Contracts and Procurements must be of reasonable cost, generally must be competitively  bid, and must comply with Federal, State, and local procurement standards.  FEMA finds four methods of procurement acceptable:
   †  Small purchase  procedures: 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: a formal method where bids are publicly advertised and  solicited, and the contract is awarded to the responsive bidder whose  proposal is the lowest in price (this method is the preferred method for  procuring construction contracts)
   †  Competitive  proposals: a method similar to sealed bid  procurement in which contracts are awarded on the basis of contractor  qualifications instead of on price (this method is used for procuring  architectural or engineering professional services)
   †  Non-competitive  proposals: a method whereby a proposal is received  from only one source, because the item is available only from a single  source; there is an emergency requirement that will not permit delay; FEMA  authorizes a noncompetitive proposal; or solicitation has been attempted and  the competition is inadequate. If these conditions exist, FEMA may find this  method acceptable. Otherwise, noncompetitive proposals and “piggyback”  contract are generally ineligible.
   FEMA provides reimbursement for three types of  Contracts:
   †  Lump sum: contract for work within a prescribed boundary with a clearly  defined scope and a total price
   †  Unit price: contract for work done on an item-by-item basis with cost  determined per unit
   †  Cost plus fixed  fee: either a lump sum or unit price contract with  a fixed contractor fee added into the price
   Time and materials contracts should be avoided,  but may be allowed for work that is necessary immediately after the disaster  has occurred when a clear scope of work cannot be developed and the work will  not exceed 70 hours. Special arrangements may be available for power  restoration. FEMA should be consulted for details. Applicants must carefully  monitor 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. Although it is not prohibited, it is generally not advisable to  make payments to a contractor contingent upon the applicant’s receipt of  funding from FEMA. Cost plus a percentage of cost contracts are not eligible.
   References:   44 CFR Part 13
   Office of Management and Budget Circular A-102  41 U.S.C. 403(11)
   Public Assistance Debris Management Guide, FEMA  325, pages 93-104
   Public Assistance Guide, FEMA 322, pages 28, 42,  51-53, 104