." 18Conflicts of interest arise when an applicant's employee, officer, or agent (or their immediate families or partners) has a financial or other interest in who receives the contract award. FEMA will also find a conflict of interest when an organization that employs (or is about to employ) any of the above parties has a financial or other interest in the award.

Duplicative costs. The Stafford Act and its implementing regulations forbid FEMA from reimbursing duplicative costs.

Contingency clauses. When procuring property and services under a grant, an applicant must follow the same policies and procedures it uses for procurements from its non-Federal funds. Therefore, while it is acceptable if the contract scope of work indicates that activities will be carried out consistent with FEMA laws, regulations, and eligibility guidelines, contracts may not be contingent upon the issuance of a Presidential declaration or FEMA's approval or obligation of funds.

Excessive Costs. To be eligible for reimbursement, costs incurred must be reasonable, allocable, and allowable.19Further, applicants must perform a cost or price analysis in connection with every procurement action including contract modifications.

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Grantee or subgrantee profit. It is acceptable for applicants to pay reasonable fees or profit to cost- type contractors. However, no applicant can ever be in a position to receive a profit or fee itself for work procured pursuant to a Federal grant. FEMA will not fund any fee or profit to the applicant.

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