With all the current urgency, why think about FEMA reimbursement now?

Because it will be too late to go back and do it the right way after the fact.

As this crisis goes across the country and through our layers of government, the costs will eventually be submitted for reimbursement and come from every direction. The requests for reimbursement will be unprecedented.

Given the span, the likelihood that there will be more demand for federal reimbursement than available funds (without additional federal action) is extremely high. In this scenario, close scrutiny of the process you followed should be expected. Procurement Officers should help their organizations be fast now but eligible for reimbursement in the future.

There are three key elements for Public Procurement Officers:

1.       Be aware of the FEMA guidance on timeline and eligibility

2.       Understand that “relaxed rules” does not mean there are no rules

3.       Prepare for when competitive procurement will be required

FEMA Guidance on Timeline and Eligibility

FEMA issued a procurement guidance memo on March 17, 2020, and then simplified the application for Public Assistance days later.  The memo provides guidance on eligible expenditures or emergency relief, including management of immediate threats, emergency medical care, medical sheltering and critical relevant commodities.  It also established that “for the duration of the Public Health Emergency, which began January 27, 2020 …[public] entities may proceed with new and existing noncompetitively procured contracts.”

“Relaxed rules” does not mean there are no rules

FEMA’s memo establishes that there is emergency (need to alleviate the threat to life) and exigency (need to avoid serious harm or injury).  These code words mean that sole source is allowable, but it does not mean that all the rules have gone out of the window. Key rules still in place include:

  • The contract must be specifically related to the circumstances and within eligible categories
  • Cost analysis must still be performed, and sole source must be justified with documentation.
  • Cost Plus Percentage of Cost Contracting is prohibited, and Time and Materials contracts need to include a ceiling price
  • Vendors cannot be suspended, debarred or listed as an excluded party under SAM.gov
  • Required contract terms are still expected to be present (specifically 2 C.F.R. § 200.326 & Appendix II)

Transition to a competitive procurement method will be required

Non-Competitive contract relationships may be used only during the period of the actual emergency or exigency, and transitioned to competitive procurement when the period ends.  While the period of this emergency is (unfortunately) potentially long, the actual FEMA guidance states that upon award of a noncompetitive contract, non-state entities should “immediately begin the process of competitively procuring similar goods and services in order to transition to the competitively procured contracts as soon as the exigent or emergency circumstances cease to exist.”  The bottom line – stay aware when offered enticing long term service and supply relationships that contracts started in response will be expected to be competed in the future.

There is a lot to come up to speed on, but it’s part of why Public Procurement Officers play a strategic role.

send me an email at dlanier@civicinitiatives.com if you’d like some of the referenced documents.

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