fema-pugpg_fiscal-year-2025_-_FIRMS_Agree_to_the_Procurement_Guidelines_listed_in_the_attached..pdf

Procurement Under Grants Policy Guide

Procurement Policy for Recipients and Subrecipients of FEMA Financial Assistance

Version 2.1, July 2025

(FM-207-21-0002)

Procurement Under Grants Policy Guide

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III

Contents

FOREWORD

List of Changes and Clarifications

APPLICABILITY

Chapter 1: Introduction

1. Overview

2. Applicability

3. Navigating the Procurement Under Grants Policy Guide (PUGPG)

4. Applying the Rules

Chapter 2: Applicability of the Federal Procurement Standards

1. Overview of Contracts

1.1. Use of Contractors by Recipients and Subrecipients

1.2. Role of FEMA in Recipient and Subrecipient Contracting

1.3. Definition of Contract

1.4. Contract Payment Obligations

1.5 Fixed Price and Cost-Reimbursement Contracts

2. Procurement by Entity

2.1. Procurement by States and Indian Tribes

2.2. Additional Considerations for Indian Tribes

2.3. State and Indian Tribe Checklist

2.4. Procurement by Local Governments and Nonprofits

Chapter 3: General Procurement Standards

1. Mandatory Standards

1.1. Maintain Oversight

1.2. Written Standards of Conduct

1.3. Gifts

1.4. Conflicts of Interests

1.5. Need Determination

IV

1.6. Contractor Responsibility Determination

1.7. Maintain Records

1.8. Time-and-Materials Contract

2. Encouraged Standards

2.1. Use of Federal Excess and Surplus Property

2.2. Use of Value Engineering

2.3. Procurement Arrangements Using Strategic Sourcing

3. Procurement Policy Checklist

Chapter 4: Competition

1. Restrictions to Competition

1.1. Unreasonable Requirements

1.2. Requiring Unnecessary Experience or Excessive Bonding

1.3. Noncompetitive Pricing Practices

1.4. Noncompetitive Contracts to Contractors on Retainer

1.5. Double Dipping

1.6. Specifying Only a Brand Name Product

1.7. Any Arbitrary Action in the Procurement Process

2. Written Procedures

2.1. Eliminate Unfair Competitive Advantage

2.2. Clear and Accurate Description of Requirements

2.3. Qualitative Requirements

2.4. Product Specifications

2.5. Identify All Requirements/Evaluation Factors

2.6. Prequalified Lists

2.7. Encouraging U.S. Jobs

Chapter 5: Methods of Procurement

1. Informal Methods

1.1. Procurement by Micro-Purchases

▪ Competition

V

▪ Prohibited Divisions

▪ Documentation

▪ Responsibility

1.2. Micro-Purchase Checklist

1.3. Procurement by Simplified Acquisitions

1.4. Simplified Acquisitions Checklist

2. Formal Methods

2.1. Procurement by Sealed Bidding

2.2. Sealed Bidding Checklist

2.3. Procurement by Proposals

2.4. Proposals Checklist

3. Noncompetitive Procurement

3.1. Procurement by Micro-Purchase

3.2. Single Source

3.3. Public Emergency or Exigency

3.4. Federal Awarding Agency or Pass-Through Entity Approval

3.5. Inadequate Competition

Justification and Documentation:

Ensure Compliance with Additional Requirements: Must

3.6. Suggested Elements for Noncompetitive Procurement Justification

3.7. Noncompetitive Procurement Checklist

Chapter 6: Domestic Preferences

1. Domestic Preferences for Procurement ........................................>

1.1. Encouraged Domestic Preference Policies

2. Required Domestic Preference Policy for Infrastructure, Build America, Buy America Act

(BABAA)

2.1. Domestic Preference for Infrastructure

2.2. Compliance

3.3. Waivers

3. Definitions

VI

4. The Buy American Act

Chapter 7: Procurement of Recovered Materials

1. Recovered Materials

1.1. Inapplicability to Indian Tribes and Nonprofits

1.2. U.S. Environmental Protection Agency (EPA) Product Designation

1.3. Affirmative Procurement Program

1.4. Solid Waste Disposal Services

1.5. Certifications

Chapter 8: Contract Cost and Price

1. Price Analysis

2. Cost Analysis

3. Cost Plus a Percentage of Cost Contracts (CPPC)

3.1. Four-Part Analysis

3.2. Considerations for States and Indian Tribes using CPPC Contracts

Chapter 9: Federal Awarding Agency/Pass-Through Entity Review

1. Pre-Award Procurement Review

1.1. Technical Specifications

1.2. Procurement Documents

2. Exemption

2.1. FEMA or Pass-Through Entity Review

2.2. Self-Certification

3. Post-Award Procurement Review

Chapter 10: Bonding Requirements

1. Bid Guarantee

2. Performance Bond

3. Payment Bond

Chapter 11: Contract Provisions

1. Required Provisions

VII

1.1. Contract Remedies

1.2. Termination for Cause and Convenience

1.3. Davis-Bacon Act

1.4. Copeland Anti-Kickback Act

1.5. Contract Work Hours and Safety Standards Act

1.6. Rights to Inventions Made Under a Contract or Agreement

1.7. Clean Air Act and the Federal Water Pollution Control Act

1.8. Suspension and Debarment

1.9. Byrd Anti-Lobbying Amendment

1.10. Procurement of Recovered Materials

1.11. Prohibition on Contracting for Covered Telecommunications Equipment or Services

1.12. Domestic Preferences for Procurements

1.13. Buy America Requirements

2. FEMA Recommended Provisions

2.1. Access to Records

2.2. Changes and Modifications

2.3. DHS Seal, Logo, and Flags

2.4. Compliance with Federal Law, Regulations, and Executive Orders

2.5. No Obligation by the Federal Government

2.6. Program Fraud and False or Fraudulent Statements or Related Acts

2.7. Copyright

2.8. BABAA for Architecture and Engineering (A/E) Contracts

Chapter 12: Beyond the Basics: Important Procurement Considerations

1. Contract Changes/Modifications

1.1. Scope of the Contract

1.2. Scope of Competition

2. Construction Contracting

2.1. Architectural and Engineering Services

2.2. Design-Bid-Build

VIII

2.3. Design-Build Contracts

2.4. Construction Manager at Risk Delivery Method

3. Cooperative Purchasing

3.1. Joint Procurements

3.2. Joint Procurements between States/Indian Tribes and Local Governments and

Nonprofits

3.3. Using Another Jurisdiction’s Contract (Piggybacking)

3.4. Local Governments, Nonprofits and Piggybacking

3.5. States, Indian Tribes, and Piggybacking

4. Cooperative Purchasing Programs

4.1. Use of General Services Administration Schedules

4.2. Other Supply Schedules and Cooperative Purchasing Programs

5. Prepare Before a Disaster

5.1. Create Prequalified Lists

5.2. Award Prepositioned Contracts

5.3. Local Governments, Nonprofits, and Prepositioned Contracts

5.4. States, Indian Tribes, and Prepositioned Contracts

6. Mutual Aid Agreements

7. Purchasing Agents

7.1. Local Governments, Nonprofits and Purchasing Agents

7.2. States, Indian Tribes, and Purchasing Agents

8. Prohibition on Contracting for Covered Telecommunications Equipment or Services

Chapter 13: Remedies for Procurement Noncompliance

1. Remedies for Noncompliance

2. Specific Conditions

APPENDIX

ACRONYM REFERENCE

DEFINITIONS

FOREWORD

All Federal Emergency Management Agency (FEMA) awards, also known as grants, are subject to the

Federal Procurement Standards under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards found in Part 200 of Title 2 of the Code of Federal

Regulations (C.F.R.) sections 200.317 — 200.327 2 C.F.R. §§ 200.317 – 200.327.1 This

Procurement Under Grants Policy Guide (PUGPG) provides guidance regarding the mandatory requirements for FEMA award recipients and subrecipients using federal grant funding to finance the procurement of property and services.

Grants and cooperative agreements are the principal funding mechanism FEMA uses to support

States, Tribes, territories, local governments, eligible nonprofits and for-profit organizations, and individuals when preparing for and recovering from emergencies and disasters.2 These funds are administered through many different programs to help ready communities across the nation for when disaster strikes. Some of FEMA’s grant programs include the following:

▪ Disaster Assistance Programs: When an area receives a presidential declaration of an emergency or major disaster, then its state, local, tribal, and territorial (SLTT) governments, and certain types of nonprofit organizations may be eligible for federal financial assistance. This assistance is administered through FEMA’s programs, including, but not limited to, the Public

Assistance (PA), the Fire Management Assistance Grant (FMAG), and the Individual Assistance

(IA) programs.

▪ Hazard Mitigation Assistance Programs: These programs provide funding for eligible mitigation measures that, through sustainable action, reduces or eliminates long-term risk to people and property from future disasters. Mitigation planning breaks the cycle of disaster damage, reconstruction, and repeated damage by employing long-term solutions that reduce the impact of disasters in the future. Examples include the Hazard Mitigation Grant Program (HMGP) and Flood

Mitigation Assistance (FMA).

▪ Preparedness Programs: These programs improve the capacity of citizens and first responders to build and sustain efforts to prepare for, protect against, respond to, recover from, and mitigate terrorism and other high-consequence disasters and emergencies. Examples include the

Assistance to Firefighter Grants (AFG) Program and Homeland Security Grant Program (HSGP).

Recipients and subrecipients of FEMA grant funding often require awarding work to contractors to ensure projects are completed on time and on budget. It is critical to the mission of emergency

1 Adopted by DHS at 2 C.F.R. § 3002.10. 79 Fed. Reg. 75871 (Dec. 19, 2014); Revised 2 C.F.R. Part 200 (Oct. 1, 2024).

2 FEMA grant programs provide assistance to for-profit entities are governed by case program regulations and guidance, and typically parallel the 2 C.F.R. Part 200 requirements.

https://www.ecfr.gov/on/2024-10-01/title-2/subtitle-A/chapter-II/part-200/subpart-D/subject-group-ECFR45ddd4419ad436d https://www.ecfr.gov/on/2024-10-01/title-2/subtitle-A/chapter-II/part-200/subpart-D/subject-group-ECFR45ddd4419ad436d https://www.ecfr.gov/on/2024-10-01/title-2/subtitle-A/chapter-II/part-200/subpart-D/subject-group-ECFR45ddd4419ad436d management that any contracts funded through a FEMA award are awarded in a fair and competitive manner, ensuring that all responsible contractors can compete for the work under a FEMA award.

The Procurement Disaster Assistance Team (PDAT), within FEMA Grant Programs Directorate (GPD), Office of Enterprise Grant Services (EGS), Procurement Under Grants (PUG) Division, developed this version of the PUGPG to provide accurate and updated guidance to support both FEMA staff and

FEMA award recipients and subrecipients in understanding and complying with the Federal

Procurement Standards.

This version of the PUGPG will:

▪ Exemplify the Agency’s mission statement: Helping people before, during, and after disasters;

▪ Improve accessibility to all users of this Guide, providing clear and understandable language to enhance comprehension of the Federal Procurement Standards;

▪ Provide guidance regarding the Office of Management and Budget (OMB) revisions and final guidance to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Rules), 2 C.F.R. Part 200 on Oct. 1, 2024;

▪ Illustrate how certain rules apply to an award recipient and/or subrecipient with real world examples; and

▪ Give additional resources, tools, and guidance to help all users develop further knowledge of the procurement under grants subject matter.

Additionally, a list of changes and clarifications from the FY21 PDAT Field Manual is included below:

List of Changes and Clarifications

Administrative & Policy

Retitled PDAT Field Manual as the Procurement Under Grants Policy Guide (PUGPG), used synonymously with “Guide” in this document.

Replaced “non-Federal entity/NFE” with “recipient” or “subrecipient”.

Updated real world examples to include new FEMA grant programs and unique procurement scenarios applicable to the corresponding Federal Procurement Standard.

Incorporated updated guidance for requirements incorporating language from updated FEMA policies and external federal agencies.

Corrected grammar, punctuation, and language, consistent with plain language standards.

https://www.govinfo.gov/content/pkg/FR-2024-10-01/pdf/2024-22520.pdf https://www.govinfo.gov/content/pkg/FR-2024-10-01/pdf/2024-22520.pdf https://www.fema.gov/sites/default/files/documents/fema_PDAT-field-manual_102021.pdf

Enhanced appendices to feature various PUG tools and resources as well as external federal agency guidance and support documents.

Consistent with existing requirements for States in 2 C.F.R. § 200.317, Indian Tribes now follow their own policies and procedures. Additionally, States or Indian Tribes that do not have procurement policies and procedures must follow 2 C.F.R. §§ 200.318 – 200.327.

Added “board member” in the context of conflicts of interest, 2 C.F.R. § 200.318(c).

OMB clarified recipients and subrecipients must consider several factors when determining if a contractor is responsible and adds guidance that contractors appropriately classify employees consistent with the Fair Labor Standards Act, 2 C.F.R. § 200.318(h).

Added paragraph (1) requiring that written procedures for procurement transactions ensure that solicitations are made in accordance with 2 C.F.R. § 200.319(b).

Removed “requests for proposals” from 2 C.F.R. § 200.319(b).

Included new definition of “double dipping,” defined under 2 C.F.R. § 200.319(b) as the procurement action by which a local government or nonprofit hires a contractor to develop the scope of work and specifications of a contract or solicitation and then the same contractor submits a bid or proposal for that work under a FEMA award. This action is prohibited.

Relocated the list of situations considered to be restrictive of competition from 2 C.F.R. §

200.319(b) to 2 C.F.R § 200.319(c).

Removed mention of geographic preferences as OMB no longer features this prohibition in the

Federal Procurement Standards when evaluating bids or proposals, previously found at 2 C.F.R. §

200.319(c).

Added a sentence stating that in establishing or amending prequalified lists, the recipient or subrecipient must consider objective factors that evaluate price and cost to maximize competition, 2 C.F.R. § 200.319(e).

Added a new paragraph at 2 C.F.R. § 200.319(f), to state that recipients and subrecipients are not prohibited from incorporating a scoring mechanism that rewards bidders committing to specific numbers and types of U.S. jobs, as well as certain compensation and benefits.

Changed the name of “small purchases” method of procurement to “simplified acquisitions,” 2

C.F.R. § 200.320(a)(2).

Included language concerning the requirements for certain FEMA grant programs under the Build

America Buy America Act (BABAA) per 2 C.F.R. § 200.322(c), 2 C.F.R. Part 184.

When determining an adequate number of qualified contracting sources, FEMA encourages at least three price or rate quotations when using competitive procurement procedures.

FEMA or a pass-through entity may approve a subrecipient’s written request to procure a product or service through a noncompetitive proposal method. In cases where FEMA or a pass-through entity approves a request to use a noncompetitive proposal, the approval must be consistent with all applicable state, local, and federally recognized tribal laws and regulations, as well as FEMA’s or the pass-through entity’s and subrecipient’s written procurement standards.

Added additional language to 2 C.F.R. § 200.324(a) to establish that the recipient or subrecipient may consider potential workforce impacts in their procurement analysis if the procurement transaction will potentially displace public sector employees.

Removed requirement for recipients to negotiate profit as a separate element of the price for each contract in which there is no price competition.

APPLICABILITY

Over the past three decades, FEMA has awarded more than $347 billion to states, Tribal Nations, territories, local governments, and eligible nonprofits to support essential response and recovery efforts.3 Recipients and subrecipients of FEMA awards are subject to the Federal Procurement

Standards found at 2 C.F.R. §§ 200.317 – 200.327, which apply to contracts under FEMA awards or

Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act)4 disaster declarations.

This version of the PUGPG is applicable to FEMA awards (non-disaster grants) with a federal award date found in the Notice of Award Letter and Stafford Act disaster declarations issued on or after Oct.

1, 2024.5

Periodically, OMB will revise sections of the Uniform Rules including the Federal Procurement

Standards. In the past, FEMA released prior versions of this Guide that aligned with the Federal

Procurement Standards in effect at that time. Those versions remain applicable for awards and disaster declarations based on the date they were issued or declared. It is important for recipients

3 FEMA’s Disaster Relief Fund: Budgetary History and Projections, Publication 58840. Congressional Budget Office, November, https://www.cbo.gov/publication/58840.

4 Robert T. Stafford Disaster Relief and Emergency Assistance Act, Pub. L. No. 93-288 (1974) (codified as amended at 42

U.S.C. §§ 5121-5207).

5 Approval for Application of New OMB Revisions to Title 2 of the Code of Federal Regulations to Hurricane Helene

Declarations, FEMA, Oct. 17, 2024. Hurricane Helene made landfall on Sept. 26, 2024, with disaster declarations occurring both before and after the new OMB revisions went into effect on Oct. 1, 2024. To streamline the grant rules applicable to Hurricane Helene declarations, FEMA has decided to amend Hurricane Helene FEMA-State/Tribe Agreements issued prior to Oct. 1, 2024, to ensure the new OMB revisions apply uniformly to all Hurricane Helene-related declarations no matter the declaration date.

https://www.cbo.gov/publication/58840 and subrecipients to apply the correct federal rules that correspond to the FEMA grant award date or the date of the disaster declaration of a Stafford Act disaster grant.

To identify the appropriate version of the Guide applicable to a specific procurement, recipients and subrecipients should reference the federal award date for the non-disaster grant award or the disaster declaration date of the disaster grant. To find the disaster declaration date, visit Disasters and Other Declarations | FEMA.gov. The chart below provides a link to the corresponding FEMA guidance based on the federal award date or disaster declaration date.

Although versions before the FY21 Field Manual are only applicable to FEMA’s Public Assistance

Program, all FEMA award recipients and subrecipients are encouraged to review these resources since they provide guidance on the Federal Procurement Standards unless restricted by statute.

FEMA will monitor the implementation of this policy through close coordination with various program offices, regional staff, and as appropriate, interagency partners and non-federal stakeholders. FEMA will consider feedback, as appropriate, from these entities when issuing updates to this policy.

Federal Award Date or Disaster Declaration Date FEMA Policy

Before Dec. 26, 2014 FY14 Field Manual

Dec. 26, 2014 – Nov. 11, 2020 FY16 Field Manual Supplement

Dec.26, 2014 – Nov. 11, 2020 FY19 Field Manual

Nov.12, 2020 – Sep. 30, 2024 FY21 Field Manual

Oct. 1, 2024 - Present FY25 PUGPG (this Guide)

Stacey N. Street

Acting Deputy Assistant Administrator

Grant Programs Directorate

Date https://www.fema.gov/disaster/declarations https://www.fema.gov/disaster/declarations https://www.fema.gov/sites/default/files/2020-07/fema_public-assistance-grantee-subgrantee-procurement-2014_field-manual.pdf https://www.fema.gov/sites/default/files/2020-07/fema_procurement-under-grants-field-manual-supplement_1.pdf https://www.fema.gov/sites/default/files/2020-07/fema_procurement_field-manual_2019.pdf https://www.fema.gov/sites/default/files/documents/fema_PDAT-field-manual_102021.pdf

Chapter 1: Introduction

1. Overview This version of the PUGPG incorporates relevant content from both the 2014 Field Manual, the 2016

Supplement to the Field Manual,6 the 2019 Field Manual, 7 and the 2021 PDAT Field Manual.8

However, this version now supersedes previous resources following OMB revisions of OMB Guidance for Federal Financial Assistance found in Title 2 of the Code of Federal Regulations. These revisions are applicable to all FEMA awards issued on or after Oct. 1, 2024, unless specifically indicated otherwise. These revisions include changes to the Federal Procurement Standards, which govern how FEMA award recipients and subrecipients must purchase under a FEMA award. For FEMA declarations made on, or awards issued prior to Oct. 1, 2024, and after Nov. 12, 2020, please reference the previous Federal Procurement Standards. Please note that the PUGPG is not encompassing of all FEMA grant program policy, nor does it have the force and effect of federal law and regulation. However, it is intended to serve as a practical guide regarding procurement under a

FEMA award with the full authority and effect of FEMA policy.

The information provided in the PUGPG is designed to serve as a foundational reference for both FEMA staff involved in the various aspects of administering FEMA awards as well as the recipients and subrecipients procuring property and services as identified in the Uniform Rules. FEMA does not intend this guide to provide or constitute legal advice to its award recipients and subrecipients. Adherence to, application of, or use of the PUGPG regarding a procurement under a FEMA award does not guarantee legal sufficiency of any procurement, nor does it ensure that an award or subaward will not be audited, monitored, or investigated. All legal questions concerning the sufficiency of a procurement under a FEMA award should be referred to the recipient’s or subrecipient’s legal counsel.

As a condition of receiving reimbursement for contractor costs relating to FEMA’s federal assistance programs, FEMA award recipients and subrecipients must comply with all applicable federal laws, regulations, executive orders, and grant award terms and conditions. Each recipient or subrecipient is responsible for managing and administering its federal awards in compliance with the applicable requirements, including but not limited to, the Uniform Administrative Requirements, Cost Principles, 6 Procurement Guidance for Recipients and Subrecipients under 2 C.F.R Part 200 (Uniform Rules) Supplement to the Public

Assistance Procurement Disaster Assistance Team (PDAT) Field Manual, June 21, 2016.

7 Field Manual – Procurement Information for FEMA Public Assistance Award Recipients and Subrecipients, Oct. 2019.

8 Procurement Disaster Assistance Team (PDAT) Field Manual: Procurement Information for FEMA Award Recipients and

Subrecipients, Oct. 2021.

https://www.fema.gov/sites/default/files/2020-07/fema_public-assistance-grantee-subgrantee-procurement-2014_field-manual.pdf https://www.fema.gov/sites/default/files/2020-07/fema_procurement-under-grants-field-manual-supplement_1.pdf https://www.fema.gov/sites/default/files/2020-07/fema_procurement-under-grants-field-manual-supplement_1.pdf https://www.fema.gov/sites/default/files/2020-07/fema_procurement_field-manual_2019.pdf https://www.fema.gov/sites/default/files/documents/fema_PDAT-field-manual_102021.pdf https://www.federalregister.gov/documents/2024/04/22/2024-07496/guidance-for-federal-financial-assistance https://www.federalregister.gov/documents/2024/04/22/2024-07496/guidance-for-federal-financial-assistance https://www.ecfr.gov/on/2024-10-01/title-2/subtitle-A/chapter-II/part-200/subpart-D/subject-group-ECFR45ddd4419ad436d https://www.ecfr.gov/on/2020-11-12/title-2/subtitle-A/chapter-II/part-200/subpart-D/subject-group-ECFR45ddd4419ad436d https://www.fema.gov/sites/default/files/2020-07/fema_procurement-under-grants-field-manual-supplement_1.pdf https://www.fema.gov/sites/default/files/2020-07/fema_procurement-under-grants-field-manual-supplement_1.pdf https://www.fema.gov/sites/default/files/2020-07/fema_procurement_field-manual_2019.pdf and Audit Requirements for Federal Awards codified at 2 C.F.R. Part 200, which the U.S. Department of Homeland Security (DHS) adopted at 2 C.F.R. § 3002.10.9 Specifically, the regulations at 2 C.F.R.

§§ 200.317 – 200.327 set forth the procurement standards that each recipient and subrecipient must follow when using FEMA financial assistance to conduct procurements of real property, goods, or services.

Applicability The Federal Procurement Standards set forth at 2 C.F.R. §§ 200.317 – 200.327 apply to all grant awards with a federal award date on or after Oct.1, 2024, and disaster declaration dates on or after

Oct. 1, 2024.10 Failure to follow the Uniform Rules found in 2 C.F.R. Part 200 when procuring and selecting contractors places FEMA award recipients and subrecipients at risk of not receiving either their full reimbursement for associated contract costs or having expended funds recouped by FEMA.

The PUGPG focuses on the procurement standards set forth in 2 C.F.R. Part 200. For procurement guidance associated with disasters declared before Oct.1, 2024, please refer to the Uniform

Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.

Navigating the Procurement Under Grants Policy

Guide (PUGPG) The PUGPG is structured according to the progression of the Federal Procurement Standards listed in 2 C.F.R. §§ 200.317 – 200.327. Throughout the PUGPG, icons are used to help identify key definitions, examples, tools/resources, and common DHS Office of Inspector General (OIG) audit findings.

▪ Internal hyperlinks connect sections that are complementary within the PUGPG.

9 79 Fed. Reg. 75871 (Dec. 19, 2014); 85 Fed. Reg. 49506 (Aug. 13, 2020).

10 89 Fed. Reg. 30046.

Definition Examples Tools/Resources

Common OIG Findings https://www.govinfo.gov/content/pkg/FR-2024-04-22/pdf/2024-07496.pdf https://www.govinfo.gov/content/pkg/FR-2024-04-22/pdf/2024-07496.pdf

▪ External hyperlinks connect the PUGPG with relevant external references or resources.

▪ Blue boxes indicate important terms or sections to know and understand.

▪ Gray boxes indicate an example where procurement under a FEMA award is being used.

▪ Graphics indicate the applicability of which recipient or subrecipient is subject to this rule:

Applying the Rules

Rule Citation Applicability

Procurements by States and

Indian Tribes § 200.317 States & Tribes

General procurement standards § 200.318

Local Governments &

Nonprofits

Competition § 200.319 Local Governments &

Nonprofits

Procurement methods § 200.320 Local Governments &

Nonprofits

Contracting with small businesses, minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms

§ 200.321* States & Tribes;

Local Governments &

Nonprofits

States & Tribes

Local

Governments &

Nonprofits https://www.ecfr.gov/on/2024-10-01/title-2/section-200.317 https://www.ecfr.gov/on/2024-10-01/title-2/section-200.318 https://www.ecfr.gov/on/2024-10-01/title-2/section-200.319 https://www.ecfr.gov/on/2024-10-01/title-2/section-200.320 https://www.ecfr.gov/on/2024-10-01/title-2/section-200.321

Domestic Preferences for procurements § 200.322

States & Tribes;

Local Governments &

Nonprofits

Procurement of recovered materials § 200.323 States & Local Governments

Contract cost and price § 200.324 Local Governments &

Nonprofits

Federal agency or pass-through entity review § 200.325

Local Governments &

Nonprofits

Bonding requirements § 200.326 Local Governments &

Nonprofits

Contract provisions § 200.327

States & Tribes;

Local Governments &

Nonprofits

*NOTE: FEMA recommends recipients and subrecipients work with their general counsel on the application of 2 C.F.R. § 200.321, as it is no longer required by the Federal Procurement Rules.

Questions regarding this policy may be directed to the assigned FEMA program analyst or grants management specialist or FEMA Grants News at FEMA-Grants-News@fema.dhs.gov.

Related Tools and Resources

✓ Federal Procurement Standards (as of Oct. 1, 2024)

✓ U.S. Department of Homeland Security Office of the Inspector General Audit

Reports related to FEMA

✓ FEMA Grants

✓ Public Assistance Program and Policy Guide (PAPPG)

✓ Preparedness Grants Manual

✓ Fire Management Assistance Grant Program Guide (FMAG)

✓ Hazard Mitigation Assistance Program (HMGP) and Policy Guidance https://www.ecfr.gov/on/2024-10-01/title-2/section-200.322 https://www.ecfr.gov/on/2024-10-01/title-2/section-200.323 https://www.ecfr.gov/on/2024-10-01/title-2/section-200.324 https://www.ecfr.gov/on/2024-10-01/title-2/section-200.325 https://www.ecfr.gov/on/2024-10-01/title-2/section-200.326 https://www.ecfr.gov/on/2024-10-01/title-2/section-200.327 mailto:FEMA-Grants-News@fema.dhs.gov https://www.ecfr.gov/on/2024-10-01/title-2/subtitle-A/chapter-II/part-200/subpart-D/subject-group-ECFR45ddd4419ad436d https://www.oig.dhs.gov/taxonomy/term/2 https://www.oig.dhs.gov/taxonomy/term/2 https://www.fema.gov/grants https://www.fema.gov/sites/default/files/documents/fema_pa_pappg-v5.0_012025.pdf https://www.fema.gov/grants/preparedness/manual https://www.fema.gov/sites/default/files/documents/fema_fmagppg_063121.pdf https://www.fema.gov/grants/mitigation/learn/hazard-mitigation-assistance-guidance

Chapter 2: Applicability of the

Federal Procurement Standards

Overview of Contracts

Use of Contractors by Recipients and Subrecipients

Recipients and subrecipients often use contractors to help carry out their FEMA award projects. For example, a subrecipient may receive federal financial assistance under a FEMA award to repair a building damaged by a major disaster. The subrecipient may then hire a construction company to complete the work. FEMA generally views contractor costs as an allowable cost11 under the FEMA award if the costs are deemed eligible under the grant program and are reasonable.

A contract is a commercial transaction between the recipient or subrecipient and their contractors, creating a legal relationship between them. FEMA's legal relationship is with the award recipient, not the recipient or subrecipient and their contractors or subcontractors.

Role of FEMA in Recipient and Subrecipient Contracting

Although FEMA is not a party to a recipient’s or subrecipient’s contract, it determines eligibility and reimbursement for a recipient’s or subrecipient’s contracting with outside sources under the FEMA award. Recipients and subrecipients that use FEMA award funding must comply with the Federal

Procurement Standards, federal law, executive orders, federal regulations, and terms of the FEMA award.

Definition of Contract

A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. There are three elements necessary to form a contract:

▪ Mutual assent;

▪ Consideration or a substitute; and

▪ No defenses to formation;12 such as duress, misrepresentation or fraud, mistake, and unconscionability.

11 2 C.F.R. § 200.403.

12 Restatement (Second) of Contracts § 1 (Am. L. Inst. 1981).

https://www.ecfr.gov/on/2024-10-01/title-2/subtitle-A/chapter-II/part-200/subpart-D/subject-group-ECFR45ddd4419ad436d https://www.ecfr.gov/on/2024-10-01/title-2/subtitle-A/chapter-II/part-200/subpart-D/subject-group-ECFR45ddd4419ad436d

Contracts are generally governed by the common law. However, contracts for the sale of goods, such as movable and tangible property are governed by Article 2 of the Uniform Commercial Code as well as common law.

The term “contract” is general and includes several different varieties or types.13 For example, contracts can be categorized by subject matter, such as construction, research, supply, service, or by the way they can be formed and accepted, such as bilateral or unilateral. Recipients and subrecipients can choose the type of contract they award, as long as it aligns with the Federal

Procurement Standards, federal, applicable state, tribal, and local laws and regulations, and within the bounds of good commercial business practice.

The Uniform Rules provide that a contract is for obtaining goods and services for the recipient’s or subrecipient’s own use and creates a procurement relationship with the contractor.14 Characteristics indicative of a procurement relationship between the recipient or subrecipient and a contractor include when the contractor:

1. Provides the goods and services within normal business operations;

2. Provides similar goods or services to many different purchasers;

3. Normally operates in a competitive environment;

4. Provides goods or services that are ancillary to the operation of the federal program; and

5. Is not subject to compliance requirements of the federal program because of the agreement; however, similar requirements may apply for other reasons.15

Contract Payment Obligations

There are generally three types of contract payment obligations: fixed-price, cost-reimbursement, and time-and-materials (T&M). Because the Uniform Rules do not define or fully describe these types of contracts, the following provides a general overview of these contracts that is largely based on the concepts and principles from the Federal Acquisition Regulation (FAR).

Fixed Price and Cost-Reimbursement Contracts

Fixed price and cost-reimbursement contracts include a variety of contracts ranging from firm-fixed price contracts, where the contractor has full responsibility for the performance costs and resulting profit or loss, to cost-plus-fixed fee contracts, where the contractor has minimal responsibility for the performance costs and the negotiated fee or profit is fixed. There are also various incentive contracts where the responsibilities of the contractor for performance costs and the profit or fee incentives are tailored to the uncertainties involved in contract performance.

13 2 C.F.R. § 200.1, Contract.

14 2 C.F.R. § 200.331(b).

15 Id.

https://www.acquisition.gov/browse/index/far

Fixed price contracts provide for a firm price or, in appropriate cases, an adjustable price.16 The contractor bears the risk of performing the required work at the fixed price.17 Firm-fixed price contracts are generally appropriate where the requirement, such as scope of work, is well-defined and of a commercial nature.18 For example, Construction contracts are often firm-fixed price contracts. NOTE: T&M contracts and labor-hour contracts are not firm-fixed price contracts.19

Cost-reimbursement contracts provide for payment of certain incurred costs as specified in a contract.20 They normally reimburse the contractor for allowable costs, with an agreed-upon fee.21 There is a limit to the costs that a contractor may incur at the time of contract award, known as a ceiling price. The contractor may not exceed the ceiling price without the recipient’s or subrecipient’s approval, or the contractor does so at their own risk.

In a cost-reimbursement contract, the recipient or subrecipient bears more risk than in a firm-fixed price contract.22 A cost-reimbursement contract is appropriate when the details of the required scope of work are not well-defined.23 There are many variations of cost-reimbursement contracts, such as cost-plus-fixed-fee, cost-plus-incentive-fee, and cost-plus-award-fee contracts.24 However, the cost plus a percentage of cost (CPPC) contract, which is discussed in detail in Chapter 8 of this

Guide, is strictly prohibited for local governments and nonprofits.25

Procurement by Entity The Federal Procurement Standards apply differently based on the type of recipient or subrecipient.

Therefore, a FEMA award recipient or subrecipient must first determine if it is a State, Indian Tribe, local government, or nonprofit as defined under the Federal Procurement Standards. Additional guidance for determining recipient or recipient type and which Federal Procurement Standards to apply are listed below.

16 See generally, 48 C.F.R. § 16.2. A fixed price contract can be adjusted, but this normally occurs only through the operation of contract clauses providing for equitable adjustment or other revisions of the contract price under certain circumstances. 48 C.F.R. § 16.203.

17 Bowsher v. Merck & Co., 460 U.S. 824, 826 n.1 (1983) (“A pure fixed-price contract requires the contractor to furnish the goods or services for a fixed amount of compensation regardless of the costs of performance, thereby placing the risk of incurring unforeseen costs of performance on the contractor rather than the Government.”).

18 48 C.F.R. § 16.202-2.

19 48 C.F.R. § 16.201(b).

20 48 C.F.R. § 16.3.

21 48 C.F.R. § 16.303.

22 Kellogg Brown & Root Servs., Inc. v. United States, 742 F.3d 967, 971 (Fed. Cir. 2014) ("[C]ost-reimbursement contracts are intended to shift to the Government the risk of unexpected performance costs[.]").

23 48 C.F.R. § 16.306.

24 48 C.F.R. §§ 16.304 - 16.306.

25 2 C.F.R. § 200.324(c).

Procurement by States and Indian Tribes

The Federal Procurement Standards applicable to States and Indian Tribes are set forth in 2 C.F.R. §

200.317. States are defined as:

▪ Any state of the United States,

▪ The District of Columbia,

▪ The Commonwealth of Puerto Rico,

▪ U.S. Virgin Islands,

▪ Guam,

▪ American Samoa,

▪ The Commonwealth of the Northern Mariana Islands, and

▪ Any agency or instrumentality thereof exclusive of local governments.26

Indian Tribe means any Indian Tribe, band, Tribal Nation, or other organized group or community, including any Alaska Native village or regional or village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act (43

U.S.C. § 1602), which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians. See 25 §

U.S.C. 5304(e). This includes any Indian Tribe identified in the annually published Bureau of Indian

Affairs list of “Indian Entities Recognized and Eligible to Receive Services” and other entities that qualify as an Alaska Native village or regional village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act.27

Consistent with the existing requirements for States in 2 C.F.R. § 200.317, Indian Tribes must follow the same policies and procedures used for procurements with non-federal funds. In addition to adhering to their own policies and procedures, Indian Tribes must also comply with rules for

Domestic Preferences (§ 200.322) and Required

Contract Provisions (§ 200.327). NOTE:

Requirements under the Build America Buy America

Act (BABAA) apply to infrastructure projects under certain FEMA grant programs.

26 2 C.F.R. § 200.1 State.

27 2 C.F.R. 200.1 § Indian Tribe.

States & Tribes https://www.ecfr.gov/on/2024-10-01/title-2/section-200.317 https://www.ecfr.gov/on/2024-10-01/title-2/section-200.317 https://www.govinfo.gov/content/pkg/USCODE-2023-title43/pdf/USCODE-2023-title43-chap33-sec1601.pdf https://www.govinfo.gov/content/pkg/USCODE-2023-title43/pdf/USCODE-2023-title43-chap33-sec1601.pdf https://www.govinfo.gov/link/uscode/25/5304 https://www.govinfo.gov/link/uscode/25/5304 https://www.ecfr.gov/on/2024-10-01/title-2/section-200.322 https://www.ecfr.gov/on/2024-10-01/title-2/section-200.327 https://www.fema.gov/grants/policy-guidance/buy-america/programs-definitions https://www.fema.gov/grants/policy-guidance/buy-america/programs-definitions

While an additional rule for Procurement of Recovered Materials (§ 200.323) is also referenced in 2

C.F.R. § 200.317, this requirement only applies to state agencies and political subdivisions of states and not to Indian Tribes. The 2024 OMB guidance also requires that States and Indian Tribes follow the Federal Procurement Standards at 2 C.F.R. §§ 200.318 – 200.327 if they do not have their own procurement policies or procedures.

Even if States or Indian Tribes comply with their own policies and procedures used for procurement from non-federal funds when they procure property or services under a FEMA award, FEMA will still evaluate the procurement to determine whether the costs conform to the Cost Principles at 2 C.F.R.

Part 200 Subpart E. 28 For example, while States and Indian Tribes are not prohibited by the federal rules from awarding a CPPC contract, FEMA may still question the reasonableness of the contract's costs since this type of contract incentivizes the contractor to drive up costs to increase profit.29

States and Indian Tribes must use the Cost Principles at 2 C.F.R. Part 200 Subpart E as a guide in the pricing of fixed-price contracts and subcontracts where costs are used in determining the appropriate price.

Additionally, while more prescriptive conflict of interest rules may apply to local governments and nonprofits, FEMA, pursuant to its authorities, requires that all recipients and subrecipients, including

States and Indian Tribes, maintain written conflicts of interest rules, including organizational conflicts of interest rules, governing the actions of their procurement professionals and disclose any potential conflict of interest to FEMA in writing.30 See State and Indian Tribe Checklist.

Additional Considerations for Indian Tribes

Indian Tribes may serve as a recipient or subrecipient under a FEMA award. It is important to note that in both capacities, they are required to comply with the applicable Federal Procurement

Standards.

Indian tribal preferences may be permissible if certain requirements are met under the Indian Self-

Determination and Education Assistance Act.

The Indian Self-Determination and Education Assistance Act sets forth federal policy allowing Indian Tribes to apply preference in the awarding of contracts and subcontracts to “Indian organizations” or “Indian-owned economic enterprises” in connection with the administration of any federal award.31

28 2 C.F.R. § 200.404 (“A cost is reasonable if it does not exceed an amount that a prudent person would incur under the circumstances prevailing when the decision was made to incur the cost.”).

29 2 C.F.R. § 200.401.

30 2 C.F.R. § 200.112.

31 25 U.S.C. § 5307(b).

https://www.ecfr.gov/on/2024-10-01/title-2/section-200.323 https://www.ecfr.gov/on/2024-10-01/title-2/subtitle-A/chapter-II/part-200/subpart-E https://www.ecfr.gov/on/2024-10-01/title-2/subtitle-A/chapter-II/part-200/subpart-E https://uscode.house.gov/view.xhtml?path=/prelim@title25/chapter46&edition=prelim https://uscode.house.gov/view.xhtml?path=/prelim@title25/chapter46&edition=prelim

An Indian organization is the governing body of any federally recognized Indian Tribe or an entity established or recognized by such a governing body.32

An Indian-owned economic enterprise is any commercial, industrial, or business activity established or organized by a member of a federally recognized

Indian Tribe for the purpose of profit, provided that such Indian tribal ownership constitutes 51% or higher of the enterprise.33

Indian Tribes using a permissible preference are required to document that they have met the requirements under the Indian Self-Determination and Education Act.34 They must also ensure compliance with the remainder of Federal Procurement Standards, as well as any applicable tribal laws.35

Other Indian Tribal Procurement Considerations

▪ Inapplicability of the Procurement of Recovered Materials Provision: The procurement of recovered materials provision36 applies only to States or political subdivisions of a state and its contractors. Indian Tribes are not required to comply with this provision.

▪ Indian Tribal Preference in Employment: An exception to Title VII of the Civil Rights Act of

1964 allows an Indian Tribe or any business enterprise on or near an Indian tribal reservation to apply Indian tribal preferences in employment.37 This exception is often referenced in contracts awarded by Indian Tribes and is compliant with the Federal

Procurement Standards.

▪ Reasonable Costs: Although Indian tribal preferences may be permissible when awarding contracts and subcontracts under the Indian Self-Determination and Education Assistance

Act, Indian Tribes still have a responsibility, under the FEMA award, to ensure that costs are reasonable and document such a determination.38

32 25 U.S.C. § 5304(l).

33 25 U.S.C. § 1452(e).

34 2 C.F.R. §§ 200.400(d) and 200.403(g).

35 2 C.F.R. § 200.317.

36 2 C.F.R. § 200.323.

37 25 U.S.C. § 5307(b).

38 2 C.F.R. § 200.404.

Example: State and Indian Tribes Awarding Contracts

Scenario: The Indian Tribe of Y, as the result of a flood, sustains damages to many of its government buildings. When evaluating proposals for the repair work, Indian Tribe of Y applies a preference percentage to Indian-owned economic enterprises competing for the award.

Indian Tribe of Y documents in its procurement file how the preference meets the requirements under their own tribal procurement rules. Was the preference given to Indian-owned economic enterprises permissible under the Federal Procurement Standards?

Answer: Yes. The use of the Indian tribal preference was permissible. Because both States and

Indian Tribes are subject to their own state and tribal procurement rules, the Indian Tribe of Y may apply preferences in the award of contracts and subcontracts to “Indian organizations” or “Indian-owned economic enterprises” in connection with the administration of a FEMA award subject to 2 C.F.R. § 200.317.

State and Indian Tribe Checklist

The below checklist features a series of questions to assist States and Indian Tribes in considering certain factors when purchasing under a FEMA award. These factors include, but are not limited to, the procurement dollar amount and required contract provisions to ensure compliance with the

Federal Procurement Standards. If you responded “no” to any of the questions below, your organization’s procurement may not be compliant with the Federal Procurement Standards. It is recommended that you visit the Purchasing Under a FEMA Award Resource Library for assistance with compliance matters.

NOTE: Separate checklists applicable to local governments and nonprofits will be provided in the corresponding chapter of this Guide.

Requirement Supporting Documentation

Did your organization comply with its own procurement policies and procedures?

Yes ☐

No ☐

Procurement policy ☐

Is the price fair and reasonable?

Yes ☐

No ☐

Evidence of market research ☐

Short narrative on letterhead ☐

Other: (ex: receipt, invoice) ☐ https://www.ecfr.gov/on/2024-10-01/title-2/section-200.317 https://www.fema.gov/grants/procurement/resource-library

If the purchase is over $25,000, did your organization ensure the contractor was not suspended or debarred? See 2 C.F.R. § 180 for additional information.

Yes ☐

No ☐

Printout of SAM.gov search ☐

Copy of suspension and debarment (S&D) certification ☐

Contract with applicable S&D clause ☐

Required Contract Provisions

NOTE: The Federal Procurement Standard at 2 C.F.R. § 200.327 requires that recipient and subrecipient contracts contain the applicable provisions described in Appendix II to Part 200 of the Uniform Rules

(Contract Provisions for Non-Federal Entity Contracts Under Federal Awards).

If the contract is over $250,000,did your organization include a Remedies clause?

NOTE: AFG recipients must include a penalty clause in all contracts for any AFG-funded vehicle.

Yes ☐

No ☐

N/A ☐

Indicate the page number where a FEMA representative can locate the clause in the contract document.

Pg.:

If the contract is more than $10,000, did your organization include a Termination for Cause and

Convenience clause?

Yes ☐

No ☐

N/A ☐

Indicate the page number where a FEMA representative can locate the clause in the contract document.

Pg.:

If the contract is for construction work and more than $2,000, did your organization include the required Davis-Bacon Act Clause?

NOTE: This clause only applies to the following

FEMA grant programs: EMPG, HSGP, NSGP, THSGP, PSGP, IPR, HHPD, Safeguarding Tomorrow RLF, and

TSGP.

Yes ☐

No ☐

N/A ☐

Indicate the page number where a FEMA representative can locate the clause in the contract document.

Pg.:

If the contract is for construction or repair work more than $2,000, did your organization include the required Copeland Anti-Kickback Act Clause?

NOTE: This clause is only required in situations where the Davis-Bacon Act also applies.

Yes ☐

No ☐

N/A ☐

Indicate the page number where a FEMA representative can locate the clause in the contract document.

Pg.:

If the contract meets the definition of “funding agreement”, did your organization include the required Rights to Inventions Made Under a

Contract or Agreement clause?

Yes ☐

No ☐

Indicate the page number where a FEMA representative can locate the clause in the contract document.

https://www.ecfr.gov/on/2024-10-01/title-2/subtitle-A/chapter-I/part-180 https://www.ecfr.gov/on/2024-10-01/title-2/section-200.327 https://www.ecfr.gov/on/2024-10-01/title-2/part-200/appendix-Appendix%20II%20to%20Part%20200 https://www.ecfr.gov/on/2024-10-01/title-2/part-200/appendix-Appendix%20II%20to%20Part%20200 https://www.fema.gov/sites/default/files/documents/fema_contract-provisions-guide_fy24.pdf#page=8 https://www.fema.gov/grants/preparedness/firefighters https://www.fema.gov/sites/default/files/documents/fema_contract-provisions-guide_fy24.pdf#page=8 https://www.fema.gov/sites/default/files/documents/fema_contract-provisions-guide_fy24.pdf#page=8 https://www.fema.gov/sites/default/files/documents/fema_contract-provisions-guide_fy24.pdf#page=9 https://www.fema.gov/grants/preparedness/emergency-management-performance https://www.fema.gov/grants/preparedness/homeland-security https://www.fema.gov/grants/preparedness/nonprofit-security https://www.fema.gov/grants/preparedness/tribal-homeland-security https://www.fema.gov/grants/preparedness/port-security https://www.fema.gov/grants/preparedness/intercity-passenger-rail-amtrak https://www.fema.gov/emergency-managers/risk-management/dam-safety/rehabilitation-high-hazard-potential-dams https://www.fema.gov/fact-sheet/safeguarding-tomorrow-through-ongoing-risk-mitigation-revolving-loan-fund-program https://www.fema.gov/grants/preparedness/transit-security https://www.fema.gov/sites/default/files/documents/fema_contract-provisions-guide_fy24.pdf#page=10 https://www.fema.gov/sites/default/files/documents/fema_contract-provisions-guide_fy24.pdf#page=15 https://www.fema.gov/sites/default/files/documents/fema_contract-provisions-guide_fy24.pdf#page=15

NOTE: This clause is not required under the PA, HMGP, FMA, PDM, FMAG, HMGP Post Fire, CCP, DCM, IHP-ONA, or Safeguarding Tomorrow RLF programs, as FEMA Awards under these programs do not meet the definition of “funding agreement”.

N/A ☐

Pg.:

If the contract involves the…