M.3. Procurement

All applicants, subapplicants and non-federal entities must follow the requirements under the procurement regulations.^[144] Federal procurement requirements for state and territorial government agencies are different from those for tribal and local government agencies and private nonprofits. This section provides information on federal procurement and contracting requirements.

In the case of non-compliance, FEMA applies an appropriate remedy in accordance with its authorities.^[145] Additional procurement resources may be found on the FEMA “Contracting with Federal Funds for Goods and Services Before, During and After Disasters” webpage.

When procuring property and services under a federal award, state and territorial governments (acting as either a recipient or subrecipient) must comply with 2 CFR § 200.317, Procurement by States, which includes:

• Following the same policies and procedures used for procurements issued from non-federal assistance.
• Complying with the socioeconomic contracting steps in 2 CFR § 200.321, domestic preferences for procurement guidelines in 2 CFR § 200.322 and the Environmental Protection Agency (EPA) guidelines for procurement of recovered materials in 2 CFR § 200.323.
• Including required provisions^[146] in all contracts awarded. Some provisions are based on sound contracting practices while others are required by federal law, executive orders and regulations.

Non-state entities such as tribal and local governments and private nonprofits, must comply with  2 CFR §§ 200.318 - 327. A non-state entity must use its own documented procurement procedures which refelect applicaible state, local, and Tribal laws and regulations provided that the procurements conform to applicable federal law and regulations.

If a federal requirement is different from the state, local, tribal or territorial government requirement or the applicant’s own requirements, the applicant must use the requirement that allows for compliance at all levels. Additionally, territorial governments should consult their legal counsel when a project involves a public building or public works facility, as the Buy American Act^[147] may apply to the procurement process.

Tribal and local governments and private nonprofits must:

• Establish or update written procurement procedures that reflect applicable state, local, tribal or territorial laws and regulations.^[148]
• Maintain required written standards of conduct covering conflicts of interest and governing the performance of employees who engage in the selection, award and administration of contracts.^[149]

Federal procurement requirements for tribal and local governments and private nonprofits are found in 2 CFR §§ 200.318 - 327. The requirements include but are not limited to:

• Providing full and open competition.^[150] Tribal government applicants may provide preference to Indian organizations or Indian-owned economic enterprises if the non-state, non-federal entity substantiates that it met the Indian Self-Determination and Education Assistance Act^[151] requirements.
• Ensuring the use of small and minority businesses, women’s business enterprises and labor surplus area firms when possible by conducting the following steps:^[152]
  • Place such organizations that are qualified on solicitation lists.
  • Ensure such organizations are solicited whenever they are potential sources.
  • Divide total requirements, when economically feasible, into smaller tasks or quantities.
  • Establish delivery schedules, where the requirement permits, which encourage their participation.
  • Use the services and assistance, as appropriate, of the Small Business Administration and the Minority Business Development Agency of the Department of Commerce.
  • Require prime contractor to conduct the above steps if subcontracting.^[153]

• Performing a cost or price analysis in connection with every procurement action above the simplified acquisition threshold,^[154] including contract modifications. The non-state, non-federal entity must make independent estimates before receiving bids or proposals.^[155] Additionally, the non-state, non-federal entity must negotiate profit as a separate element of the price when it performs a cost analysis and for each contract in which there is no price competition.^[156]
• Evaluating and documenting the contractor’s integrity, compliance with public policy, record of past performance, and financial and technical resources.
• Ensuring the contractor was not suspended or debarred.^[157]
• Prohibiting the use of statutorily or administratively imposed state, local or tribal geographic preferences in evaluating bids or proposals except where expressly encouraged by applicable federal law.^[158]
• Excluding contractors that develop or draft specifications, requirements, statements of work, or invitations for bids or requests for proposals from competing for such procurements to ensure objective contractor performance and eliminate unfair competitive advantage.^[159]
• Maintaining records to detail the history of the procurement including but not limited to:
  • Rationale for the method of procurement.
  • Selection of contract type.
  • Contractor selection or rejection.
  • The basis for the contract price.^[160]

Tribal and local governments and private nonprofits must use one of the following procurement methods:

• Micro-purchase.
• Small purchase procedure.
• Sealed bid (formal advertising).
• Competitive proposal.
• Non-competitive proposal (sole source). ^[161]

FEMA may reimburse costs incurred under a contract procured through a non-competitive proposal, also referred to as sole source contract, only when one or more of the following circumstances apply:

• The aggregate dollar amount of the acquisition of property or services does not exceed the micro-purchase threshold.
• The item is only available from a single source.
• The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation (this exception to competitive procurement is only for work specifically related to the circumstance and only while the circumstances exist). Applicants or subapplicants need to immediately begin the process of competitively procuring similar goods and services and transition to a competitively procured contract as soon as the circumstances cease to exist.
• FEMA or the pass-through entity expressly authorizes a non-competitive proposal in response to a written request from the subapplicant.
• After solicitation of several sources, competition is determined inadequate.^[162]

For each non-competitive procurement, besides micro-purchases, non-state or non-federal entities must identify which of the four circumstances listed above apply and provide all the following information, documentation and justification:

• A brief description of the product or service being procured, including the expected amount of the procurement.
• Explanation of why a non-competitive procurement is necessary. If there was a public exigency or emergency, the justification should explain the specific conditions and circumstances that clearly illustrate why competitive procurement would cause an unacceptable delay in addressing the public exigency or emergency. Failure to plan for the transition to competitive procurement cannot be the basis for continued use of non-competitive procurement based on public exigency or emergency.
• Length of time the non-competitive contract will be used for the defined scope of work, and the impact on that scope of work should the non-competitively procured contract not be available for that amount of time (e.g., how long the applicant anticipates the exigency or emergency circumstances to continue, how long it would take to identify requirements and award a contract that complies with all procurement requirements, or how long it would take another contractor to reach the same level of competency).
• The specific steps taken to determine that the applicant could not have used, or did not use, full and open competition for the scope of work (e.g., research conducted to determine that there were limited qualified resources available that could meet the contract provisions).
• Any known conflicts of interest and any efforts that were made to identify potential conflicts of interest before the non-competitive procurement occurred. If no efforts were made, explain why.
• Any other justifications.

In the case of non-compliance with non-competitive procurement requirements, FEMA applies an appropriate remedy in accordance with its authorities.^[163]

A pass-through entity may approve a subrecipient’s written request to procure a product or service through a non-competitive proposal method.^[164] In cases where a pass-through entity approves a request to use a non-competitive proposal, the approval must be consistent with all applicable state, local, and federally recognized tribal laws and regulations, as well as the pass-through entity’s and subrecipient’s written procurement standards. Additionally, pass-through entities’ and subrecipients’ procurements must continue to comply with the requirements, even in cases where the pass-through entity approves a request to use non-competitive proposals.

FEMA may review a pass-through entity’s decision to allow a procurement using non-competitive proposals, such as during the award monitoring process, in response to an audit finding or other similar circumstances, or for the reasons specified in 2 CFR § 200.325. During its review, FEMA will inspect the written procurement records for the transaction, including the rationale for the method of procurement, selection of contract type, and contractor selection or rejection.

FEMA will not substitute its judgment for that of the pass-through entity in cases where the pass-through entity has documented justification for allowing a non-competitive procurement. However, FEMA will review the documented justification for approving the non-competitive procurement to ensure it otherwise complies with the requirements of 2 CFR §§ 200.318-327. FEMA may also require the pass-through entity to demonstrate that the decision to approve the non-competitive proposal is consistent with applicable state, local, and federally recognized tribal laws and regulations, as well as all applicable written procurement standards. FEMA may also assess whether the costs incurred under the procurement are reasonable.

According to 2 CFR § 200.216,^[165] recipients and subrecipients, as well as their contractors and subcontractors, may not obligate or expend any FEMA award funds to:

• Procure or obtain any equipment, system or service that uses covered telecommunications equipment or services as a substantial or essential component of any system or as critical technology of any system.
• Enter into, extend or renew a contract to procure or obtain equipment, systems or service that use covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology of any system.
• Enter into, extend or renew contracts with entities that use covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.

Covered telecommunications and surveillance equipment are described in Section 889(b)(1) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 and 2 CFR § 200.216. ^[166]

FEMA recipients and subrecipients are required to include a provision in their contracts explaining the prohibitions under Section 889(b)(1) of John S. McCain National Defense Authorization Act for Fiscal Year 2019 and 2 CFR § 200.216. This applies to subcontractors under any new, extended or renewed contract. Recipients and subrecipients may draft their own provisions that meet these requirements or use language provided on the FEMA “Contracting with Federal Funds for Goods and Services Before, During and After Disasters” webpage.

The Build America, Buy America Act (Buy America)^[167] requires all federal agencies, including FEMA, to ensure that no federal financial assistance for “infrastructure” projects is provided “unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States.” BRIC and FMA awards are subject to Buy America requirements. HMGP and HMGP Post Fire are not subject to the Build America, Buy America Act.^[168]

Awards under FEMA financial assistance programs subject to the Build America, Buy America Act requirements, as well as new funding FEMA obligates to existing awards, must comply with the following domestic preference requirements:^[169]

• All iron and steel used in the project are produced in the United States.
• All manufactured products purchased with FEMA financial assistance must be produced in the United States.
• All construction materials are manufactured in the United States.

Recipients and subrecipients may request a waiver of the application of the Build America, Buy America Act requirements in certain limited circumstances. FEMA may approve a waiver request if it finds that:^[170]

• Application of the Build America, Buy America Act requirements would be inconsistent with the public interest
• Types of iron, steel, manufactured products, or construction materials are not produced in the United States in sufficient and reasonably available quantities or of a satisfactory quality; or
• The inclusion of iron, steel, manufactured products, or construction materials produced in the United States will increase the cost of the overall project by more than 25%.

For more information about the applicability of the Build America, Buy America Act requirements and how to submit a waiver, refer to FEMA Interim Policy #207-22-0001 and the FEMA “'Buy America' Preference in FEMA Financial Assistance Programs for Infrastructure” webpage.

Applicants and subapplicants must include the required contract provisions in 2 CFR § 200.327 in all contracts awarded. Some provisions are based on sound contracting practices while others are required by federal law, executive orders and regulations.

For more information about required and recommended contract provisions, including sample language, refer to the Contract Provisions Guide: Navigating Appendix II to Part 200 - Contract Provisions for Non-Federal Entity Contracts Under Federal Awards and Contracting with Federal Funds for Goods and Services Before, During and After Disasters webpages.

The recipient or subrecipient should submit the following to support contract costs claimed (not an all-inclusive list):

• Procurement policy (required when requested by FEMA or recipient or subrecipient).
• Procurement documents, such as request for proposals, bids, selection process, etc. (required when requested by FEMA or recipient or subrecipient).^[171]
• Federal awarding agency or recipient or subrecipient review.
• A cost or price analysis (required for contracts above the simplified acquisition threshold).
• Contracts, change orders and summary of invoices (required).
• Dates worked (to validate that work was completed within the award’s period of performance).
• Documentation that substantiates monitoring, such as weekly logs.

The non-federal entity must maintain written standards of conduct covering conflicts of interest and governing the performance of its employees engaged in the selection, award and administration of contracts.^[172] No employee, officer or agent may participate in the selection, award, or administration of a contract supported by a federal award if that person has a real or apparent conflict of interest.

If the non-federal entity has a parent, affiliate or subsidiary organization (that is not a state, local government or federally recognized tribe), then the non-federal entity must also maintain written standards of conduct covering organizational conflicts of interest. Organizational conflicts of interest occur when the non-federal entity is or appears to be unable to be impartial in conducting a procurement action involving a related organization because of relationships with a parent company, affiliate or subsidiary organization.^[173]

To ensure objective contractor performance and eliminate an unfair competitive advantage, contractors that develop or draft design plans and specifications, requirements, statements of work and invitations for bids or requests for proposals must be excluded from competing for such procurements as required.^[174]