Per 44 C.F.R. § 13.36(b)(2), applicants and grantees must maintain a contract administration system to ensure that contractors adhere to the terms, conditions, and specifications of their contracts and purchase orders. The RA properly determined that the Applicant did not maintain its contract administration system properly, which led to its Contractor’s overbilling and unreasonable project costs. FEMA may grant exceptions to procurement requirements under 44 C.F.R. § 13.6(c) on a case-by-case basis. Neither the Applicant nor the Grantee have demonstrated that FEMA should grant an exception in this case, where the Applicant did not monitor its contract appropriately, leading to deobligation of funding in an OIG audit.

The Applicant failed to maintain an adequate contract administration system and has not provided justification for an exception to this procurement requirement. Accordingly, FEMA is denying the second appeal.

44 C.F.R. §§ 13.6, 13.36, 13.52.