Emergency Contracting: Flexibilities in Contracting Procedures during an Emergency (2007)

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27 ACKNOWLEDGMENTS This study was performed under the overall guidance of the NCHRP Project Committee SP 20-06. The Committee is chaired by JAMES S. THIEL, Wisconsin Department of Transportation. Members are LAWRENCE A. DURANT, Louisiana Department of Transportation and Development; BRELEND C. GOWAN, California Department of Transportation (Retired); WILLIAM E. JAMES, Tennessee Attorney General’s Office; PAMELA S. LESLIE, Florida Department of Transportation; MICHAEL E. LIBONATI, Temple University School of Law; JULIA L. PERRY, Federal Highway Administration; MICHAEL E. TARDIF, Friemund, Jackson and Tardif, LLC; RICHARD L. TIEMEYER, Missouri Department of Transportation; THOMAS VIALL, Vermont Agency of Transportation; RICHARD L. WALTON, JR., Virginia Department of Transportation; and ROBERT L. WILSON, Arkansas State Highway and Transportation Department. EDWARD V. KUSSY provides liaison with the Federal Highway Administration, JO ANNE ROBINSON provides liaison with the Federal Highway Administration, and CRAWFORD F. JENCKS represents the NCHRP staff.

26 ND N.D. Cent. Code 24-03-04, N.D. Cent. Code 54-44.4-02, N.D. Cent. Code 24-02-21, N.D. Cent. Code 24-02-18 http://www.legis.nd.gov/information/statutes/cent-code.html NE Neb. Rev. Stat. § 39-1343 http://uniweb.legislature.ne.gov/legaldocs/view.php?page=s391 3043000 NH § 21-I:11 (St. Statutes) 4:18, 4:19, 4:45 un- definitized 228:4 http://www.gencourt.state.nh.us/rsa/html/I/21-I/21-I-11.htm http://www.gencourt.state.nh.us/rsa/html/NHTOC/NHTOC-I- 4.htm NJ N.J. Stat. 52:34-10 http://lis.njleg.state.nj.us/cgi- bin/om_isapi.dll?clientID=40037074&Depth=2&depth=2&expand heaings=on&headingswithhits=on&hitsperheading=on&infobase =statutes.nfo&record={15C6B}&softpage=Doc_Frame_PG42 NM N. M. Stat. § 13-1-127 (1978) http://www.conwaygreene.com/nmsu/lpext.dll?f=templates&fn =main-h.htm&2.0 OH Ohio Rev. Code § 5517.02, 5526.08 http://codes.ohio.gov/orc/55 OK Okla. Stat. ch. 61 0.5 § 130, Okla. Admin. Code 730:1-5-1 http://ok.gov/launch.php?url=http%3A%2F%2Fwww.lsb.state.o k.us%2F OR Or. Rev. Stat. 279B.080, Or. Rev. Stat. 366.445, Or. Admin. R. 731-147-0030, Procedure MAI-33-01, ODOT Policy and Procedures Manual http://www.leg.state.or.us/ors/279b.html PA www.dgs.state.pa.us/proc-handbook/cwp/view.asp?A=3 &question_ID127879 &pp=1 RI R.I. Gen. Laws 42-13-1, R.I. Gen. Laws 37-2-21(b), RIDOT Standard Operating Procedure, “Procedure for the Design and Construction of Projects Generated by an Emergency Dec- laration,” Feb. 2, 1996 http://www.rilin.state.ri.us/Statutes/Statutes.html SC SC Stat. 57-5-1620, SC Stat. 11-35-10, SCDOT Directive 41 http://www.scstatehouse.net/code/statmast.htm TN Tenn. Code Ann. 54-1-135 http://michie.lexisnexis.com/tennessee/lpext.dll?f=templates&f n=main-h.htm&cp= UT Code 63-56-411; Rule R33-3-5 http://le.utah.gov/~code/TITLE63/htm/63_29029.htm VT State of Vermont—Agency of Administra- tion Bulletin No. 3.5, 8/10/95 http://www.adm.state.vt.us/pdf/Bulletin_3.5.pdf WI Wisc. Stat. 16.75(6)(e); 166.03(1)(b)1,4,544 http://www.legis.state.wi.us/rsb/stats.html WV W. Va. Code § 148-1-7.6 State Purchasing, § 15-5-6 Governor, § 17-2A-8 DOH Commissioner http://www.legis.state.wv.us/WVCODE/15/masterfrmFrm.htm WY Wyoming DOT Policy No. 24, issued 3/1/97; 24-1, issued 3/23/06; 24-9, issued 3/3/06 44 Comments from a reviewer point out that Wisconsin Statutes 84.06(3) and 84.07(1b) also relate to emergency highway work. It was also pointed out that Wisconsin has “standing authority to contract with each of its 72 counties to perform maintenance without any bidding” and has standard contracts in place all year. The intergovernmental contracting that is the subject of these statutes and com- ments is beyond the scope of this report.

25 APPENDIX E STATE CODE AND RELATED ADMINISTRATIVE SOURCES AK Alaska Stat. 36.30.310, 2 Alaska Admin. Code 12.440 http://www.legis.state.ak.us/cgi- bin/folioisa.dll/stattx06/query=36!2E30!2E310/doc/{@14547} AZ Proc. Cod §§ 41-2537, R2-7E302 http://www.azleg.gov/ars/41/02537.htm CT Connecticut Gen. Stat. ch. 242, § 13b-26(f) http://www.cga.ct.gov/2007/pub/Chap242.htm#Sec13b-26.htm FL Florida Stat. tit. XXVI–Public Transporta- tion (2007) §§ 337.02, 337.11(6)(a), 287.057(5)(a), 287.055(3)(a) http://www.flsenate.gov/Statutes/index.cfm?App_mode=Displa y_Statute&URL=Ch0337/titl0337.htm&StatuteYear=2004&Title =%2D%3E2004%2D%3EChapter%20337 http://www.flsenate.gov/Statutes/index.cfm?App_mode=Displa y_Statute&URL=Ch0287/part01.htm&StatuteYear=2004&Title= %2D%3E2004%2D%3EChapter%20287%2D%3EPart%20I HI Haw. Rev. Stat. § 103 D-307, ch. 128, Haw. Rev. Stat. § 103 P-307 http://www.capitol.hawaii.gov/hrscurrent/Vol02_Ch0046- 0115/HRS0103D/HRS_0103D-0307.HTM IA Iowa Code § 313.10, Iowa Transportation Laws 761 ch. 20, 20.8(7), Undefinitized—20.3(3)f(g) http://coolice.legis.state.ia.us/Cool- ICE/default.asp?category=billinfo&service=IowaCode http://www.legis.state.ia.us/ACO/IAChtml/761.htm#rule_761_2 0_8 IL 30 Ill. Comp. Stat. 500/art. 20 http://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=00300500 0HArt%2E+20&ActID=532&ChapAct=30%26nbsp%3BILCS%26 nbsp%3B500%2F&ChapterID=7&ChapterName=FINANCE&Sec tionID=7753&SeqStart=4800000&SeqEnd=7200000&ActName=I llinois+Procurement+Code%2E KS Kansas Standard Operating Manual 1.9.4, 3.3.10, Kan. Stat. Ann. 48-904, Kan. Stat. Ann. 48-916, Kan. Stat. Ann. 48-925, Kan. Stat. Ann. 48-926, Kan. Stat. Ann. 48-933, Kan. Stat. Ann. 48-934, Kan. Stat. Ann. 48-936, Kan. Stat. Ann. 48-937, Kan. Stat. Ann. 48-939, Kan. Stat. Ann. 75-3739 http://www.kslegislature.org/legsrv-statutes/getStatuteInfo.do MA 801 Mass. Code Regs. 21.00 http://www.mass.gov/portal/gog_cache.jsp?q=cache:fumDSlOxE 8cJ:www.mass.gov/Aosd/docs/policy/801cmr21.doc+801+CMR+21 .00&access=p&output=xml_no_dtd&ie=UTF- 8&client=mgov&site=default_collection&proxystylesheet=mgov& oe=UTF-8 ME Title 23 Me. Rev. Stat. Ann. 753 MI www.michigan.gov/dmb 0510.09 Emergency purchases MN Minn. Stat. 161.32, Subd. 3 http://ros.leg.mn/bin/getpub.php?pubtype=STAT_CHAP_SEC& year=current&section=161.32 MS Miss. Code Ann. 65-1-85, 31-7-13(f)(j)(k); 65- 1-149 DFA procurement Man. § 3.206; MDOT Rule 941-7401-02000 Web site denied access MT Mont. Code Ann. 60-2112 (2) (2007) http://data.opi.mt.gov/bills/mca/60/2/60-2-112.htm

24 STATE Q. 6 Does State statute or regulation allow for waiver of re- quirements related to solicitation and award of contracts in emergency situa- tions? Q. 7 Does State stat- ute or regulation allow for waiver of requirements re- lated to the admini- stration of contracts in emergency situa- tions? Q. 8 Has State ever been impeded in dealing with an emergency by limi- tations imposed by FEMA? Q. 9 Has State DOT ever sought re- imbursement from FEMA for emergency transportation- related contract- ing? North Dakota Yes Yes No Yes Ohio Yes No Yes43 Yes Oklahoma Yes No No Yes Oregon Yes Yes No Yes Pennsylvania Yes No No Yes Rhode Island Yes Yes No Yes South Carolina Yes Yes No Yes Tennessee Yes No No Yes Vermont Yes Yes No No Utah Yes Yes No No West Virginia Yes No No No Wisconsin Yes No No Yes Wyoming Yes No No No 43 Ohio’s response stated that, “On extremely rare occasions FHWA will not concur that an emergency exists” and that Ohio then either uses state funds or follows a limited competitive process.

23 STATE Q. 6 Does State statute or regulation allow for waiver of re- quirements related to solicitation and award of contracts in emergency situa- tions? Q. 7 Does State stat- ute or regulation allow for waiver of requirements re- lated to the admini- stration of contracts in emergency situa- tions? Q. 8 Has State ever been impeded in dealing with an emergency by limi- tations imposed by FEMA? Q. 9 Has State DOT ever sought re- imbursement from FEMA for emergency transportation- related contract- ing? Alaska Yes No No Yes Arizona Yes No No response to 8 No Connecticut Yes Yes No Yes Florida No No No Yes Hawaii Yes Yes No Yes Illinois Yes No No Yes Iowa Yes No No Yes Kansas Yes Yes No Yes Maine Yes Yes No Yes Massachusetts Yes No No Yes Michigan Yes/No40 Yes No Yes Minnesota Yes Yes Yes41 Yes Mississippi Yes No No Yes42 Montana Yes Yes No Yes Nebraska Yes Yes No No New Hampshire Yes Yes No Yes New Jersey Yes Yes No Yes New Mexico Yes Yes No No 40 As noted in the text above, Michigan’s response indicated that limited competition is permitted, by invitations to pre- qualified bidders, but no sole source for construction contractors. 41 Minnesota’s answers indicated that they had experienced “slow turn-around times for paperwork.” 42 Mississippi indicated that it had applied to FEMA for reimbursement, but did not get it.

22 STATE Q. 3 Does State statute or regulation set conditions for waiving contract re- quirements in emergency situations? Q. 4 Does State statute or regulation authorize con- tract award before the requirements can be fully defined? Q. 5 Does State statute or regulation allow for lim- ited competition or sole contract in emergency situations? New Mexico Yes No Yes North Dakota Yes No Yes Ohio Yes Yes Yes* Oklahoma Yes State law does not ad- dress Yes Oregon Yes Yes Yes Pennsylvania Yes Yes Yes* Rhode Island Yes Yes Yes South Carolina Yes Yes Yes Tennessee Yes Yes Yes Vermont Yes Yes Yes Utah Yes Yes Yes West Virginia Yes Yes Yes Wisconsin Yes Yes Yes Wyoming Yes Yes Yes *The survey responses indicated that in these states there is a requirement for multiple bids, although com- petition may be limited. Massachusetts law “recommends” multiple quotes before contract award, according to its response. As noted earlier in the report, most states’ laws, regulations, or policy statements related to emer- gency contracting make some reference to having as much competition as is practical under the circumstances.

21 APPENDIX D RESPONSES TO SPECIFIC SURVEY QUESTIONS BY STATES STATE Q. 3 Does State statute or regulation set conditions for waiving contract re- quirements in emergency situations? Q. 4 Does State statute or regulation authorize con- tract award before the requirements can be fully defined? Q. 5 Does State statute or regulation allow for lim- ited competition or sole contract in emergency situations? Alaska Yes Yes Yes Arizona Yes No Yes Connecticut Yes Yes Yes Florida Yes Yes Yes* Hawaii Yes Yes Yes Illinois Yes No Yes Iowa For both 3 & 4: Con- tract–No, Procure–Yes See Q. 3 Yes* Kansas Yes Yes Yes Maine Yes Yes Yes Massachusetts Yes No Yes* Michigan Yes No Yes and No Minnesota Yes No Yes Mississippi Yes No Yes Montana Yes39 No Yes Nebraska Yes No Yes New Hampshire Yes Yes Yes New Jersey Yes No Yes 39 As noted earlier in the discussion, Montana law states that the Transportation Commission may award a contract where the Commission determines that “special circumstances” warrant it.

20 APPENDIX C QUESTION 2 STATE Q. 2 Who Has Authority to Issue Emergency Contract? Alaska Anyone authorized by the Commissioner Arizona Authorized procurement officers Connecticut Commissioner of Transportation Florida Contracts Administrative Officer and Contract Office Hawaii District Engineers Illinois State Procurement Officer Iowa Contracts Engineer with approval of Statewide Directors Kansas Secretary of Transportation Maine DOT with Governor’s approval Massachusetts Each agency within EOT has a signatory list Michigan Finance and Admin. Contract Service Division Mississippi Transportation Commissioner or his designee Montana Transportation Commission Nebraska Purchasing Dept. Roads Director, District Engineers New Hampshire Governor or his designee New Jersey State Treasurer New Mexico Central Purchasing Officer North Dakota Director DOT Ohio Director DOT Oklahoma Director DOT Oregon District Manager in DOT; head of contracting agency Pennsylvania Head of Contract agency or designee Rhode Island Director DOT South Carolina Executive Director or his designee Tennessee Commissioner DOT Vermont Secretary of DOT Utah Chief Procurement Officer West Virginia Governor, DOH Commissioner, Division of Purch. Wyoming DOT Director Wisconsin Governor or his designee

19 39) Environment and Safety (FAR Part 23) 40) Hazardous Materials (FAR 23.1004(b)) 41) Toxic Chemicals (FAR 23.9) 42) Buy American / Foreign Acquisition (FAR 25) 43) Trade Agreements (FAR 25.4)—Does not apply to purchases for war or national defense or indispensable to national security (FAR 25.401(a)(2)) 44) Trade Sanctions (FAR 25.6)—Does not apply to contracts in support of national security interests (FAR 25.602(a)(3)) 45) Prohibited Sources (FAR 25.7)—Does not apply to purchases for use outside of the United States for emer- gency purposes (FAR 25.701(a)(2)) 46) Disaster or Emergency Assistance (FAR 26.2) 47) Patents (FAR 27.2) 48) Unauthorized disclosure of classified information may be contrary to national security (FAR 27.207-1(a)) 49) Patent Rights (FAR 27.3) 50) Rights in Data and Copyrights (FAR 27.4) 51) Foreign License—also see 22 C.F.R. 124 (FAR 27.601(d)) 52) Bonds and Insurance (FAR 28) 53) War-Hazard insurance (FAR 28.305(c)) 54) Taxes (FAR 29) 55) Exemption Certificate for Supplies for Vessels of War (FAR 29.202(d)) 56) Contract Financing (FAR 32) 57) Commercial Item Purchases (FAR 32.2) 58) Loan Guarantees for Defense Production (FAR 32.3) 59) Advance Payments for Noncommercial Items (FAR 32.4) a) Advance payments may be authorized when it facilitates the national defense (FAR 32.402(c)(1)(iii)(B)) 60) Assignment of Claims (FAR 32.8) a) Use of the no-setoff provision may be appropriate to facilitate the national defense, or in the event of a national emergency or natural disaster (FAR 32.803(d)) 61) Payment by Electronic Funds Transfer (FAR 32.11): 62) need not apply if classified contract (FAR 32.1103(d)) 63) need not apply if in the conduct of emergency operations (FAR 32.1103(e)) 64) Use of Industrial Resources for National Defense Purposes (FAR 34.1) 65) Contracting for Construction (FAR 36.2) 66) Service Contracting (FAR 37) 67) Dismantling, Demolition, or Removal of Improvements (FAR 37.3) 68) Acquisition of Information Technology (FAR 39) a) IT acquired for national defense shall follow 40 U.S.C. 1412 (FAR 39.001) b) Exception determinations not required for IT purchases for a national security system (FAR 39.2) 69) Acquiring Utility Services (FAR 41.2) 70) Utility service for national defense can be purchased outside State regulation (FAR 41.201(d)(2)(iii)) 71) Contract Administration a) Contract Administration Office (FAR 42.3) b) Correspondence and Visits to Contractor (FAR 42.4) c) Novation and Change-of-Name Agreements (FAR 42.12) d) Transportation Management (FAR 42.14) 72) Government Property Used in Contracting 73) Providing Government Property to Contractor (FAR 45.3) 74) Contractor Use and Rental of Government Property (FAR 45.4) 75) Contractor Inventory (FAR 45.6) 76) Transportation (FAR 47) (a) Transportation in Supply Contracts (FAR 47.3) (b) Ocean Transportation by U.S. Flag Vessels (FAR 47.5) 77) Termination of Contracts (FAR 49) 78) Extraordinary Contractual Actions (FAR 50) 79) Use of Government Sources (FAR 51)

18 APPENDIX B FAR WAIVERS FAR waivers for emergency or war-time contracting relating to specific procurement requirements 1) Expedited techniques related to the solicitation and award of contracts 2) An exception to the requirement for issuance of synopses of proposed contract actions a) when issuance would delay award and harm the government (FAR 5.202) b) when issuance would compromise national security (FAR 5.301(b)(1)) c) release of classified information is only through security channels (FAR 5.404-1(b)(1) 3) Full and open competition after exclusion of sources (FAR 6.2) 4) Agencies may exclude a source in order to maintain an alternative source if in the interests of national de- fense (FAR 6.202(a)(2),(3)) 5) Other than full and open competition, as allowed by exemptions in the Competition in Contracting Act (CICA) (FAR 6.3) a) CICA exemption where there is only one responsible source (FAR 6.302-1) b) CICA exemption for unusual and compelling urgency (FAR 6.302-2) c) CICA exemption for national security (FAR 6.302-6) 6) Federal Supply Schedule (FAR 8.4) 7) Contractor Qualifications (FAR 9.2) 8) Defense Priorities and Allocations (FAR 11.6) 9) Sealed Bidding (FAR 14) 10) Submission of Bids (FAR 14.3)—Bid opening moves to first open date when government closed due to emer- gency (FAR 14.304(d)) 11) Opening of Bids (FAR 14.4)—Bid openings may be postponed due to an emergency or unanticipated event (FAR 14.402-3(a)(2)) 12) Use of two-step sealed bidding techniques to prequalify contractors so that second step bidding only has to consider price as a factor for award (FAR 14.5) 13) IDIQ contracts that prequalify contractors and confirm general agreements on price so that a Task Order that identifies specific work to be performed can be issued to a single contractor without other competition (FAR 16.5) 14) Letter contracts and other forms of undefinitized contract actions (FAR 16.603) 15) Putting options in contracts so work can be added later as funding becomes available or as clearances are received—must still be within the general scope of the original contract (FAR 17.2) 16) Oral solicitations / awards in purchases exceeding the simplified acquisition threshold (FAR 15.203(f)) 17) Contract Pricing (FAR 15.4) 18) Use of unsolicited proposals (FAR 15.6) 19) 8(a) contracting (FAR 19.8) can be 20) expedited by agreement with SBA (FAR 19.4) 21) set-aside when in the interest of maintaining or mobilizing the Nation’s full productive capacity, war, or national defense programs (FAR 19.502-1(a)). 22) Simplified acquisition for purchases under $100,000 (FAR Part 13) 23) Government credit card (FAR 13.301) 24) Purchase orders (FAR 13.302) 25) Blanket purchase agreements—repetitive purchases (FAR 13.303): 26) up to $500,000 for purely commercial items (FAR 13.5) 27) short selection process acquisition of architect-engineer services up to $100,000 (FAR 36.602-5). 28) Expedited techniques related to contract administration 29) Safeguarding classified information (FAR 4.4; FAR clause 52.204-2 alt II) 30) Government contract files shall contain security requirements and evidence of required clearances (FAR 4.803(a)(9)) 31) Acquisition Planning (FAR 7) 32) Inherently Governmental Functions (FAR 7.5) 33) Application of Labor Laws (FAR 22) 34) Labor StandardsInvolving Construction (FAR 22.4) 35) Equal Employment Opportunity (FAR 22.8) 36) EO 11246 may be exempted in the interest of national security (FAR 22.807(a)(1)) 37) Veterans Preference (FAR 22.1303(b)(1)) 38) Employment of Workers with Disabilities (FAR 22.1403(b)(1))

17 Yes No Citation to State Statute / Regulation 5. Does your State statute or procurement regulations allow for limited competition or sole source in emergency situations? 6. Does your State statute or procurement regulations allow for the waiver of specific contracting requirements related to the solici- tation and award of contracts in emergency situations? 7. Does your State statute or procurement regulations allow for the waiver of specific contracting requirements related to the ad- ministration of contracts in emergency situations? 8. Have you ever been impeded in dealing with an emergency situation by limitations imposed by the FHWA on State procure- ment? Please describe briefly what happened in the space provided below. 9. Has your State DOT ever sought reimbursement from FEMA for transportation-related contracting in an emergency? Please describe briefly what happened in the space provided below. 10. Has your State issued regulations or general guidance on con- tracting in an emergency? If yes, please provide a copy or a website where it can be viewed. Space for additional comments: Name and information about the agency and person(s) responding to this questionnaire: State: Agency: Name: Address: Telephone: Fax: Email: Date:

16 APPENDIX A SURVEY NCHRP 20-6, STUDY TOPIC 13-02 CONTRACTING DURING AN EMERGENCY Please answer the following as fully as possible and where the answer is “yes,” provide a copy of the regula- tions, procedures, and/or guidelines in which the policy is stated. Yes No Citation to State Statute / Regulation 1. Does your State statute or procurement regula- tions recognize the concept of contracting in an emer- gency situation? 2. Who has authority in your State DOT to issue con- tracts in an emergency situation? (You may provide a citation or list in the space provided below). 3. The Federal Acquisition Regulations (FAR) conditions for waiving contract requirements in an emergency situation can be summarized as: (a) only a person with authority to contract can commit the Government to a valid contract; (b) certain requirements of the FAR can only be waived at certain levels, depending on the value of the con- tract affected (c) the Contracting Officer’s goal should be to obtain as much open competition as the circumstances will al- low; (d) open competition requires the Contracting Officer to publicize proposed actions to the extent the circum- stances will allow; (e) contracting requirements should be detailed in writing at the solicitation stage whenever possible and to the extent possible. Does your State statute or procurement regulations set conditions for waiving contract requirements in emergency situations? If yes, please provide citation(s) or a copy of the procedure, or describe the conditions in the space provided below. 4. Does your State statute or procurement regulations authorize contracts to be awarded before the requirements can be fully defined?

15 • Preprinted forms for a “Natural Disaster Emer- gency Contract.” • A preprinted “Documents Check List” for use by contracting officers. • Requirement in guidance or regulations that writ- ten justifications be included in the contract file, even if prepared after the award. 3. Assurance that as much competition as is practica- ble under the circumstances is provided. Useful methods may include: • Requirement that at least two bids be solicited or obtained where practical. • Use of prequalified bidders. • Prohibition on renewal of emergency contracts without open bidding. • Use of prequalified products lists. 4. Designating experienced contracting officers in situations where problems may be anticipated, or where federal requirements are important.

14 FHWA. In both cases the state government must meet sometimes complex documentation requirements in order to receive funds. Emergency contracting procedures may be used by the Federal Department of Transportation if the Presi- dent declares a state of emergency under Title 42, U.S. Code. While this has most often been done for natural disasters such as hurricanes and earthquakes, a state of emergency was also declared after the destruction of the World Trade Center in New York City in September 2001. This declaration is a necessary prerequisite to the availability of federal funds to the states under FHWA and FEMA, unless the state governor has made a find- ing of an emergency that is concurred in by the Admin- istrator of FHWA as provided by Title 23.38 Concurrence of the Administrator is not necessary when there has been a federal declaration under the Stafford Act. In both federal and state law, the use of emergency pro- curement procedures allows for limited competition in selecting a contractor. In both state and federal con- tracting, however, this limitation must be carefully util- ized and fully documented. Documentation is important to meet state require- ments, and is a necessity if federal funding is involved. The requirements of the FAR will be applied to state procurements if, for example, FEMA funding is sought. This requirement, and the lack of documentation, has resulted in the cancellation and rebid of many contracts in the cleanup work after Hurricane Katrina. Although the FAR allows for ratification of a contract after award, there must be sufficient documentation to jus- tify its award after the fact. Most of the states that responded to the survey indi- cated that they have applied for funding from FEMA or FHWA in an emergency contracting situation. The most often cited reimbursement from FEMA was for debris removal and repair of highways and buildings due to flooding. Generally, no problems in meeting federally- imposed requirements or in obtaining federal funds were reported, although some responses indicated that the process was cumbersome or that “paperwork” was slow. In some cases where FEMA funds were not forth- coming, FHWA funds were available; otherwise, the states had to find money within their own coffers. Most of the states that responded to the survey have adopted some form of the language used in the Model Procurement Code to define an emergency procure- ment. That is, there exists “a threat to public health, welfare, or safety under emergency conditions” and the emergency procurement “shall be made with such com- petition as is practicable” under existing circumstances. Further, the requirement for written documentation of the determination of the emergency was universal in the state laws and regulations. Some states expanded the definition of an emergency to include a threat to public property or the operation of government, and at 38 Tit. 23, U.S.C. § 125, as delegated to the Administrator under tit. 49, C.F.R. § 1.48(b)(19). least one state allows emergency contracting to be used to avoid the lapse of funds, but that was the exception. The survey results show that, generally, those states that have experienced more emergencies in the form of natural disasters are more likely to have adopted de- tailed and complex regulations and guidelines. The sur- vey results, and follow-up telephone calls to the re- sponding agencies, show that, generally, states have not experienced formal protests or challenges in the form of lawsuits to their awards of emergency contracts. A few states reported that there had been some questions by unsuccessful bidders or from vendors that were not awarded contracts. These questions had been dealt with administratively by the concerned agency, and in some cases, changes had been made in the award of subse- quent contracts to meet the expressed concerns. Over- all, there was not a showing or reporting of difficulty experienced in the award of emergency contracts. This was generally attributed to having stringent require- ments for the use of emergency contracting, and to the practice of following the requirements of the law and regulations carefully. Likewise, for the most part, states did not report that their existing procurement laws, regulations, and guid- ance were not adequate to provide a framework for their practice when an emergency arose. There were a few instances where a state reported that some prob- lems arose with procuring adequate supplies or services in an emergency, but in these cases, changes were made that resolved the problem for future procurements. The responses of the states showed a practical, common sense approach to problems, such as one state’s practice of always assigning an experienced construction inspec- tor to oversee work for which federal reimbursement will be sought. That inspector documents the work and directs the contractors, and in that way avoids many of the problems that can arise in meeting the documenta- tion requirements under FEMA and FHWA. To deal with the necessity to provide some competition, to ob- tain needed goods and services, and to move quickly states have established lists of prequalified bidders from whom the successful emergency contractor will be selected. This solves the problem of a speedy award and helps to insure that the selected contractor will be able to provide the required goods or services. The following is a brief summary, in list form, of those practices and policies that responding states have adopted or followed when contracting for goods and services on an emergency basis: 1. Detailed written procedures and guidance for emergency contracting, which are provided to contract- ing officers. This may include, among other things: • Clear description of what constitutes an emergency. • Designation of persons with emergency contracting authority, and how it may be delegated. 2. Written documentation of both the determination of the emergency and the selection of a particular con- tractor, for which the following are useful:

13 to document the problem and establish work zones, so that contractors will charge specific work to particular work sites. Alaska also assigns experienced construc- tion inspectors to oversee the work sites, document the work, and direct the contractors. Once the work is com- pleted, Alaska then compiles all available data and works with FEMA on necessary documentation of work completed and payments made.36 The most often cited reimbursement from FEMA to the states was for emergency contracting for debris re- moval and repair of highways and buildings due to flooding. Oregon also cited contracting costs during wildland fires. Pennsylvania answered that FEMA has provided reimbursement “related to a number of events.” Rhode Island’s response indicated that it had applied to FEMA, but “the requisite threshold requirements for damage in the State were not met. Fortunately, FHWA was able to provide the necessary assistance for damage on federally eligible roadways.” IX. GENERAL GUIDANCE THAT HAS BEEN ISSUED ON FEDERAL EMERGENCY CONTRACTING A. United States Department of Transportation B. Office of Federal Procurement Policy (OFPP) General Guidance That Has Been Issued by the Fed- eral Government on Federal Emergency Contracting 1. The Office of the Secretary has issued a DOT Emergency Contracting Kit. The kit includes guidance to agencies on how to prepare in advance for emergency contracting and lists several sources for urgent con- tracting. 2. The OFPP has issued guidance on the use of Emergency Procurement Flexibilities (May 2003). The OFPP guidance identifies both existing flexibil- ities already in the procurement regulations, such as the use of IDIQ contracts to have contractors available for a rapid response, and new flexibilities, including an expanded use of simplified acquisition authority. The existing flexibilities include: 1. IDIQ contracting. An IDIQ contract—similar to a “Master Contract” in Wisconsin, a “Push Button” con- tract in Florida, or an “If and Where Directed” contract in New Jersey— allows the federal government to enter into a contract that identifies the type of work to be performed, and generally negotiates most rates, but does not specify where and when the work is to be per- formed until the work is needed. Specific work assign- ments and work details are set forth by the issuance of task orders against the IDIQ. This allows an agency to have contractors on standby. The sole restriction of an 36 Form from Mark O’Brian, Alaska DOT (Apr. 7, 2006). IDIQ after it is awarded is that a minimum level of or- ders must be issued during the year. 2. HUBZone small business contracts. The Histori- cally Underutilized Business Zone (HUBZone) program authorizes agencies to acquire goods and services from qualified program participants on a sole-source basis up to certain thresholds. This authority enables agencies to rapidly identify and enter into contracts with capable small business sources. See FAR subpart 19.13. 3. Oral solicitations. FAR 15.203(f) authorizes the use of oral solicitations when processing a written solicita- tion would delay the acquisition of supplies and services to the detriment of the government and a synopsis is not required (e.g., in order to support emergency situa- tions). 4. Letter contracts. FAR 16.603 authorizes agencies to enter into "letter" contracts (i.e., a written prelimi- nary contractual instrument) when the government's interests demand that work on a requirement start immediately and negotiating a definitive contract is not possible in sufficient time to meet this demand. The letter contract would need to include a definitization schedule. 5. Limited source selections. FAR Part 6 allows source selections to be limited for various reasons, such as when: (a) there is only one responsible source, (b) unusual and compelling urgency exists, (c) disclosure of the agency's needs would compromise the national se- curity, or (d) full and open competition is not in the pub- lic interest. Section 856(a) of the Homeland Security Act of 2002 (HSA) calls for agencies to use these authorities when appropriate.37 6. Innovative contracting. The OFPP guidance states that agencies are fully authorized to innovate and use sound business judgment that is otherwise consistent with law and within the limits of their authority. Agen- cies should not assume that a new approach is prohib- ited simply because the FAR does not specifically rec- ognize it. As FAR 1.102-4(e) states, the fact that the FAR does not endorse a particular strategy or practice does not necessarily mean that it is prohibited by law, executive order, or other regulation. X. SUMMARY AND CONCLUSION With the rising possibility of natural or man-made disasters that result in damage to publicly owned facili- ties such as bridges, highways, and other transporta- tion infrastructure, this study was conducted to explore the contracting options that are available under such circumstances. Both federal and state laws and regula- tions provide for expedited and sometimes abbreviated procedures to deal with such emergency situations. Federal laws also provide for funding of state emer- gency spending under FEMA and reimbursement under 37 Although the federal government is generally prohibited from accepting voluntary services, unless specifically author- ized by statute, it may do so in emergency situations (involving the safety of human life or the protection of property) by au- thority of tit. 31, U.S.C. § 1342.

12 B. Federal Statute’s Impact on State Emergency Procurements The survey included a question about whether the state felt it had ever been “impeded in dealing with an emergency situation by limitations imposed by the FHWA on State procurement.” Only two of the respond- ing states answered this question in the affirmative. In the returned survey, one state indicated that the prob- lem was “slow turn-around time” for paperwork. The second state responded that, on “extremely rare occa- sions, FHWA will not concur that an emergency exists.” In those instances, it either funded the emergency con- tract with state funds, or followed a limited competitive process. The response of a third state is also of interest in this regard. Its response did not indicate that FHWA had impeded its contracting or its response to emergency situations, but FHWA did not look with favor on the procedures and method that it had successfully used. VII. LIMITATIONS IMPOSED BY FEMA FOR REIMBURSEMENT TO THE STATES IN AN EMERGENCY FEMA regulations on disaster relief are set forth in Title 44 of the Code of Federal Regulations at Part 13. FEMA regulations are very different from the FHWA Emergency Relief Fund. In addition to the grant money, the states receive an administrative allowance to ad- minister FEMA grant funds. The amount of the allow- ance is set by law. FEMA also allows the construction of an alternate fa- cility in situations where the public welfare would not be served by restoring the damaged facility, as well as upgrades to current standards. FEMA provides funding for actions to protect facili- ties, such as beach sand to protect improved property. Grants are made based on 5-year storm projections. Buildings, including furnishings and systems such as electrical systems, are eligible for grants. Local gov- ernments can also apply for community disaster loans. In order to receive FEMA funds, states must have or do the following: 1. The President must have declared an emergency under the Stafford Act.33 FEMA designates which coun- ties are included in the declaration. 2. States must have approved accounting systems to track costs. 3. Contracts must be of reasonable cost, generally competitively bid, and must comply with federal, state, and local procurement standards. FEMA recognizes small purchase procedures, sealed bids, competitive proposals, or noncompetitive proposals when justified as: 33 The Stafford Act authorizes a preference for local hiring in emergency contracting, which has been upheld by the Comp- troller General in Matter of Ashbritt, Inc., B-297889, decided May 20, 2006. • Sole source • An emergency that will not permit delay • Inadequate competition is available. 4. Contracts may be lump sum, unit price, or cost plus fixed fee. Time and materials contracts should be avoided, but may be allowed for work necessary imme- diately after a disaster. 5. States must prepare a cost estimate using FEMA cost codes, unless the work is already completed, in which case a claim may be based on actual costs. 6. States must bear a share of the costs. Donated re- sources may be used for the state share. 7. States must complete a damage survey report. 8. Funding cannot be duplicated with insurance pro- ceeds, salvage costs, or another federal agency. FEMA, for example, does not pay for repairs to Federal-Aid roads. 9. The facility for which the funds will be spent must be the legal responsibility of the claimant. FEMA assigns a public assistance coordinator to each applicant and creates a case management file. On April 24, 2006, the Office of Federal Procurement Policy announced that the FAR Council was in the process of pulling all emergency contracting flexibilities into a single part—Part 18 (now reserved). VIII. IMPACT OF LIMITATIONS IMPOSED BY FEMA FOR REIMBURSEMENT TO THE STATES FOR EMERGENCY PROCUREMENTS States were asked whether the state DOT had ever sought reimbursement from FEMA for transportation- related contracting in an emergency. Most of the states answered this question in the affirmative; only eight of the responding states answered “no.” Of those eight, Arizona indicated it had only applied to FHWA (not FEMA) for reimbursement of emergency contracting funds.34 Mississippi was one of the many states that had applied to FEMA; its response stated, “MDOT has at- tended numerous meetings with FEMA, since Hurri- cane Katrina, but has yet to receive any reimburse- ment.” The response of New Hampshire was typical of many of the states’ answers to this question: They had applied for reimbursement for flooding and severe win- ter storm costs. They experienced “good cooperation and eventual reimbursement. Cumbersome process with extensive documentation.”35 Alaska responded at some length, stating that it has received assistance from FEMA for emergencies that impact its aviation and highway assets. Based on its previous experience with FEMA, established procedures are followed to assure that eligible items will be author- ized for reimbursements. Some of the steps followed are 34 Other states answering the question in the negative were Nebraska, New Mexico, Oklahoma, Vermont, Utah, West Vir- ginia, and Wyoming. 35 Letter from James F. Marshall, Director of Administra- tion, New Hampshire DOT (March 24, 2006).

11 discharge to the satisfaction of the U.S. Secretary of Transportation the duties required by Title 23. This means that every state has a preexisting organization to address the need for a highway-related procurement, including financial accountability and staffing exper- tise. Title 23, Code of Federal Regulations, Part 1, § 1.3, requires that each state highway department must be authorized by the laws of the state to make final deci- sions for the state in all matters relating to, and to en- ter into, on behalf of the state, all contracts and agree- ments for projects and to take such other actions on behalf of the state as may be necessary to comply with federal laws and regulations under Title 23. This means that the state DOT has authority to take immediate action in an emergency without having to get authority from the governor or the state legislature. The second is that Title 23, U.S. Code, § 125, estab- lishes a fund to repay the states for emergency repairs. The states still need to take action to make the repairs, but they know there is a potential funding source for such work. Sec. 125. Emergency relief (a) General Eligibility—Subject to this section and section 120, an emergency fund is authorized for expenditure by the Secretary for the repair or reconstruction of high- ways, roads, and trails, in any part of the United States, including Indian reservations, that the Secretary finds have suffered serious damage as a result of—- (1) natural disaster over a wide area, such as by a flood, hurricane, tidal wave, earthquake, severe storm, or land- slide; or (2) catastrophic failure from any external cause. This fund only reimburses the state for repair and re- construction of highways, not construction of a new or improved facility. Third, while Title 23, U.S. Code and Title 23, Code of Federal Regulations, set forth required contracting pro- cedures, those procedures contain flexibilities in times of emergency. The most basic of these is the exception to the requirement for competitive bidding: Title 23, U.S. Code Sec. 112. Letting of contracts (a) In all cases where the construction is to be performed by the State transportation department or under its su- pervision, a request for submission of bids shall be made by advertisement unless some other method is approved by the Secretary. The Secretary shall require such plans and specifications and such methods of bidding as shall be effective in securing competition. (b) Bidding Requirements.— (1) In general.—Subject to paragraphs (2) and (3), construction of each project, subject to the provisions of subsection (a) of this section, shall be performed by con- tract awarded by competitive bidding, unless the State transportation department demonstrates, to the satisfac- tion of the Secretary, that some other method is more cost effective or that an emergency exists. Title 23, Code of Federal Regulations, Part 635 Subpart A—Contract Procedures Section 635.104 Method of Construction (a) Actual construction work shall be performed by con- tract awarded by competitive bidding; unless, as provided in Sec. 635.104(b), the STD demonstrates to the satisfac- tion of the Division Administrator that some other method is more cost effective or that an emergency exists. Sec. 635.120 Changes and extra work (a) Following authorization to proceed with a project, all major changes in the plans and contract provisions and all major extra work shall have formal approval by the Division Administrator in advance of their effective dates. However, when emergency or unusual conditions justify, the Division Administrator may give tentative advance approval orally to such changes or extra work and ratify such approval with formal approval as soon thereafter as practicable. Subpart B—Force Account Construction Sec. 635.204 Determination of more cost effective method or an emergency (a) Congress has expressly provided that the contract method based on competitive bidding shall be used by a State transportation department or county for perform- ance of highway work financed with the aid of Federal funds unless the State transportation department dem- onstrates, to the satisfaction of the Secretary, that some other method is more cost effective or that an emergency exists. (b) When a State transportation department determines it necessary due to an emergency to undertake a federally financed highway construction project by force account or negotiated contract method, it shall submit a request to the Division Administrator identifying and describing the project, the kinds of work to be performed, the method to be used, the estimated costs, the estimated Federal Funds to be provided, and the reason or reasons that an emergency exists. Subpart C—Physical Construction Authorization Sec. 635.309 Authorization Authorization to advertise the physical construction for bids or to proceed with force account construction thereof shall normally be issued as soon as, but not until, all of the following conditions have been met: ...(e) An affirmative finding of cost effectiveness or that an emergency exists has been made as required by 23 U.S.C. 112, when construction by some method other than contract based on competitive bidding is contem- plated. In addition, the fact that the FHWA Division Offices are located in each State Capital, available to confer immediately with the states on whether their proposed procurements will support the contribution of federal funding, enhances immediate action.

10 V. SPECIFIC AUTHORITY TO WAIVE CERTAIN CONTRACTING REQUIREMENTS A. Waiver of Specific FAR Requirements The FAR requirements that can be waived go beyond the level of competition, the amount of publicity, and the level of written detail in the specification. A more detailed listing is included in Appendix B. B. State Statutes from Survey To determine the extent to which normal contracting requirements can be waived in an emergency, state agencies were asked to indicate in the survey question- naire whether their laws and procurement regulations allowed for waiver of certain contracting procedures in the case of emergency contracts. The questions were directed toward both solicitation and award of con- tracts, and the administration of contracts. The five questions were: 1. Does state law or regulations set conditions for waiving contract requirements in emergency situations? 2. Does state law or regulations authorize award be- fore the contract requirements can be fully defined? 3. Do laws and regulations allow for limited competi- tion or sole source award of a contract in an emergency? 4. Do laws and regulations allow for waiver of specific contracting requirements related to the solicitation and award? 5. Do laws and regulations allow for waiver of specific contracting requirements related to the administration of contracts? In answer to the first question, all responding states answered with some form of affirmative answer, as dis- cussed in Section 3.C above. That discussion will not be repeated here. Iowa’s response pointed out that under its laws and regulations, contract requirements may only be waived for nonconstruction contracts; for con- struction contracts, the answer is “no.” In answer to the question of whether state law or regulations authorize award before the contract re- quirements can be fully defined, 18 of the states said “yes” and 10 said “no”. Oklahoma responded that its law and regulations do not address that issue; Montana responded that the Transportation Commission sets the terms of any contract awarded under “special circum- stances”; and Iowa law provides for such an award in the case of nonconstruction contracts, but not for con- struction contracts. The third question, “do laws and regulations allow for limited competition or sole source award of a contract in an emergency?,” was answered with some form of “yes” by all respondents. Since almost all the states require that emergency contracts be made with “such competi- tion as is practicable under the circumstances,”31 the 31 Rhode Island statute quoted here, R.I. GEN. LAWS § 37-2- 21(b). answers, in many cases, were qualified by the require- ment that multiple bids be obtained. Pennsylvania law, for example, provides that “when practical, two bids shall be obtained” in contracting for supplies, and in construction contracts, telephone bids “from at least two responsible contractors, if practical” are to be solicited.32 Massachusetts law is similar. The response made to this question by Florida is a good summary of the re- plies of many of the states: The agency may proceed with the procurement of com- modities or contractual services without receiving com- petitive sealed bids, proposals or replies, however, such emergency procurement shall be made by obtaining pric- ing information from at least two vendors, unless the agency determines in writing that the time required to obtain pricing information will increase the immediate danger to the public health, safety or welfare or other substantial loss to the state. In response to the question regarding waivers for so- licitation and award (Question 4 above (No. 6 in the survey form)), all states answered in the affirmative except Florida and Michigan. Florida’s response stated, “No. Must have minimum terms and conditions re- quired by law.” Michigan’s response stated, “Yes, lim- ited competition to prequalified construction contracts. No, [as to] sole source. Proprietary process, yes.” In response to the last question pertaining to contract administration (No. 7 on the survey form), the answers were almost equally divided, with 17 states checking the “Yes Box” and 14 answering in the negative. Some states’ answers were modified by comments. For exam- ple, Michigan’s answer stated, “No process payments are allowed. Lump sum [payments are made] after in- spect and acceptance instead.” Connecticut’s response states that for Case I emergencies, the contractor must agree to be paid on a cost-plus basis. The responses are summarized in Appendix D. Follow-up telephone calls were made to 11 of the re- sponding states to determine what their experience had been insofar as challenges to emergency contracts by vendors who were not awarded contracts, or by unsuc- cessful bidders. As discussed previously, most of those state DOTs who responded to these telephone or email inquiries indicated that they have not experienced for- mal complaints or protests. VI. FEDERAL STATUTES APPLICABLE TO STATE EMERGENCY PROCUREMENTS (TITLE 23) A. Federal Statutes Applicable to State Emergency Procurements (Title 23) FHWA addresses the impact of emergencies on state procurement in three distinct ways. The first is the re- quirement in Title 23, U.S. Code, § 302, that any state desiring to receive federal funding must have estab- lished a state transportation department that has ade- quate powers and is suitably equipped and organized to 32 Procurement Handbook, pt. II, ch. 6.

9 4. A limited competition or sole source contract that involves limitations on publicity but otherwise follows all appropriate FAR procedures. 5. A limited competition or sole source contract that does not fully detail the work to be performed, but in- volves some level of written contract requirements. 6. A limited competition or sole source contract that is created by an oral commitment. The level of competition may range from: • A single phone call • Several phone calls • Faxed requests for proposals (RFPs) to multiple contractors • Reduced notice • Reduced time to respond • Standard procedure. The detail in the scope of work may be a single phone call discussing the work needed or full plans and specs. Compensation protocols may vary among: • Requiring contractor to document actual costs • Using the same rates as a current contract • Standard pricing in the industry • Faxed proposals • Full bid. Environmental Concerns What level of environmental review is required under the National Environmental Protection Act (NEPA)? The Council on Environmental Quality (CEQ), which issues the implementation guidance for Federal NEPA actions, states: 1506.11 Where emergency circumstances make it neces- sary to take an action with significant environmental im- pact without observing the provisions of these regula- tions, the Federal agency taking the action should consult with the Council [on Environmental Quality] about alter- native arrangements. Agencies and the Council will limit such arrangements to actions necessary to control the immediate impacts of the emergency. Other actions re- main subject to NEPA review.29 The short answer to all of the above is that it depends on the immediacy of the threat caused by the emer- gency. To save lives, immediate action is justified. To protect health, some consideration is required as to what is the best way to do so. For example, does a build- ing with mold need to be cleaned or destroyed? That consideration will help the contracting officer balance the immediacy of the threat against the need for stan- dard procurement procedures. The authority to take expedited action to reopen a road depends on the need for the road. The sole road available to evacuate an area, or to reach a hospital, justifies the least process. A road to a tourist destination without residences can generally be repaired using standard procedures. 29 40 C.F.R. § 1506.11. A. Record-Keeping Requirements The greater the scope of the waiver of standard proc- esses, the greater the need for documentation to justify the waiver. The contracting officer should be making notes on whom he or she is speaking to and when; what price, if any, was agreed on; and, most importantly, specifically what work was authorized. These notes are essential in order to be able to reconstruct afterward what happened. These issues were made evident in the awarding of contracts for cleanup work after Hurricane Katrina. Because there was inadequate documentation of the justification for limiting competition and of the deter- mination of available competition, many of those con- tracts had to be terminated and the process restarted. However, several unwritten contracts to strengthen or repair the levees immediately at the time of the flooding were valid. The difference between the two types of con- tracts is that there was inadequate time to obtain any level of competition during the flooding, but there was adequate time to obtain some level of competition to do cleanup work after the hurricane. Under the require- ments of the FAR, which is applied to state procure- ment if FEMA funding is sought, the contracting officer is required to obtain whatever competition it can under the circumstances, and, most importantly, to document what the circumstances were that drove that decision. According to a new report, an official with the U.S. Army Corps of Engineers, which handles contracting for FEMA, admitted 2 weeks after the hurricane that they had no records of what contracts had been awarded. "We haven't felt a need to keep a list of contracts awarded to date."30 This meant that oversight of the contracts awarded was nearly impossible, which proba- bly was a factor in the decision to cancel and rebid. B. What Can Go Wrong? Since the contracting officer has discretion to the lim- its of his or her authority, and senior Agency officials have unlimited authority, what can go wrong? Some common issues include: 1. No record or recollection of what work was ordered or from whom; 2. The same work awarded to multiple contractors; 3. No requirement that the contractor be able to re- construct his or her actual costs; 4. Unclear work orders—wrong work, wrong place, etc.; 5. Order without authority—may be able to address through ratification; 6. Sole source when limited/open competition was possible; and 7. Inflated cost charges—may come from suppli- ers/subcontractors. 30 G. Witte & R. Merle, Government Tries to Balance Scru- tiny, Speed, WASHINGTON POST, Sept. 15, 2005, at D1, avail- able at http://www.washingtonpost.com/wp- dyn/content/article/2005/09/14/AR2005091402558.html.

8 emergency purchases “when immediate expenditure is necessary for repairs to State property in order to pro- tect against further loss of or damage to State property, to prevent or minimize serious disruption to State ser- vices, or to ensure the integrity of State records.”22 Ha- waii’s statutory scheme provides for emergency con- tracting procedures when there is a “threat to life, public health, welfare, or safety by reason of major natural disaster, epidemic, riot, fire, or such other rea- son” as the head of a purchasing agency determines; when normal contracting procedures will not meet the need; and without the needed goods, services, or con- struction, “the continued functioning of government, the preservation of irreplaceable property, or the health and safety of any person will be seriously threatened.”23 Several of the states provided copies of portions of their procurement manuals that relate to contracting in an emergency situation. The guidance set forth in these manuals makes clear that contracting with limited competition is reserved for those situations where fol- lowing the usually required procedures will not answer the need. For example, the Wisconsin Procurement Manual defines an “emergency situation” as when there is not only a threat to public health, safety, and welfare, but also the event was “unforeseen; calls for immediate action; and cannot be responded to using established procurement methods.”24 Likewise, the Arizona Pro- curement Code provides that emergency procurements will only be used when the situation exists that is not only a threat, but “which makes compliance with [usual contracting requirements] impracticable, unnecessary, or contrary to the public interest.”25 Alaska’s Field Operations Guide states that emer- gency procedures “may be used to purchase only those supplies or services required to relieve the emergency situation. Subsequent needs shall be obtained using normal purchasing procedures.”26 The Kansas DOT Standard Operating Manual contains this policy state- ment as guidance for its procurement officers: “When an emergency condition exists that jeopardizes the function of state government, the protection of property, or the health and safety of individuals, immediate cor- rective actions including steps for necessary emergency procurements shall be taken to stabilize the situation until a permanent solution can be obtained through conventional channels.” This sums up the position of most of the states, as set forth in their laws, regulations, and other guidance for contracting officers, that specific conditions must exist to justify emergency contracting, and that once the emergency need is met, regular and ordinary competi- 22 ILL. COMP. STAT. 500/20-30. 23 HAW. REV. STAT. § 103D-307. 24 Emergency Procurement in State Procurement Manual, No. PRO-C-3, effective June 19, 2003. 25 Arizona Procurement Code, ch. 23, art. 3. 26 Introduction in Alaska Field Operations Guide 132 (Jan. 2005). tive contracting procedures will be used for a “perma- nent solution.” An especially interesting response to the question- naire was made by the New Jersey Department of Transportation (NJDOT). The New Jersey laws allow for contracting without advertising and the competitive bidding process, but with whatever “competition is practicable,” when “the public exigency requires the immediate delivery of the articles or performance of the service.”27 For this method of contracting, the response points out, “the oversight lies within the New Jersey Department of Treasury.” Rather than use this con- tracting process, the NJDOT prepares for emergencies by maintaining contracts known as “if and where di- rected” or “time and materials” contracts that allow NJDOT to “pay a contractor for labor by the hour, per category, and to pay for materials by reimbursing the contractor for costs plus a percentage above those costs for each item purchased.” NJDOT also maintains an emergency fuel contract, which was utilized (and de- scribed as “invaluable”) during the September 11, 2001, emergency, when the Holland Tunnel was closed, ne- cessitating the construction of a temporary bus depot in a state park. The emergency fuel supply was used for construction equipment, as well as for police and other state government vehicles. The response points out that “while this method of conducting business in an emer- gency is not prohibited by the FHWA, it is not the pre- ferred way of doing business,” since FHWA is of the opinion that it does not insure the state the best price.28 This method of contracting, however, has proven to be the most useful to NJDOT. It is not known if other states use “if and where directed” or “time and materi- als” contracts in emergency situations, since that ques- tion was not part of the survey. However, information has been provided from Florida that a similar arrange- ment is used there. These contracts, called “push but- ton” contracts, are awarded competitively before an emergency exists, but in a geographical area where emergency needs can be anticipated. More than one contractor may be “on call” in a particular geographical area for specific emergency services such as ice or fuel supply or debris removal. IV. RANGE OF CONTRACTING OPTIONS It should now be clear that the options available un- der the FAR to a contracting officer in emergency situa- tions include the following: 1. A full open and competitive contract following all appropriate FAR procedures. 2. A limited competition contract otherwise following all appropriate FAR procedures. 3. A sole source contract otherwise following all ap- propriate FAR procedures. 27 N.J. STAT. ANN. §§ 52:32-7, 52:34-10. 28 Letter from Jeffrey J. Callahan, NJDOT (May 5, 2006).

7 stage, at solicitation, and prior to award—, to the extent the circumstances will allow. The purpose of this is to involve the maximum number of potential participants. Again, the problem with emergency contracting is to determine how much publicity the proposed contracting action can allow under the specific circumstances. Pub- licity may have to be limited due to time constraints or due to security constraints. Again, this requires the contracting officer to exercise discretionary judgment. The fifth basic condition is that contracting require- ments should be detailed in writing at the solicitation stage whenever possible and to the extent possible. As noted above, a telephone conversation about general needs may be a valid contract under certain circum- stances. However, the goal of the contracting officer is to do as much as is possible under the specific circum- stances that he or she is dealing with to identify con- tract requirements in writing. This may mean a general written description that is detailed at a later time, re- ferred to as an undefinitized contract, and discussed under FAR Section 16.603. The FAR conditions for waiving contract require- ments in an emergency situation can be summarized as: 1. Only a person with authority to contract can com- mit the government to a valid contract; 2. Requirements of the FAR can only be waived at certain levels, depending on the value of the contract affected; 3. The contracting officer’s goal should be to obtain as much open competition as the circumstances will allow; 4. Open competition requires the contracting officer to publicize proposed actions to the extent the circum- stances will allow; and 5. Contracting requirements should be detailed in writing at the solicitation stage whenever possible and to the extent possible. B. Survey of State Laws and Regulations 1. Who May Issue an Emergency Contract According to responses to the survey questions, a va- riety of state officials have the authority to issue con- tracts in an emergency. In most cases, the authority may be delegated downward from the official desig- nated in state law or regulation; this delegation of au- thority often depends on the amount of money involved in the contract. For example, in Wisconsin, emergency contracts up to the amount of $25,000 may be entered into by the governor’s designee, the Secretary of the Department of Administration.17 17 See WIS. STAT. §§ 16.75(6)(e), 16.75(7), 166.03(1)(b)1,4,5, and the State Procurement Manual, available at http://vendornet.state.wi.us/vendornet/procman/proc3.pdf. There are also Wisconsin Statutes related to emergency high- way work at §§ 84.06 and 84.07, which describe the determina- tion of an emergency for such intergovernmental contracts for highway work and the scope of such work. The most frequently named official in the survey re- sponses was the head of the Department of Transporta- tion, whether called a Secretary, Commissioner, or Di- rector. Twelve of the responding states provided this answer.18 The director of the purchasing or procurement office has the authority in a number of other states, including Illinois, Florida, New Mexico, Pennsylvania, and Utah. In Hawaii, district engineers may issue emergency contracts, and in Iowa contracts engineers have the authority with approval of statewide directors. Alaska’s response states, “Anyone authorized by the Commissioner [of Transportation].” Appendix C com- piles the responses to this question from all of the re- sponding states. 2. When May Emergency Contracting Procedures Be Used The survey of state laws provided by responses re- ceived shows that, generally, government contracting requirements may be waived when there is a threat to the public health, safety, or welfare, or a threat to gov- ernment property or operations, and in addition, that there is no time to follow the usually required proc- esses. Most of the statutory provisions of the responding states include the language of the State Model Pro- curement Code in defining an emergency as a situation in which there “exists a threat to public health, welfare, or safety,” and in requiring that procurements be made “with such competition as is practicable under the cir- cumstances.” For example, the Rhode Island law pro- vides that emergency procurements may be made “when there exists a threat to public health, welfare, or safety under emergency conditions as defined in the regulations; provided, that the emergency procure- ments shall be made with such competition as is practi- cable under the circumstances.”19 For example, in many instances, the statutory or regulatory definition of an emergency has been ex- panded to include a threat to state property unless im- mediate action is taken, or a need to “avoid substantial harm to the functioning of government or the provision of necessary or mandated services.” This last language is from the Massachusetts statute setting out conditions when an emergency contract is appropriate.20 Simi- larly, Iowa law includes language that allows emer- gency contracting processes when there is a “situation in which the [government] must act to preserve critical services and programs.”21 In addition to the above justi- fications, the Illinois Procurement Code provides for 18 Those states were Connecticut, Kansas, Rhode Island, Maine, Mississippi, Montana, Ohio, Oklahoma, North Dakota, Tennessee, Vermont, and Wyoming. 19 R.I. GEN. LAWS § 37-2-21. 20 801 MASS. CODE REGS. 21.05. 21 Iowa Transportation Laws 761, ch. 20, 20.8(7)b(3). Iowa law also provides that an emergency exists when there is a danger to “persons occupying or visiting a public improvement or property located adjacent to the public improvement.” Supra subsec. b(2).

6 states bluntly, “Lack of planning does not constitute an emergency purchase.”14 Illinois, on the other hand, which has a very complex and complete list of factors that may constitute an emergency, specifically provides that emergency con- tracting may be done when “immediate action is neces- sary to avoid lapsing or loss of federal or donated funds.”15 As with the federal system, the possibility for misuse does exist, but states have taken steps to avoid that by requiring written justification of actions taken, and by providing detailed and common sense instructions to their procurement officers and other employees in- volved in the contracting process. III. BASIC CONDITIONS FOR WAIVING CONTRACT REQUIREMENTS IN EMERGENCY SITUATIONS A. FAR There are certain basic conditions in the FAR that must be taken into consideration to properly waive FAR-imposed requirements such as competitive bid- ding. The first is that only a person with authority to contract can commit the government to a valid contract. That person is identified, according to the FAR, in two ways. Contracting authority rests first with the head of the agency down to the head of the contracting activity. For the Federal Lands Program in FHWA, this would include the Administrator, the Deputy Administrator, the Executive Director, and the Associate Administra- tor for the Federal Lands Program, as well as each of the Division Engineers for the Federal Lands Highway Divisions. In addition, the head of the agency and by delegation, the head of the contracting activity, have authority to warrant individuals as contracting officers. These indi- viduals are selected based on position and training. Warranted contracting officers have dollar limits as to the amount they can commit the federal government to under contract. They also have strict requirements as to training—both for the initial warrant and for annual or biannual refresher training. The delegation of contract- ing authority is usually by a formal order of some type: agency order, memorandum, accomplished guidance, or procedure. There are circumstances in which a person who does not have the authority to commit to a contract does so and a person with the appropriate authority agrees to bind the government after the initial unauthorized con- tract action has taken place. This is done through a process called ratification. FAR Section 1.602-3 spells out specific guidance as to the application of the ratifi- cation process, stating: 14 New Mexico Internal Procedures, § L, Emergency Pur- chase 124. 15 ILL. ADMIN. CODE, tit. 44, § 1.2030(b)1(F). Agencies should take positive action to preclude, to the maximum extent possible, the need for ratification ac- tions. Although procedures are provided in this section for use in those cases where the ratification of an unauthor- ized commitment is necessary, these procedures may not be used in a manner that encourages such commitments being made by Government personnel. The ratification process also differs from other emer- gency contracting flexibilities in that it can only address the issue of the lack of authority of the person taking the contract action; for example, when a contracting officer exceeds his or her warranted dollar limit. The FAR section cited above also states that a ratification action can only be taken subject to some very severe limitations—for example, the government must have received a benefit from the unauthorized commitment, the contract would have been proper if made by an au- thorized individual, the price was fair and reasonable, and funding was available at the time the commitment was initially entered into. Ratification, therefore, can- not correct a waiver of the contracting process. The second basic condition in the FAR is that re- quirements of the FAR can only be waived at certain levels, depending on the value of the contract affected. Thus, the FAR requirement for competitive bidding may be waived by the contracting officer for a proposed contract that is not anticipated to exceed $500,000, but a waiver for a proposed contract that is not anticipated to exceed $10 million must be approved by the competi- tion advocate, who is a high-level individual in the Agency. Waiver for a proposed contract that is antici- pated to exceed $10 million must be approved by the head of the procuring agency, and waiver for a proposed contract that is anticipated to exceed $50 million must be approved by the senior procurement executive, who is a high-level individual at the departmental Office of Acquisition. Similar stepped authority applies to the waiver of other FAR requirements. The third basic condition is that the contracting offi- cer’s goal should be to obtain as much open competition as the circumstances will allow. This requirement is summarized in the Competition in Contracting Act (CICA). This means that the contracting officer cannot simply adopt a process that involves less than full com- petition without considering both the circumstances and other options available. A good contracting officer exercises discretionary judgment with each contracting action. There are specific exceptions to the requirement for full and open competition detailed in FAR Part 6, including simplified acquisition procedures for contracts below a certain dollar value, task orders placed under Indefinite Delivery-Indefinite Quantity (IDIQ) con- tracts, and architect-engineer contracts,16 which are discussed further in this report. But waiver should never be random or an abuse of that discretion. The fourth basic condition is that open competition requires the contracting officer to publicize proposed actions—including at the presolicitation or planning 16 Brooks Act, 40 U.S.C.§ 541, et seq.

5 Check List” for use by the contracting officer who awards the emergency contract. States such as Mon- tana and North Dakota, on the other hand, indicated they have not promulgated emergency contracting rules or special guidance. Montana’s statute does not refer to emergency contracting as such, but simply provides that the Transportation Commission can waive com- petitive bid requirements in any situation where a writ- ten determination is made that “special circumstances require it.”4 All of the state laws and regulations that recognize the concept of emergency contracting have provisions for limiting the process of competitive bidding, in order to save time and secure necessary goods and services immediately. This is the point at which the process may lead to misuse, since the competitive bidding process is designed to provide assurance that the government is getting “the best for the least” when it is spending pub- lic money. The survey did not ask state agencies to pro- vide information about any difficulties that had been experienced, but some of the problems encountered by the states in emergency contracting may be indicated by examining the guidance that has been written for contracting officers. As in the federal law, there are several ways that the states have attempted to insure that limited competi- tion contracting is done properly. The requirement that all actions, including the determination that an emer- gency exists, be justified and recorded in writing is the first and most generally used in the regulations and guidance. If time does not permit such recording before the fact, written justifications must be prepared after- ward and preserved in the contract file.5 An example of this is Pennsylvania’s Procurement Handbook, which requires that the written determination of an emer- gency and the basis for selection of the particular con- tractor must be included in the contract file, and that the records must be maintained for 3 years from the date of final payment. Other possible misuses of the emergency contracting processes that states have attempted to avoid can be seen by laws, regulations, and guidance that provide that emergency contracts must be “limited to those supplies, services, or construction items necessary to meet the emergency.”6 In other words, once the imme- diate need is met, then further goods or services must be obtained by following usually mandated procedures. Another approach to the same sort of problem can be seen in laws or regulations that prohibit the renewal, without competitive bidding, of a contract that has been awarded on an emergency basis.7 4 MONT. CODE ANN. § 60-2-112 (2005). 5 See, for example, Wisconsin Procurement Manual, PRO-C- 3 (effective June 19, 2003); Alaska Field Operations Guide 134–135. 6 Mississippi Procurement Manual § 3.206.03; Massachu- setts has a similar provision. 7 For example, FLA. STAT. § 287.057(19). Some state processes require that emergency con- tracts be entered into only with vendors who are on a list of “prequalified” bidders.8 This is a timesaving de- vice and assures that contracts are not awarded in an emergency to vendors who turn out later to be unable to provide the needed services or goods.9 One problem that states would like to avoid in emer- gency contracting situations is having the contract award challenged by unsuccessful bidders or other ven- dors. The careful adherence to their laws, regulations, and policies has obviated this problem for most of the states, according to an informal telephone survey that was conducted of a number of the responding state DOT officers. As the respondent from Illinois reported, the “stringent procurement code” and the fact that the agency is “cautious about when they use” emergency contracting procedures protect the agency from chal- lenges to emergency contract awards.10 Of the 11 states contacted, almost all reported no challenges. Minnesota reported that there had been some questions raised by unsuccessful bidders, but no formal protests. Oregon also reported some administrative contests.11The South Carolina agency reported that in the past there had been some complaints about awards of debris removal contracts. These complaints were handled administra- tively and did not rise to the level of protests. The agency now works from a list of prequalified bidders for debris removal, all of whom get notice when a contract is to be issued, and in that way has avoided complaints. In the area of equipment purchases, particularly re- placement signals, the Florida DOT also employs a pre- qualified products list.12 Among other problems that may arise is the at- tempted use of emergency contracting procedures to avoid the lapse of funds at the end of the fiscal year. Several of the state procurement handbooks point out that failure to plan ahead, or the possibility of loss of funds at the end of the fiscal year, is not an “emer- gency.” The Alaska Field Operations Guide, for exam- ple, which has much practical advice for its readers, states in the introduction that the “potential loss of funds at the end of the fiscal year is not considered an emergency.”13 The New Mexico DOT procedures manual 8 Ohio, Massachusetts, and Vermont, for example, require that contractors be on a list of prequalified vendors in order to be awarded an emergency contract (required in Ohio for high- way work, but not for nonhighway work). 9 In a telephone conversation on Dec. 7, 2006, Sonia Pitt of the Minnesota DOT discussed that state’s use of prequalified bidders for emergency contracting and stated that it “abso- lutely saves time,” as well as obviating many complaints or challenges about bidder selection. 10 Telephone conversation with Ken Martin, Illinois DOT (Dec. 7, 2006). 11 The states that were contacted were Connecticut, Florida, Illinois, Massachusetts, Minnesota, Mississippi, New Jersey, Ohio, Oregon, Pennsylvania, and South Carolina. 12 Telephone conversation between Margaret Hines and Charles Johnson, Florida DOT (Dec. 8, 2006). 13 See Alaska Field Operations Guide 132.

4 tion of a contract. It also delineates over 700 standard contract clauses and nearly 100 standard forms. However, in the event of an emergency, a federal con- tracting officer may have the authority to call a contrac- tor with which the contracting officer has either previ- ously done business, or has selected out of the phonebook, and discuss a need of the government, which may or may not be detailed. The contracting offi- cer can either agree on an overall price or agree to pay actual costs plus a reasonable profit, and, if the con- tracting officer has adequate authority, that phone con- versation constitutes a valid federal contract. The difficulty lies in identifying the appropriate con- tracting procedures that are somewhere in between those two extremes—when the work must be done quickly or under tight security but there is adequate time to follow some, but not all, of the procedures in the FAR. From a legal standpoint, the shortest answer is that the contracting officer can take whatever steps are necessary to deal with the situation, as long as the basis for the action and the contracting officer's determina- tion are adequately documented. If, for example, the contracting officer limits competition to only a few con- tractors but documents that it had to do so, based on the specific circumstances of the situation, in order to perform emergency work in a timely fashion, then the worst case scenario would involve someone with the authority to waive full competition ratifying that action at a later time based on the documentation that the contracting officer prepared. If there is no documentation of what was done and why it was done in some manner other than as specifi- cally required by the FAR, then there is no basis to rat- ify, waive, or approve such an action—and the conse- quences may be an audit exception or even, in extreme cases, lead to criminal prosecution. In addition, the per- son taking the action without appropriate authority must keep in mind that the decision to ratify at a later time is based on the interests of the government. Even with adequate documentation, that determination is not guaranteed. Therefore, it is in the best interest of the contracting officer, as an individual, not to abuse that process. However, the trust placed in the contracting officer to represent the best interests of the government is reflected in the FAR, which describes the responsibil- ity of the contracting officer as follows: Contracting Officers are responsible for ensuring per- formance of all necessary actions for effective contracting, ensuring compliance with the terms of the contract, and safeguarding the interests of the United States in its con- tractual relationships. In order to perform these respon- sibilities, contracting officers should be allowed wide lati- tude to exercise business judgment. 1 B. The State Model Procurement Code The American Bar Association publishes the Model Procurement Code for State and Local Governments. 1 FAR 1.602-2. The 2000 edition has the following section on emer- gency procurements: Section 3-206 Emergency Procurements Notwithstanding any other provision of this Code, the Chief Procurement Officer, the head of a Purchasing Agency, or a designee of either officer may make or au- thorize others to make emergency procurements when there exists a threat to public health, welfare, or safety under emergency conditions as defined in regulations; provided that such emergency procurements shall be made with such competition as is practicable under the circumstances. A written determination of the basis for the emergency and for the selection of the particular con- tractor shall be included in the contract file. The key language is clearly "such competition as is practicable under the circumstances." Again, similar to the federal language cited above, there is broad discre- tion suggested in that the chief procurement officer, or other designated individual, can be expected to act ap- propriately under the circumstances. C. State Procedures To collect information on state practices, a survey form was sent to all the state Departments of Transpor- tation (DOT), asking that they identify statutes and regulations in their respective states that allow or rec- ognize emergency contracting procedures.2 Thirty-one state agencies returned responses to the survey, and all those responding indicated that their states have laws and regulations that recognize the concept of contract- ing in an emergency situation.3 The agencies polled were asked to provide citations to or copies of their statutes and copies of any additional guidance, such as regulations or handbooks, that have been adopted by the responding agency. An examination of these re- sponses and materials shows that generally (and not surprisingly) the more apt a state is to suffer natural disasters or emergencies, the more likely it is to have adopted detailed and complex regulations and guide- lines. For example, both Florida and Alaska provided references to detailed written procedures and guidance for emergency contracting and preprinted forms for a “Natural Disaster Emergency Contract.” Alaska also provided a full set of documents, which include an “Emergency Procurement Contract” and a “Documents 2 A copy of the survey is attached as Appendix A. The sur- vey also asked about the state’s experience in seeking reim- bursement for costs from FEMA, and whether FHWA had im- peded the state in dealing with an emergency situation. The survey questions were not directed toward, and the responses generally did not include, intergovernmental contracting be- tween the state and its subdivisions, such as provided in Wis- consin Statutes 84.06 and 84.07. 3 The responding states, in alphabetical order, were: Alaska, Arizona, Connecticut, Florida, Hawaii, Illinois, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, New Hampshire, New Jersey, New Mex- ico, Ohio, Oklahoma, Oregon, North Dakota, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Utah, West Virginia, Wyoming, and Wisconsin.

3 EMERGENCY CONTRACTING: FLEXIBILITIES IN CONTRACTING PROCEDURES DURING AN EMERGENCY By Julia L. Perry Counsel, Eastern Federal Lands Division, Federal Highway Administration and Margaret L. Hines Attorney, Washington, DC I. INTRODUCTION—WHEN IS EMERGENCY CONTRACTING APPLICABLE? There is a significant difference between what is re- quired to conduct a valid procurement under state and federal law, regulations, and procedures for contracting in an emergency—including natural disasters—as com- pared to a nonemergency situation. Federal contracting procedures have specifically identified flexibilities that are available in emergency contracting. Some states have statutes and regulations similar to the federal government. Other states track the State Model Pro- curement Code. Still others have developed extensive procedures based on a history of emergency contracting. This report addresses in a summary fashion the follow- ing topics: • Flexibilities available in federal procurement; • Flexibilities identified in the State Model Procure- ment Code; • Practices in selected states; and • Limitations imposed by federal grant agreements of the Federal Highway Administration (FHWA) and the Federal Emergency Management Agency (FEMA). What constitutes an emergency for contracting by federal agencies is defined in federal law and regula- tions. In order to be considered an emergency under federal law, the situation for which the procurement is being issued has to be declared to be a state of emer- gency by the President under authority of Title 42, United States Code, chapter 68—Disaster Relief, § 5121, et seq. The most common form of emergencies is natural disasters, such as hurricanes, tornadoes, flood- ing, landslides, earthquakes, etc. However, the impacts of a terrorist attack can be classified as an emergency under the law, as was done for New York City on Sep- tember 11, 2001. A declaration of an emergency under federal law has specific consequences that can have a significant impact on the states. Most importantly, federal funding be- comes available under both FHWA programs and FEMA programs. In the case of the FHWA programs, funds are made available to reimburse the state for expenditures related to bringing roads back into usable condition. In the case of the FEMA programs, funds may be available up front to fund emergency efforts. In the event of an emergency, the states must decide not only what work needs to be done, but also what type of contracts will be most expedient in alleviating the impact of the emergency situation on highways. Con- tract services may include such items as rubble re- moval, road repairs, design of temporary repairs to a bridge, design of a temporary bridge replacement, re- pair to gutter openings in the roadway, repair of sig- nalization and intelligent transportation system (ITS) capabilities, and access to utilities under the roadway. The contract types may include oral contracts, letter contracts, limited acquisitions, or full and open com- petitive bidding, depending on the circumstances. There are two basic methods to obtain emergency road or bridge repair work. The first is to issue a modification to an existing contract for work in the area. However, this type of action raises concerns as to whether the procurement is within the scope of the original contract. The second method is to issue a new contract. In either case—modification of an existing contract or new pro- curement—the issue is what flexibilities exist in con- tracting procedures to address emergency situations. II. THE CONCEPT OF FLEXIBILITY FOR CONTRACTING IN EMERGENCY SITUATIONS AND HOW IT CAN BE MISUSED A. Federal Acquisition Regulations (FAR) The Federal Acquisition Regulations (FAR) provide guidance for federal contracting, and several of their concepts have been incorporated into Office of Man- agement and Budget (OMB) Circular A-102, which is applicable to state and local governments seeking fed- eral grants. (OMB does not award grants; OMB has responsibility for the development of government-wide policy to assure that grants are managed properly and that federal dollars are spent in accordance with appli- cable laws and regulations.) In 50 chapters, the FAR covers everything from acquisition planning to termina-

Legal Research Digest 49 NATIONAL COOpeRATIve hIghwAy ReseARCh pROgRAm December 2007 Subject Areas: IA Planning and Administration; IC Transportation Law TRANspORTATION ReseARCh BOARD OF THE NATIONAL ACADEMIES CONTeNTs I. Introduction—When Is Emergency Contracting Applicable? 3 II. The Concept of Flexibility for Contracting in Emergency Situations and How It Can Be Misused 3 III. Basic Conditions for Waiving Contract Requirements in Emergency Situations 6 IV. Range of Contracting Options 8 V. Specific Authority to Waive Certain Contracting Requirements 10 VI. Federal Statutes Applicable to State Emergency Procurements (Title 23) 10 VII. Limitations Imposed by FEMA for Reimburse - ment to the States in an Emergency 12 VIII. Impact of Limitations Imposed by FEMA for Re- imbursement to the States for Emergency Procurements 12 IX. General Guidance That Has Been Issued on Federal Emergency Contracting 13 X. Summary and Conclusion 13 Appendix A 16 Appendix B 18 Appendix C 20 Appendix D 21 Appendix E 25 EmErgEnCy ConTrACTIng: fLExIbILITIES In ConTrACTIng ProCEdurES durIng An EmErgEnCy This report was prepared under NChRp project 20-6, “Legal problems Arising Out of highway programs,” for which the Transportation Research Board is the agency coordinating the research. The report was prepared by Julia L. perry, Counsel, eastern Federal Lands Division, Federal highway Administration, and margaret L. hines, Attorney, washington, DC. James B. mcDaniel, TRB Counsel for Legal Research projects, was the principal investigator and content editor. The Problem and Its Solution State highway departments and transportation agencies have a continuing need to keep abreast of operating practices and legal elements of specific problems in highway law. This report is a new paper, which continues NCHRP’s policy of keeping departments up-to-date on laws that will affect their operations. Applications There have been several efforts to identify legal issues and actions necessary when a transporta- tion agency confronts disaster. Prior to the ter- rorist attacks of 9/11, this issue arose primarily when a natural disaster occurred. The potential for natural disasters continues, and the spec- ter of terrorism has added yet another level of concern. Preliminary research for this study topic identified over 30 separate provisions ap- plicable to agencies in the federal system and for civilian agencies; the Federal Acquisition Regulations (FAR) provide guidance for fed- eral contracting. In 50 chapters, the FAR covers everything from acquisition planning through termination of a contract. In the event of a very serious emergency, the delineated procedures may be abbreviated to save time or provide for tight security or to provide other necessary flex- ibility. Each state has its own laws, regulations, and procedures for emergency contracting for its Department of Transportation, but we found no compilation of the same. The American Bar Association publishes the Model Procurement Code (Model Code) for use by state and local governments. Much like federal law and regulations, provisions in the Model Code authorize contracting officers to use emergency, non-competitive procedures when there is a threat to public health, welfare, or safety. Contracting officers should document their decisions so that those responsible for oversight can ensure that the best interest of all parties is protected. Some states have statutes and regulations similar to the federal govern- ment. Others track the Model Code. This study examines the flexibility in federal procurement; presents a summary of practices, procedures, and laws in state procurements; and identifies limitations imposed by grant agree- ments. It should be useful to administrators, at- torneys, contracting officers, engineers, finan- cial officers, and other officials responsible for highway maintenance.