Costs Eligilbilty

Reasonable Cost

Detailed Discussion

The definition of cost eligibility states  that a cost must be reasonable and necessary to be eligible. What is a Reasonable Cost? A cost is  reasonable if, in its nature and amount, it does not exceed that which would  be incurred by a prudent person under the circumstances prevailing at the  time the decision was made to incur the cost. In other words, a reasonable  cost is a cost that is both fair and equitable for the type of work being  performed. For example, charging $50/hour for a backhoe is unreasonable when  the going rate for a backhoe is $25/hour. There are several ways reasonable  costs are established, such as:
   †  Historic  documentation for similar work
   †  Average costs  for similar work in the area
   †  Published unit  costs from national cost estimating databases
   †  FEMA cost codes,  equipment rates, and engineering and design service curves
   The reasonable cost requirement applies to all  labor, materials, equipment, and contract costs awarded for the performance  of eligible work.
   References:   Office of Management and Budget Circulars A-21, A-87, Attachment  A.C.2, and A-122
   Public Assistance Guide, FEMA 322, pages 40-41,  51


Related Subjects & Topics

Costs Eligilbilty

This website  is intended as a national source of information about  the delivery of  financial recovery services. It includes resources on eligibility, procurement, grant management delivery, and issues related to various Federal Programs currently supporting FEMA  Public Assistance program  financial recovery for governments and non-profits. This website is not affiliated or endorsed or sponsored  by  FEMA  or any other Federal grant program. The information provided in various webpage documents is derived largely from Federal  published materials. In general, under section 105 of the Copyright Act, such works are not entitled to domestic copyright protection under U.S. law and are therefore in the public domain.  The goal is to help navigate the various Federal websites and summarize grant information and requirements. It does not constitute legal advice or grant management advise and is provided for general informational purposes only. Only the Federal Agency responsible for grants can make determinations on eligibility and grant amounts. You should consult with your professional services advisors and State and Federal Grant Coordinators for more detailed guidance on specific FEMA Public Assistance financial recovery issues.

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