Procurement, Reasonable Costs

Conclusion:  The costs are not eligible for PA funding because the Applicant failed to follow federal procurement requirements in obtaining the work.

Summary Paragraph

From November 8 through November 13, 2011, a major storm surge and blizzard caused damage to the Facility.  The Applicant hired Knik Construction (Knik) to conduct the repair work.  It was started on June 28, 2012 and completed on July 2, 2012.  The work included: surveying the Facility’s piers for submerged rocks and then removing them; cleaning the open jetty surface of materials moved by the storm; straightening cell sheet piles; and backfilling the outer cell with bedding material.  The work was not performed pursuant to a written contract but rather a verbal agreement.  The Grantee denied the Applicant’s request to approve its non-competitive procurement pursuant to 44 C.F.R. § 13.36(d)(4)(1)(c).  FEMA denied the Applicant’s request for $170,791.48 in PA funding for the work because it did not comply with federal procurement requirements.  The Applicant appealed the decision on April 22, 2013.  In a letter dated October 2, 2014, the FEMA Region X Regional Administrator (RA) denied funding for work on the following grounds: the Applicant must follow the procurement requirements outlined in 44 CFR § 13.36 regardless of whether the work is categorized as an emergency protective measure (Category B) or permanent restoration (Category G); the Applicant could have started a competitive bidding process prior to beginning the work; and FEMA and the Grantee had both denied requests for noncompetitive bidding proposals.  On December 4, 2014, the Applicant submitted its second appeal.

Authorities and Second Appeals

• 44 C.F.R. §§ 13.36, 13.43(a), 206.206.
• PA Guide, at 40-41, 66.
• City of Pierre, FEMA-1984-DR-SD, at 11.

Headnotes

• According to 44 C.F.R. § 13.36(d)(4)(1)(B), a public exigency or emergency is a circumstance that may permit procurement by noncompetitive proposal.

• The Applicant failed to provide documentation to demonstrate how the closure of the Facility caused a public exigency. 

• Pursuant to 44 C.F.R. § 13.36(d), sealed bids are feasible when (1) a complete, adequate, and realistic specification or purchase description is available; (2) two or more responsible bidders are willing and able to compete effectively for business; and (3) the procurement lends itself to a firm fixed price contract.

• The Applicant failed to provide documentation to show these three conditions were not present.

• Pursuant to 44 C.F.R. § 13.36(b)(9), an applicant is required to document its procurement process through “records sufficient to detail the significant history of procurement.”

• An oral agreement, by its nature, will not provide sufficient documentation as the procurement agreement is not documented in writing.