Contracts must be of reasonable cost, generally must be competitively bid, and must comply with Federal, State, and local procurement
standards. FEMA regulations at 44 CFR Part 13 – Uniform Administrative Requirements For Grants And Cooperative Agreements To State And
Local Governments provide specific guidance on contracts. FEMA finds four methods of procurement acceptable. Each is described below in general terms.
Small Purchase Procedures. Small purchase procurement is an informal method for securing services or supplies that do not cost more than $100,000 by obtaining several price quotes from different sources.
Sealed Bids. Sealed bid procurement is a formal method where bids are publicly advertised and solicited, and the contract is awarded to the bidder whose proposal is the lowest in price (this method is the preferred method for procuring construction contracts).
Competitive Proposals. Competitive procurement is a method similar to sealed bid procurement in which contracts are awarded on the basis of contractor qualifications instead of solely on price (this method is often used for procuring architectural or engineering professional services).
Noncompetitive Proposals. Noncompetitive procurement is a method whereby a proposal is received from only one source. Noncompetitive proposals should be used only when the award of a contract is not feasible under small purchase procedures, sealed bids, or competitive proposals, and one of the following circumstances applies:
the item is available only from a single source;
there is an emergency requirement that will not permit a delay for competition;
FEMA authorizes a noncompetitive proposal; or
solicitation from a number of sources has been attempted, and competition is determined to be inadequate.
“Piggyback contracting” is a concept of expanding a previously awarded contract. Piggyback contracting does not meet the requirements of 44 CFR Part 13 because it is non-competitive and may have an inappropriate price structure. This type of contract is not eligible. However, FEMA may separately evaluate and reimburse costs it finds fair and reasonable. It is important to recognize that an applicant may provide a contract that meets the legal and administrative procurement requirements but includes aspects that would not be eligible for FEMA funding. Each type of contract must be reviewed carefully to assure compliance with the FEMA scope of eligible work.
FEMA provides reimbursement for three types of contracts. They are:
lump sum contracts for work within a prescribed boundary with a clearly defined scope and a total price;
unit price contracts for work done on an item-by-item basis with cost determined per unit; and
cost plus fixed fee contracts, which are either lump sum or unit price contracts with a fixed contractor fee added into the price.
Applicants should avoid using time and materials contracts. FEMA may provide assistance for work completed under such contracts for a limited period (generally not more than 70 hours) for work that is necessary immediately after the disaster has occurred when a clear scope of work cannot be developed. Monitoring is critical and a competitive process still should be used to include labor and equipment rates. Trimming trees of dangerous hangers may be an appropriate use of this type of contract, but only if an acceptable unit price contract is not feasible. Applicants must carefully monitor and document contractor expenses, and a cost ceiling or “not to exceed” provision must be included in the contract. If a time and materials contract has been used, the applicant should contact the State to ensure proper guidelines are followed. Cost plus a percentage of cost contracts are not eligible. However, FEMA may separately evaluate and reimburse costs it finds fair and reasonable. FEMA may review proposed contracts for compliance with FEMA eligibility rules and reasonableness of costs, but such a review does not constitute approval.
FEMA has developed an on-line debris contractor registry tool to assist State and local governments in identifying and contacting contractor resources. The registry tool can be found on FEMA’s website (www.fema.gov/business/contractor.shtm). The information provided in the registry is maintained by contractors and their representatives. FEMA does not verify, and takes no responsibility for, the accuracy of any of the information submitted. FEMA does not endorse, approve, or recommend any contractors, including those in the registry. State and local governments should perform all appropriate due diligence prior to entering into a contract. Contracting with any of the entities listed in the registry does not assure a State or local government of reimbursement under a Federal grant. State and local governments should follow their competitive procurement procedures when selecting a contractor.
Loss.of.Revenue
The loss of revenue is not an eligible cost authorized by the Stafford Act and, therefore, cannot be funded through the PA Program. Loss of revenue may occur:
when a hospital releases non-critical patients in order to make room for disaster victims;
when a hospital sustains damage that reduces its pre-disaster capacity;
when a toll road is opened for evacuation of traffic and the normal toll is not charged;
when the State waives the normal fee for ferry service to encourage alternate transportation after a disaster event; or
when a utility system is shut down as the result of a disaster. Applicants may suffer other costs that are ineligible for FEMA assistance, such as payment of salaries for employees sent home during an
emergency.