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

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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).