Categories A and B have restrictions on regular time, (overtime only) and sometimes, time periods, depending on the type of disaster declaration. Permanent repair categories have no overtime restrictions. All categories will also pay for fringe benefits, equipment, rented equipment, and contractual services. Note: FEMA refers to applicant owned equipment and their personnel as "Force Accounts" and the documents used to capture their expenses, as "Force Account Forms". Read the Public Assistance Applicant Handbook to learn more. Get your copy here
You should also note that projects funded through categories A and B are not eligible for "406 mitigation".
An applicant must be very careful when deciding whether to use force accounts (their forces) or contractual services for their A and B work. You must decide if the possible increase in the cost of contractual services will be less than the amount of the loss of overtime reimbursement.
FEMA equipment rates are pretty straightforward. FEMA will reimburse you for an hourly rate based on their list of equipment rates, or your established rates, whichever is lower. Make sure to use the latest rates available. You may also be able to use state rates (which may be higher) providing you have formally adopted use of those rates prior to the disaster. Get equipment rates here Note: FEMA rates do not apply to rented equipment. Those costs are reimbursed on actual costs billed by the provider. Be sure to record all costs for fuel and lubricants, as they typically are not included in rental costs.
Now that you have your projects separated into categories. The next step is to determine whether they will be large or small projects. Section 422 of the Stafford Act (Simplified Procedure) allows FEMA to fund projects that are under a certain dollar amount (adjusted annually in accordance with the Consumer Price Index CPI) in a more simplified way. The actual wording of the section is a little confusing so I’ll put it in laymen’s terms.
Small projects (less than $123,100.00) are funded in full based on the Federal Estimate (PW), with two caveats.
1. When the project is completed as per the Scope of Work (SOW) in the PW. The applicant (or sub) is allowed to keep any overages awarded for that particular project.
2. If there is a shortage in the amount awarded in the PW, the applicant (or sub) can request additional funding. However, all small projects will be audited for any overages/shortages. If it is determined that a shortage exists after all projects have been reconciled, additional funds will be awarded. If FEMA determines there is an “overall” overage, they could require that those overages are returned. This information is available in the FEMA Public Assistance Guide. Get your copy here
It is very important that your projects SOW and estimate amounts are complete and accurate. It can be extremely difficult and time consuming to request additional funding in the future.
If you decide to have the FEMA Project Specialist estimate your damage, it is critical that you understand their estimating process. You may very well be leaving tens of thousands of dollars, or more, on the table.
How FEMA estimates Small Projects. FEMA’s “go to” estimating tool is a document commonly referred to as the FEMA “Cost Codes” (g.2). Get an example here This tool is developed by FEMA to reflect costs for different types of work in your geographic area. Make sure to request a copy from FEMA for your perusal before any project estimating begins.
This tool can be extremely helpful to the Project Specialist estimating you damages as it allows them a quick way to develop costs. However, is it in your best interest? Probably not! It is generally in your best interest to develop your own cost estimates using historical and/or current cost data for that type of work in your area. This may take you more time to put together and be more difficult for the FEMA representative. However, your community is counting on you and the decisions you make on their behalf, to be in their best interests. Not the FEMA reps!
Large projects are estimated and funded differently than small projects. It can sometimes (rarely) be advantageous to group a number of small projects together to create a large project. There are several considerations to explore before making that decision.
First; remember, with small projects, if you complete the scope of work for less than the estimate, you (the applicant) are entitled to keep the remaining funds for the betterment of your community. Not a small consideration if you estimated wisely, and were frugal in getting the work completed.
Second; do you have complete and absolute faith in the organizational skills of your FEMA Project Specialist? They are the ones responsible for creating the large project PW. Combining many small projects together while keeping the supporting documentation in an easy to follow, and organized way, is a talent very few have mastered. You could be creating a bookkeeping headache you will have to deal with for years to come.
Third; there could be issues regarding one of the projects, (406 Mitigation, floodplain management, insurance, environmental, historical, etc.) just to name a few. It only takes one issue, on one project, to stall the funding process for the entire large project. Often times the issues are not apparent at the time the PW was created. However, once they do surface, the obligating of disaster funds can come to an immediate halt until the issues are addressed and resolved. Many times the only solution is to rewrite the large project, remove the project(s) with the issues, and begin again, creating separate PW’s for one or more small projects.
As I mentioned earlier, there could be a benefit to grouping a number of smaller projects together to create a large project.
The small projects could be poorly written, with incomplete SOW’s and underestimated costs. More often than not, an applicant will decide not to be bothered with the reconciliation process of all the small PW’s and walk away. Leaving their eligible disaster funds behind. A large project is advanced to the applicant as the work progresses. Then, funded to the penny once the work is 100% complete, providing the SOW was completed as per the PW. In this case, the applicant would receive 100% funding for all the small projects.
FEMA also incorporates the use of an estimating tool referred to as Cost Estimating Format (CEF) with some large projects. It was designed to include costs that may be overlooked while developing an estimate, such as; permits, local costs, units cost adjustments, etc. Get more CEF information here
Ultimately, the decision whether to group, or not to group small projects rests with you, the applicant (or sub). Not with FEMA. That decision should not be made without careful consideration of the facts, the dollars involved, the issues that could possibly arise, and administrative requirements for large projects.
FEMA has four different mitigation programs. Each one designed, developed and funded to help you meet your specific disaster prevention needs. 406 Mitigation is the program designed and funded under authority of section 406 of the Stafford Act. It is the program that concerns you most when dealing with damages addressed in your PW's. Historically, the programs have been, and largely remain "stand alone" programs. However, since Hurricane Katrina there has been a partnering initiative between the 406 and 404 mitigation programs to create a more seamless approach regarding recovery and mitigation of some facilities. Get a more detailed description of each program here
Section 406 Public Assistance (PA) is a post-disaster program established under Section 406 of the Stafford Act—it is jointly administered by FEMA and individual states. As part of the reimbursements made to restore damaged public facilities and certain private non-profit (PNP) facilities, public assistance funds may be made available for cost-effective mitigation measures undertaken as part of the recovery. The amount of Section 406 Mitigation funds made available in any given disaster is not computed by a formula, but is based on a project-by-project evaluation of the feasibility and cost effectiveness of mitigation measures.
Section 404 Hazard Mitigation Grant Program (HMGP) is a post disaster program established under Section 404 of the Stafford Act. It offers funding to states, communities, and other eligible grant recipients to invest in long-term measures that will reduce vulnerability to future natural hazards. The states have a strong role in administering HMGP, with FEMA providing oversight. Contact the State Hazard Mitigation Officer (SHMO) for state-specific information.
Pre-Disaster Mitigation (PDM), established under Section 203 of the Stafford Act, is a nationally competitive grant program designed to assist states and communities to develop mitigation plans and implement mitigation projects. PDM funds are appropriated annually. FEMA convenes national panels to evaluate eligible applications. Applications are submitted by states following the state selection process. Communities should contact the SHMO for state-specific PDM procedures.
Flood Mitigation Assistance (FMA) is a grant program funded by the National Flood Insurance Program (NFIP) and focused on buildings that are insured by the NFIP, with particular attention to buildings that have received multiple claim payments. As with the HMGP, FMA is state-administered, and information and assistance is available from the SHMO.
406 Mitigation is a program FEMA Public Assistance has struggled with for decades. Not for lack of want. Exactly the opposite. FEMA would like nothing more than to greatly increase the amount of 406 Mitigation projects developed and approved in every major disaster declaration. FEMA sets goals to have 15 to 20 percent of all projects written (categories C-G) to include 406 Mitigation.
The problem is not desire. Lack of properly trained staff and educating the applicants on the program is where FEMA could use help.
It is imperative that applicants (that’s you) take a more proactive approach to educate yourself and your staff on FEMA’s 406 Mitigation program.
It’s a simple program. If your infrastructure (facility) was damaged as a result of the event, FEMA wants to not only provide dollars to repair or replace it. FEMA wants to include extra funding to allow for cost-effective measures/modifications to the facility, to reduce the chance of damage in the future.
Cost-effective, that’s the determining factor. How exactly is cost-effectiveness determined? Using historical data from past disasters. FEMA has developed a list of mitigation measures they have pre- determined to be cost-effective. Get your list here
Don’t worry if you don’t see the measure you are seeking on the list. It is certainly not all inclusive. It’s just a list of measures FEMA has used many times in the past. FEMA encourages you to develop your own ideas on how to best mitigate your damaged facilities. If it proves to be cost-effective and does not infringe on any local, state or federal laws or regulations, FEMA should be happy to provide funding.
FEMA has a general rule of thumb of 15% of the cost to repair a facility to pre-disaster design, function and capacity. However, it can well exceed that percentage providing the measure has a Cost Benefit Ratio (CBR) greater than 1.0, per the following guidelines:
To evaluate proposed hazard mitigation projects prior to funding FEMA requires a Benefit-Cost Analysis (BCA) to validate cost effectiveness. BCA is the method by which the future benefits of a mitigation project are estimated and compared to its cost. The end result is a benefit-cost ratio (BCR), which is derived from a project’s total net benefits divided by its total project cost. The BCR is a numerical expression of the cost effectiveness of a project. A project is considered to be cost effective when the BCR is 1.0 or greater, indicating the benefits of a prospective hazard mitigation project are sufficient to justify the costs. Get your Cost Benefit Analysis Tool here
It’s critical to you and your community, that you take advantage of FEMA’s 406 Mitigation program. Be sure to include it (if possible) on all your FEMA funded (C-G) projects!
“A facility is considered repairable when disaster damages do not exceed 50 percent of the cost of replacing a facility to its predisaster condition, and it is feasible to repair the facility so that it can perform the function for which it was being used as well as it did immediately prior to the disaster.” This regulation is often referred to as “The 50 Percent Rule.”
There are going to be “issues” on every disaster. That’s just part of the game. And that’s Okay. They are to be expected in the disaster business. Your project may get slowed down for a short time while those involved work through it and find a solution. No big deal.
Certain “issues’ however, have a tendency to become problematic. Their “slowdown” might more accurately be described as “stuck”. Projects being analyzed using FEMA’s 50% Rule have a history of falling into the “stuck” side of the ledger.
It’s not the obvious ones, where the repair cost is 70% of the cost of replacement. That’s easy. It’s the projects where the margin is much closer to 50/50 that have the problems. And it doesn’t matter if the facility is a multi-million dollar hospital, or a $35,000.00 low water crossing. The same questions and concerns will surface.
How was the project estimated? What about mandatory upgrades? Did you allow for the increased cost of materials due to the material shortage and increased labor costs caused by the disaster?
If you have a project and the cost of repairs to your damaged facility comes back at 35, 40 or 45 percent of the cost of replacement, you’ll find yourself asking those same type questions.
This is when you want to make sure you know the ins and outs of the 50% rule better than FEMA. Not that the policy get your copy here is particularly hard to understand. It’s the item cost and contingency costs that were, or were not, included in the analysis that drive the outcome of the estimates, and ultimately, FEMA’s final decision.
Make sure you have every possible expense imaginable included in the repair estimate to get the repair costs over the 50% threshold.
Stay “unstuck” with this one. Know "for sure" the outcome of the analysis before going to FEMA.
When an applicant determines that the public welfare would not be best served by restoring a damaged facility or its function, the applicant may request approval of an alternate project from FEMA through the Grantee. Applicants receive Federal funding based on a percentage of the Federal cost share of the Federal estimate of the cost of repairing, restoring, reconstructing, or replacing the facility. Section 609 of the Security and Accountability For Every Port Act of 2006 (SAFE) (P.L. 109-347) amended section 406 (c)(1) of the Stafford Act by changing the contribution for alternate projects for public facilities from 75 to 90 percent of the Federal share of the eligible costs. There was no change to the contribution of 75 percent of the Federal share for alternate projects for Private Non-Profit facilities.
An “alternate project” is different from an “improved project.” An improved project restores the facility and maintains its function or maintains the function in another existing or new facility(with no reduction in Federal share). Conversely, the application of eligible funding to repair or expand other public facilities, or construct a new-use facility, or purchase capital equipment or perform hazard mitigation measures unrelated to the original facility, would be considered alternate projects. Read more about FEMA's Policy regarding Alternate and Improved Projects here
Section 324 of The Stafford Act allows for the inclusion of certain costs incurred by a grantee and/or sub-grantee for Administrative Costs (aka Indirect Admin Costs), as well as administrative costs that can be directly chargeable to a specific project, which are referred to as Direct Administrative Costs (DAC).
Several years ago changes were made to the process in which FEMA reimburses grantees and sub-grantees for their Administrative Costs. Most notably is the change from reimbursing DAC as a percentage of the costs of the eligible disaster damage repairs, to using actual costs incurred. See FEMA Policy DAP9525.9 here Download and print a copy of this policy for future reference.
Make sure to maintain complete and accurate records of labor, fringe benefits as well as consultant/contract costs in an hourly form directly chargeable to each project (PW) to meet the requirements of the policy and OMB Circular A-87 get your copy here.
The line between Administrative Cost and Direct Administrative Costs can sometimes be a little blurry. Click here for a list of examples to help you better understand them.
Because of the change from a percentage to actual cost. Many applicants have either dedicated their own personnel, or obtained the services of a professional FEMA consultant to assist with their administrative needs. Be sure to take the time to thoroughly understand the policy and the activities that are reimbursable, so you can make your best decision on how to proceed.
If you have a specific question or feel you may need professional help with your FEMA Public Assistance Grant. We're here to help you. Call or email to see what we can do for you.
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