How does FEMA decide whether our costs were reasonable?

FEMA weighs whether:

• The cost is ordinary and necessary for the type of facility or work, with the right skill level and level of effort;
• The hours claimed fit the severity of the incident, the need for extraordinary hours, the employee’s function and consecutive hours worked;
• You used sound business practices and arm’s-length bargaining;
• You acted with prudence, and followed your own established practices and policies;
• You complied with procurement rules, including a cost or price analysis and selecting the lowest responsible bidder under your criteria; and
• The cost matches current market prices in the area, based on your history, average area costs, other applicants’ costs, published cost data or FEMA cost codes.

FEMA also considers shortages, project complexity, economy of scale, extraordinary labor needs and your written justification. If a cost is not reasonable, FEMA may fund only the reasonable portion, using the least-cost alternative, the lowest bid, another applicant’s properly procured price or a FEMA estimate.

Bid tabulations, your cost or price analysis, historical invoices for similar work, and a written justification for any cost above market, prepared at the time.