Procurement under 2 CFR 200 after a disaster: what FEMA checks

FEMA procurement 2 CFR 200 compliance is reviewed on every contract McGee Disaster Consulting Group manages for an applicant, before an invoice is ever submitted. Procurement is one of the most frequent sources of audit findings in Public Assistance. The work was needed and the invoices were paid, yet costs may still be determined ineligible if the contract behind them was not procured the way 2 CFR 200 requires. The rules are federal. The fix is local: written procedures, a documented history, and a plan for what happens when the emergency ends.

Whose rules apply

A state, territorial or tribal government applicant follows the same policies and procedures it uses for purchases with its own funds, plus 2 CFR 200.321 through 200.323 and 200.327. Every other applicant, whether a county, a city, a school district, a utility or a private nonprofit, follows the full set of standards in 2 CFR 200.318 through 200.327: written procedures, written conflict-of-interest standards, full and open competition, and a documented history for each procurement. Your own charter, state statute or board policy may be stricter than the federal floor, and if it is, 2 CFR 200.318 requires your procedures to reflect it.

FEMA procurement 2 CFR 200: the five methods and the 2025 thresholds

Two reminders. Your state or local threshold may be lower than the federal figure, and if it is, it controls. And every procurement above the simplified acquisition threshold, contract modifications included, requires an independent estimate prepared before bids or proposals come in and a cost or price analysis of what does, with profit negotiated as a separate element wherever there is no price competition.

The emergency exception, read narrowly

A noncompetitive award is allowed when the item is available from only one source; when public exigency or emergency will not permit the delay of competition; when FEMA or the recipient expressly authorizes it in response to a written request; or when competition proves inadequate after several sources are solicited. The exigency exception is the one applicants lean on after a disaster, and it is narrower than it looks. It covers only the work specifically related to the emergency, only while the emergency conditions exist, and it carries an obligation to begin competitive procurement immediately and transition to a competed contract as soon as the circumstances allow. The Public Assistance Program and Policy Guide states that failing to plan for that transition does not justify staying on a sole-source contract.

For a large project built on a noncompetitive contract, the policy guide asks the file to explain what was bought and for roughly how much; why competition was not possible, with the specific conditions that made delay unacceptable; how long the contract will be used and what happens to the scope if it is not; the steps you took to determine that competition was not available; and any known conflicts of interest and what you did to identify them. Under 2 CFR 200 and the policy guide, if none of the allowable circumstances applied, FEMA may determine all or part of the cost ineligible.

Contract terms FEMA looks for

• The required provisions from Appendix II to 2 CFR 200, including termination for cause and for convenience, equal employment opportunity, debarment and suspension, anti-lobbying certification, recovered materials and domestic preference.
• A SAM.gov exclusion check on the contractor, printed and dated before award.
• Documented affirmative steps to include small, minority-owned and women-owned businesses in the solicitation.
• An independent estimate made before bids opened, and a cost or price analysis, for anything above the simplified acquisition threshold.
• No cost-plus-percentage-of-cost pricing. Time-and-materials only with a written determination that no other contract type is suitable and a ceiling the contractor exceeds at its own risk.
• A complete file: solicitation, advertisement or invitations, bid tabulation or scoring, selection rationale, executed contract, amendments and change orders.

How McGee Disaster Consulting Group helps

Every contract we manage is checked against FEMA procurement 2 CFR 200 requirements before award. McGee Disaster Consulting Group manages procurement compliance for you, from the pre-season contract review to the last invoice. The approach is to compete what can be competed before the season, keep the emergency exception short and documented when it has to be used, and check every invoice against the contract terms before money leaves the building. Recovery-Ready Planning covers pre-positioned contracts and written procedures; Pre-Retainage Review checks contractor documentation before retainage is released.