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