Contracting for Disaster Relief: The Federal Method
By James F. Nagle on July 8, 2014 | Posted in Procurement Issues
The American public generally agrees that the federal government’s contracting response is far from efficient. ‘Why did it take so long to get help for Hurricanes Katrina and Sandy and/or the Joplin Missouri Tornado take so long?’ is a commonly asked question. So, while the memories of the Oso, Washington landslide are still fresh in our minds, it might be good to review what the federal government has done since Katrina to assure that the federal government can more quickly and efficiently respond to the next major national disaster.
The federal government has issued a new Part 18 to its Federal Acquisition Regulation (FAR). Part 18 is entitled “Emergency Acquisitions” which is to be used when the President issues an emergency declaration or a major disaster declaration. Part 18 essentially does three things. Because emergencies are, by definition, unusual and a compelling urgency, it recognizes that:
- There is typically no need for the federal government to advertise that is it is looking for contractors;
- Nor is there any need to require full and open competition, because time simply will not allow it; and accordingly,
- Many normal requirements such as bid guarantees or the prohibition against advance payments can be waived.
The issue then becomes, if there is no requirement or even ability to advertise, how can the government quickly find the needed contractors? The federal government has come out with a Disaster Response Registry which is free to join as part of the registration process that federal contractors have already completed in order to get on the Central Contractor Registration (CCR) or the new System for Award Management (SAM). The federal government asks contractors to get on this registry so it can determine the availability of contractors for debris removal, distribution of supplies, reconstruction, and other disaster or emergency relief activities inside the United States and outlying areas. The only additional information that contractors are typically asked to provide on the registry is the geographic area in which they normally perform and the amount of their bonding capacity. Contracting Officers are required to consult the Disaster Response Registry to determine the availability of such needed contractors.
The third aspect of the response is that the federal government has decided that to hasten a full economic recovery, there should be a preference for making awards of prime and subcontracts to local firms, to the extent practical, either through a local area set-aside program or evaluation preference. So, the Contracting Officer may set aside solicitations to allow only local firms within a specific geographical area to compete. While a major disaster or emergency area may span counties in several contiguous states, the set-aside area need not include all of the counties in the declared disaster/emergency area, but cannot go outside it. It should be noted that these local area set-asides are not necessarily set aside only for small businesses. They can include even large businesses to the exclusion of other large businesses from areas not affected by the disaster. If a set aside is not used, then the evaluation preference would provide more evaluation points, in an unrestricted buy, to local firms.
To make this clearer and stronger, the federal statute provides that any expenditure of federal funds under an emergency response contract not awarded to a local firm must be justified in writing. Moreover, the government will typically include a clause, FAR 52.226-5, Restrictions on Subcontracting Outside Disaster or Emergency Area, to assure that local residents are selected for employment with the prime and subcontractors to the maximum extent possible. Indeed, that clause allows for a minimum figure to be stated so that the contractor must not employ less than that percentage. The federal government also states that in anticipation of potential emergency response requirements, the federal agencies involved in response planning should consider awarding emergency response contracts before a major disaster or emergency occurs, in order to insure immediate response and relief.
Undoubtedly in the next several years there will be more major disasters throughout the United States, including here in the Pacific Northwest. In response to those situations, the procurement methods outlined above, especially the Disaster Response Registry, might allow local contractors to be well positioned to be selected for the relief work that they are qualified to do.