later prove to FEMA that the costs incurred were not excessive, considering the situation at the time the decisions were made. FEMA determines reasonableness by evaluating several factors, including the following: • The cost is of a type generally recognized as ordinary and necessary for the type of facility or work. 6 • The cost is comparable to the current market price for similar goods or services based on:⁷ – Historical documentation; – Average costs in the area; or – Published unit costs from national cost estimating databases.
whether there was an opportunity for the Subrecipient to obtain more reasonable pricing; – Project-specific complexities, such as environmental or historic issues, remote access or location, provision of a unique service with few providers, or elements requiring an extraordinary level of effort; or – The Subrecipient deviated from its established practices. 8 • Exigent circumstances existed. If so, FEMA evaluates the length of time the circumstances existed compared to the length of time costs were incurred. • The Subrecipient participated in ethical business practices, ensuring parties to a transaction are independent of each other, without familial ties or shared interests and on equal footing without one party having control of the other. 9 • The Subrecipient complied with local, state, and/or federal procurement requirements. When a disaster occurs, Subrecipients are faced with the task of doing whatever is necessary to protect property, protect
• Any of the following factors caused escalation of costs:
– Shortages in equipment, materials, supplies, labor, or contractors. When escalating costs are due to shortages, FEMA considers whether the Subrecipient’s work continued beyond the period of shortages and
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