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Guest Blog: Hurricane Harvey Federal Procurement Requirements

September 19, 2017

In the aftermath of Hurricane Harvey, we know many impacted open-enrollment charter school operators are left with questions about how to repair the damage and how to serve students displaced by the storm. Among several resources, the Texas Education Agency (TEA) has provided guidance on emergency procurement under Texas Education Code (TEC) Chapter 44 Subchapter B, non-competitive procurement during an emergency, and the impact on federal grant funds. All Hurricane Harvey resources provided by the TEA are available here for your review. TEA issued procurement guidance specific to Hurricane Harvey here

It is important to review these materials, and reach out to legal counsel, your local designated Federal Emergency Management Agency (FEMA) official, and/or TEA if you have any questions or identify any conflicts because even where any applicable state law procurement requirements have been suspended under an emergency procurement exception, federal procurement requirements still exist where you will spend or seek reimbursement with federal funds. FEMA may also have its own interpretation of the regulations and has its own authority to issue waivers or approvals that TEA does not have. When using TEA “federal” money, however, follow TEA guidance.

Federal Grant and Title Funds Overseen by TEA

As noted in TEA guidance, the Education Department General Administrative Regulations (EDGAR) requires grant recipients who use federal grant funds to procure property and services to follow general procurement standards (2 CFR §200.318). Federal grant recipients must select the procurement method most appropriate under the circumstances from the following available methods:

2.Small purchase
3.Sealed bids
4.Competitive proposals
5.Non-competitive proposals (also commonly thought of as ‘sole source’)

Non-competitive procurement may be used when a public exigency or emergency will not allow for a delay in services, caused by the competitive solicitation process. In the event of an emergency, such as Hurricane Harvey, a grant recipient may choose to solicit a non-competitive proposal from only one source to avoid delay in procuring items or services (2 CFR § 200.320(f)(2)). When using the non-competitive procurement method, all costs must still be allowable under the specific program. TEA provided the following example:

An Local Education Agency (LEA) that received damage from Hurricane Harvey may need to quickly replace or acquire materials or services that were damaged, destroyed, or lost in the storms. Also, an LEA receiving a number of evacuated students may need to choose the non-competitive procurement option to more quickly procure needed items or services to be able to serve the unexpected growth in enrollment numbers.

While LEAs that determine a need for non-competitive procurement are not required to obtain prior approval from TEA, TEA has provided forms that are available online for LEAs that prefer to obtain prior approval as documentation for auditors 

The Request for Prior Approval Forms includes instructions for completing and submitting the appropriate form. Please note:

  1. 1.For LEAs located in counties identified in the Governor’s disaster declaration that received damages in the storms, an automatically approved form will be available for downloading. Submission to TEA is not required.
  2. 2.For LEAs outside the counties identified in the Governor’s disaster declaration that enrolled evacuated students from Hurricane Harvey, a prior approval request may be submitted to the Associate Commissioner for Grants Compliance and Oversight. Approvals will be processed within three business days.

Local documentation on how the determination for the need for non-competitive procurement was made is kept locally.

Federal Funds Managed and Overseen by FEMA

With respect to the interaction between procurement rules under EDGAR and rules for reimbursement from the Federal Emergency Management Agency (“FEMA”), TEA guidance clarifies that an LEA affected by Hurricane Harvey may use the non-competitive procurement method allowed by EDGAR to obtain goods and services quickly, as long as the LEA does not intend to submit the same expenditures to FEMA for reimbursement. If the expenditure is intended to be submitted to FEMA, presently or at a later date, then the LEA must follow the FEMA procurement rules. TEA guidance also makes clear that an LEA should not use federal grant funds (from TEA or Department of Education) to pay for services or activities with an intention of requesting FEMA reimbursement later. Any FEMA reimbursements/grant charges must be net “any amounts received from the Federal government to finance activities or service operations of the non-federal entity” under 2 CFR §200.406(b). The guidance notes that:

If an LEA is later reimbursed by FEMA for expenses that were charged to a federal grant, the LEA must ensure that the charges are treated as applicable credits as specified in EDGAR. To the extent that such credits received by the LEA relate to allowable costs, they must be credited to the federal grant either as a cost reduction or cash refund, as appropriate (2 CFR §200.406).

The full Guidance and FAQ from the TEA’s Department of Grants Compliance and Oversight is available at the link provided above for TEA resources in the section entitled “Federal Grants Information.”

While FEMA has adopted the same federal regulations for procurement as referenced by TEA, please know that FEMA has its own oversight, interpretation and requirements that are not necessarily the same or aligned with TEA. When using or seeking reimbursement form FEMA managed or allocated federal funds, your school must comply with FEMA regulations and guidance in order to avoid costs being questioned, disallowed or denied.

FEMA and the State have the following links to additional resources for procurement or reimbursement with FEMA monies:

FEMA Procurement Guidance (June 21, 2016)

FEMA Procurement Disaster Assistance Team (PDAT) resource page

FEMA Public Assistance: Contracting Requirements Checklist

Texas Department of Public Safety Procurement 101 presentation 

We are available should you have any questions or concerns about the procurement process, and we encourage you to review the full set of guidance resources available if you plan to procure any goods or services for emergency needs created by Hurricane Harvey.

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