FEMA has provided guidance on the provisions of the UG that require contract costs to be “reasonable.” Even if the expense itself is eligible for reimbursement under Category B (emergency protective measures), the cost of that expense still must be reasonable. This requirement applies to all contracts. In addition, if the cost of a contract is $250,000 or more (i.e., it is above the Simplified Acquisition Threshold), an independent cost/price analysis must be performed prior to solicitation of bids. These requirements still apply even if the contract is eligible under the emergency and exigent circumstances (E/E) exception to UG competitive bidding requirements (FEMA has already provided guidance on E/E for the COVID-19 event; this guidance is available on the SOG COVID-19 resource site – see links to this site below.
The attached PDAT documents and message below from FEMA Region IV are very helpful in understanding the cost reasonableness requirement. Please read the full message below and the attached documents, and follow the advice given below about ways to check pricing and document your efforts. And, remember, document everything!
The attached guidance sheets are posted on our SOG COVID-19 resource site under Emergency Management.
2016-06-101310_clean_FEMAPricingGuideforRecipientsandSubrecipients