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Suggested Citation:"Chapter 5 - Contracts." National Academies of Sciences, Engineering, and Medicine. 2014. A Debris Management Handbook for State and Local DOTs and Departments of Public Works. Washington, DC: The National Academies Press. doi: 10.17226/22239.
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Suggested Citation:"Chapter 5 - Contracts." National Academies of Sciences, Engineering, and Medicine. 2014. A Debris Management Handbook for State and Local DOTs and Departments of Public Works. Washington, DC: The National Academies Press. doi: 10.17226/22239.
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Suggested Citation:"Chapter 5 - Contracts." National Academies of Sciences, Engineering, and Medicine. 2014. A Debris Management Handbook for State and Local DOTs and Departments of Public Works. Washington, DC: The National Academies Press. doi: 10.17226/22239.
×
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Suggested Citation:"Chapter 5 - Contracts." National Academies of Sciences, Engineering, and Medicine. 2014. A Debris Management Handbook for State and Local DOTs and Departments of Public Works. Washington, DC: The National Academies Press. doi: 10.17226/22239.
×
Page 31
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Suggested Citation:"Chapter 5 - Contracts." National Academies of Sciences, Engineering, and Medicine. 2014. A Debris Management Handbook for State and Local DOTs and Departments of Public Works. Washington, DC: The National Academies Press. doi: 10.17226/22239.
×
Page 32
Page 33
Suggested Citation:"Chapter 5 - Contracts." National Academies of Sciences, Engineering, and Medicine. 2014. A Debris Management Handbook for State and Local DOTs and Departments of Public Works. Washington, DC: The National Academies Press. doi: 10.17226/22239.
×
Page 33
Page 34
Suggested Citation:"Chapter 5 - Contracts." National Academies of Sciences, Engineering, and Medicine. 2014. A Debris Management Handbook for State and Local DOTs and Departments of Public Works. Washington, DC: The National Academies Press. doi: 10.17226/22239.
×
Page 34
Page 35
Suggested Citation:"Chapter 5 - Contracts." National Academies of Sciences, Engineering, and Medicine. 2014. A Debris Management Handbook for State and Local DOTs and Departments of Public Works. Washington, DC: The National Academies Press. doi: 10.17226/22239.
×
Page 35

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28 Synopsis of Issue Experience has shown that debris contracting requirements frequently are not well understood by the entities that may need to issue these types of contracts. Following a disaster, jurisdictions may find that their personnel and equipment are needed for multiple tasks. Awarding a debris contract or contracts will allow their own assets to be used on other high priority tasks. Being familiar with the debris management process, contract requirements and limitations, and complying with federal, state, and local contracting procedures will expedite the award of such contracts. Debris-related contracting (bidding and award procedures, monitoring, documentation, etc) is one of the major issues that may affect reimbursement. • Jurisdictions need to be aware of, and plan for, contracting for any or all phases of debris operations. Being aware of, and complying with, contracting requirements will help minimize permitting, compliance, and reimbursement issues. Procurement guidelines of the local juris- diction, as well as the federal agency providing potential funding for debris removal work, must be followed to be in compliance with federal program requirements. • Debris contracts can be used to supplement resource availability: – The jurisdiction should know if and when it plans to use contractor support vs. in-house resources. – Contracts may be issued pre- or post-event. The local jurisdiction should consider whether issuing contracts pre- or post-event will work best for it if it intends to use contract resources. – Some geographic areas have few contractor resources available. Community officials should understand what contract resources are available in their area and what other entities hold contracts with them to provide emergency services. The jurisdiction should understand who the contractor’s priority clients are. • Types of contracts may be limited depending on the requirements of the federal agency that might provide reimbursement funding. For example, FEMA generally does not allow time- and-materials contracts past the first 70 hours of eligible work performed, nor do they allow cost-plus-percentage-of-cost contracts. [See Title 44, Code of Federal Regulations (CFR), Section 13.36 for DHS/FEMA requirements.] (11) Target Audience • Debris managers. • Contracting/procurement personnel. • Legal counsel. • Political officials. C H A P T E R 5 Contracts

Contracts 29 Why Is Contracting Important? Local or state governments responsible for debris management operations might choose to issue debris removal, monitoring, and/or disposal contracts to augment the capabilities of their in-house resources. In many instances, the magnitude of the event and the quantities of debris generated overwhelm the responsible entity’s assets. In other cases, the responsible state or local agency might prefer to contract out debris responsibilities so that the agency can focus on its core missions. While citizens might tolerate decreased levels of service for short periods, debris management activities can take months to accomplish, necessitating the augmentation of existing staff and capabilities so that the agency can continue to provide the expected level of normal service to its constituents. State and local entities that anticipate seeking reimbursement for debris management activities from federal agency grant programs must comply with federal contracting requirements as well as their own procurement regulations. Non-compliance could jeopardize potential federal funding. This, in turn, could mean that the state or local entity is required to pay all of the debris-related costs out of its own funds, adversely impacting the financial well-being of the community. Example: 2004 Hurricanes (12) After Hurricane Ivan struck the City of Pensacola, FL, on September 16, 2004, the city was responsible for removing vegetative debris from 64 public parks. The city entered into a non- competitively bid time-and-materials contract with a large national firm to remove debris from the parks. Approximately six weeks after the contract was signed, the contractor completed debris removal and invoiced the city for over $1.3 million. The city submitted a reimbursement request to FEMA for the contractor’s services. FEMA determined that the contract did not meet federal contracting requirements, as it was not competitively bid, used time-and-materials as the basis for reimbursement, did not include a not-to-exceed limit, did not include a cost analysis, and did not substantiate an immediate threat to public health and property. FEMA compared the $35.53 per CY unit cost paid by the city to the calculated $9.26 per CY unit price for the local market during that time period. FEMA reimbursed the city for the work completed in the first 70 hours after the disaster based on the $9.26 per CY rate, a total of $357,047. What Is Involved in Debris Contracting? Contracting for debris management services requires a state or local entity to identify its anticipated needs, which can be assessed using the debris estimating methodologies described in Chapter 3. The planning committee or debris manager will evaluate available resources to determine conditions under which in-house or contract resources should be used to manage, accomplish, and/or monitor debris removal. In addition to resource capacity and capabilities, financial consid- erations might be considered when making a determination to issue pre-event debris contracts. The following items also might be considered: • Force account—Because some force account labor is assumed to be working regardless of whether a disaster occurs, the jurisdiction’s overall budget might be less severely impacted if these regularly budgeted resources are redirected to performing debris removal. Conversely, diverting force account resources results in routine services not being provided. If debris is widespread, the entity might not be able to reassign personnel to debris activities for long periods of time. • Contract labor—Contractors must be paid as the work is done, and then reimbursement requested from federal agencies. Transfer of funds from the reimbursement programs to the

30 A Debris Management Handbook for State and Local DOTs and Departments of Public Works agency paying the contractor could take months or even years. However, the use of contractors allows regular services to be provided with minimal interruption, and places more of the documentation burden on the contractor. • Mission assignment—In federally-declared disasters, FEMA has the option to mission-assign the USACE to provide debris removal services to Grantees and Subgrantees. This “option” requires a federal disaster declaration and can have a greater unit cost than using other alternatives, which means that the local jurisdiction’s overall cost share total could be higher. The anticipated debris management needs of the jurisdiction will form the basis for the devel- opment of the contract scope of work. The contract scope of work states what task the contractor is to accomplish, where, and in what timeframe. Typically it includes the following information: • The geographic extents covered by the contract (including maps can be helpful). • An estimate of the quantities of debris to be removed. • The work to be performed: – Clearance and/or removal and/or disposal. – Types of debris (mixed, vegetative, etc.). – Whether or not private property debris removal is included. If so, procedures must be clearly spelled out on how to differentiate between removal from public and private property. (Generally, it is best to obtain a determination from the appropriate federal agency on the eligibility of reimbursement for removal of debris from private property before such work is done.) – Specifies “eligible debris” or “eligible work” only per the regulations, policies, and guidance that govern each reimbursement grant program. – The extents and limits of where work is to be performed, for example, in “public rights-of-way” or on “public property” as prescribed by the particular program. – Number of passes to be completed. – Performance schedule. – Methods of documentation to be used by the contractor (e.g., load tickets). – Methods of measurement. – Equipment requirements. – Clearly stated basis of payment, such as cys or tons. – Documentation required of the contractor to substantiate invoices. – Voucher submittal and payment schedule. – Reporting requirements. – Safety (require the submittal of a safety plan). – Licensing requirements. – Penalties. – Termination clause. Some debris contracts have a clause that the contract may be termi- nated without cause with specific written notification. • Glossary of terms used in the contract. • Subcontracting provisions, including disclosure of subcontractors to be used. Sample scopes of work used by the USACE are available online (13). In addition to the scope of work, terms and clauses used in the jurisdiction’s contract boiler- plate language also would be included in the contract. This language would prescribe issues like bonding requirements, basis for termination, etc. Any scope of work developed should be vetted by the appropriate state or local legal department as well. Some further contract provisions to be considered for inclusion in a debris contract are: • Federal procurement regulations should be followed regarding inclusion of standard clauses for reasons such as invoicing requirements, payment terms, termination for cause, termination

Contracts 31 for convenience, prohibition of debarred contractors and subcontractors, and bonding require- ments, among others. • Execution should be done on a task order basis. This allows the jurisdiction to prescribe what the contractor is to do. It is an effective way of controlling contractor costs. • The contractor should be required to participate in the local entity’s annual training/exercise at no cost. • Contracts and contract modifications must be in writing; verbal agreements are not recognized. The state or local entity issuing the contract should follow its usual procurement procedures when soliciting bids for debris contracts. If the contracting entity might seek federal reimbursement for the work, then federal procurement requirements must also be followed. Generally speaking, federal procurement guidelines require the agency issuing the contract to develop the scope of work and cost estimate for the bid solicitation. Payment to the contractor cannot be contingent upon reimbursement from the federal agency. Some contracting requirements can vary by federal agency and program. Three of the federal agency debris management reimbursement programs frequently used by state and local govern- ments are discussed below: • FEMA Public Assistance Program – Competitively bid contracts are strongly preferred. 77 Time-and-materials contracts are allowable only for the first 70 hours of work under the PA program. 77 Lump sum/firm fixed price is allowed, but must be reasonable. 77 Unit price is allowed. 77 Cost-plus-percentage-of-cost is not allowed. – Small purchase orders to secure services or supplies costing less than $100,000 by obtaining several quotes from different sources are acceptable. – Sealed bids wherein the contract is awarded based on price (preferred method) are acceptable. – Competitive proposals wherein the contract is awarded based on contractor qualifications are acceptable. – Noncompetitive proposals are used only if the other three methods are not feasible and the item is available only from a single source; there is an emergency that does not permit delay; or competition has been determined to be inadequate. The basis for the noncompetitive process must be clearly explained and justified. The use of this method and the resulting award must be supported by a cost analysis by the procuring agency. – Emergency or expedited contracting procedures can be followed (see FEMA 9580.4) (14). – “Piggyback” contracts wherein one entity adopts or “piggybacks” on another entity’s award of an invitation to bid are strongly discouraged and have caused delays in approval and funding. – FEMA Policy 9580.201 (15) provides guidance on debris contracting for state and local agencies that plan to seek grant reimbursement from FEMA for contracted debris manage- ment services. The guidance contains checklists of what to include in contracts as well as what to avoid and can be found in Appendix C. • FHWA Emergency Relief Program – Competitively bid contracts are strongly preferred – The following are permissible if the state determines that competitively bid contracts are not feasible: 77 Negotiated equipment rental contracts. 77 Negotiated debris management contracts. 77 Contracts issued based on telephone bid solicitations to a “reasonable minimum number of contractors” (7).

32 A Debris Management Handbook for State and Local DOTs and Departments of Public Works – Must include FHWA Form 1273 (16); this form can be found in Appendix D. – In a Memorandum of Understanding between the Bureau of Indian Affairs (BIA) and FHWA, roads on tribal lands designated by BIA as falling under the authority of FHWA must follow FHWA procurement requirements; are likely to require giving preference to Native American firms, subcontractors, and workers; and require providing training and assistance to minority contractors. – The FHWA offers a class in Contract Administration for FHWA projects (17). • NRCS Emergency Watershed Protection (EWP) Program – NRCS works with a local entity known as the Project Sponsor. – Federal contract—NRCS enters into an agreement with the local Project Sponsor to do the contracting. Federal Acquisition Regulations, United States Department of Agriculture Acquisition Regulations, and NRCS Acquisition Regulations are followed. Projects costing less than $100,000 can use the Simplified Acquisition Process. Projects costing more than $100,000 must use competitive bidding procedures. – Locally-led contracting—This is the preferred method of contracting for the EWP. The Project Sponsor contracts for the work using the appropriate state and local regulations. – Force account—The Project Sponsor uses its own personnel and equipment to accomplish the work. This method can be used only for projects with an estimated cost of $150,000 or less. – Locally-led with landowner contract—The Project Sponsor enters into a contract with the landowner to accomplish the approved scope of work. – Performance of work—This method is used when the Project Sponsor does not have funds available to pay for its share of the installation work or the accounting system needed to keep detailed records required by force account contracting, but has forces (in-house or donated) to perform the work. In this case, the price agreed upon by the Project Sponsor and NRCS is fixed prior to commencement of the work, and recordkeeping is not required. What Are Other Options for Obtaining Debris Services? For a variety of reasons, including, but not limited to, jurisdiction size, geographic location, frequency of disasters, and non-availability of qualified contractors, some state and local entities do not wish to enter into contracts for debris services. If in-house resources become overwhelmed in the event of a debris-generating disaster, there are some other methods that might be available to state and local agencies for obtaining needed services. Councils of Government (COGs) or Local Emergency Planning Committees (LEPCs) might award debris management contracts for their members to use as needed. If such a contract is used, the agency awarding a task order should coordinate with the COG or LEPC holding the master contract on the process for issuing a task order. Some states maintain and administer contracts for their local jurisdictions to use, or have laws that designate certain already-contracted entities as having authority to haul debris in the event of a disaster. Local entities that plan to use state contracts should review and understand the contract terms and conditions prior to use. Example: Local Government Use of Connecticut’s State Debris Contract (18) In October 2011, the state of Connecticut endured an unusual snowstorm that toppled many trees and power poles. Two dozen cities and towns turned to contract resources to remove and dispose of the debris; eight issued their own contracts while 16 others used the state’s competitively bid, open-ended debris removal contract. The state also had a debris monitor- ing contract available for use by local governments; many used the contract while a few hired temporary workers and trained them. A post-disaster review of the costs paid by municipalities that used the state’s contracts compared to those that issued their own contracts suggests that,

Contracts 33 in general, the municipalities that issued their own contracts realized significant savings over the state contract. For example, based on a review of invoices, several of the towns that issued their own contracts would have paid $2.5 million to $4 million more for debris removal if they had used the state contract. Given that the jurisdictions were responsible for paying the 25-percent cost share required by the FEMA PA program, these entities saved between $0.5 million and $1 million of local taxpayer money. There are several likely reasons that the individually issued contracts generally had lower rates than the state’s contract. The state contract’s rates were publicly available and allowed other debris removal firms to undercut the state contract’s prices to ensure that municipalities that were soliciting bids would award their own contracts rather than use the state’s. A difference in fee structures might also account for the overall cost savings. Some contractors charge a separate management fee based on total amount of debris collected but charge lower unit prices for debris removal and disposal, while other contractors do not charge a separate management fee but instead incorporate the fee into their unit prices, generally increasing the unit price for removal and disposal. Lastly, the state’s contract was with a large, national firm that has the capacity to do much more than vegetative debris cleanup, which is reflected in their pricing. This particular disaster was primarily a vegetative debris disaster, which some tree and landscaping services that have lower overhead are capable of handling. The local governments that used the state’s contract indicated that they had not previously needed this type of service and so did not have the appropriate contracts in place. They were primarily concerned about public safety, and the state contract allowed them to address this concern. Furthermore, the state’s contractors were seasoned in the eligibility issues and documentation requirements of FEMA’s PA program. The local governments that used the state contracts believe that the recordkeeping of these firms facilitated quick reimbursement from FEMA. The result of the analysis has made towns aware of some issues to consider when deciding how to contract for debris monitoring, removal, and disposal services in the future. Acknowledging that “the state contracting process generally is very good,” they will analyze the situation and decide on the course of action that makes the most sense for the particular circumstances. Who Issues Debris Contracts? Debris management contracts typically are issued by local government agencies or quasi- government entities, as they most often are responsible for clearing and removing debris from public property and rights-of-way within their jurisdictional boundaries. Some state’s laws encourage or even prescribe contracting at the state level. Each state and local government agency responsible for overseeing debris management operates under different hierarchical structures within their governments. The following entities might be involved in contracting for debris management services, depending on their particular government structure and legal authorities: • State or local department of transportation and highways. • State or local general services administration or equivalent contracting agency. • State or local emergency management agency. • Regional coordinating entity such as a council of governments or regional planning committee. • Local DPW/solid waste authority. • Local utility department. • Local emergency management agency. • Local parks department. • Local department of natural resources.

34 A Debris Management Handbook for State and Local DOTs and Departments of Public Works Within the locality or agency, different individuals could participate in development, award, oversight, and payment of the contract. Such individuals could include, but are not limited to: • City/county manager. • Department administrator (e.g., director, deputy director). • Division administrator (e.g., solid waste, streets). • Contracting officer/contracting specialist. • Procurement manager. • Finance officer. • Debris manager. • Legal counsel. The agencies and individuals involved in developing and issuing debris management contracts should coordinate on the technical, boilerplate, and other legal content of the request for services and subsequent award. This will help ensure that the needs of the community will be met while following jurisdictional procurement methods and, as appropriate, meeting federal grant program requirements for contracting. When Are Debris Contracts Issued? Contracts for debris management services can be issued before or after a debris-generating event. Contracts that are issued prior to the occurrence of a debris-generating event are called pre-event, prepositioned, or standby contracts, and are strongly preferred by FEMA. State and local jurisdictions that have experienced large debris-generating events highly recommend the use of prepositioned contracts, yet nearly 62 percent of the respondents to our study survey indicated that they did not have prepositioned contracts for debris monitoring, removal, and/or disposal. Awarding contracts for debris management services in advance of a disaster offers state and local entities several advantages when the services are needed. Pre-event contracts generally are done during “peace time,” avoiding the rush associated with just-in-time, emergency-type contracting. By slowly and deliberately developing the scope of work, advertising, and issuing the contract, the awarding entity increases the likelihood that the contract will comply with federal agency contracting requirements for grant reimbursement programs. Pre-event contracting also is regarded as promoting more competitive bidding, which is likely to result in lower bids than when demand is high and resources are scarce, as is typical immediately following a disaster. Once they are in place, pre-event contracts can be activated immediately upon the need to aug- ment existing in-house capabilities, which can provide for a more rapid response and smoother recovery. Because debris management contractors have been pre-identified, the jurisdiction is able to better respond to post-disaster inquiries from other debris contractors that solicit their business by claiming they are “FEMA-approved” or “FEMA-certified.” (It is important to note that FEMA does not approve or certify any debris contractors. They do, however, maintain a database of self-registered debris contractors on their website, but firms on that list are NOT certified by FEMA) (19). As with any process, there can be a downside to issuing pre-event contracts. Debris management contractors may hold contracts with multiple clients in close geographic proximity to each other, which could result in a competition for limited resources during emergencies/disasters if the contractor’s resources are limited or exceeded. Most debris contractors have agreements with subcontractors to assist in major debris removal/disposal events; however, in large disasters, the primary contractor may have many clients, and may be forced to use less experienced subcontrac- tors. This potential pitfall can be mitigated by issuing multiple contracts and/or including clauses in the contract that require the contractor to provide priority service to the issuing entity.

Contracts 35 Some state and local entities want to prepare for procuring debris-related services in the event they are needed but do not wish to execute a prepositioned contract for these services. In these cases, the state or local entity might prepare by issuing requests for qualifications to pre-qualify contractors and then asking the contractors to provide bids if/when needed. The state or local entity might also pre-draft contracts by developing standard boilerplate and other required language. When the scope of the event is known, it is added to the pre-drafted language and a request for proposals or bids is issued. If a state or local entity has not taken steps to develop pre-event debris management contract language and finds that it needs to contract for debris management services after a disaster has occurred, there are several options that the entity might pursue to expedite the procurement process. One option is to first issue an emergency contract to get field operations underway. If this option is used, the contracting entity should ensure that emergency contracting procedures follow local and state procurement requirements, as well as federal requirements if federal agency reimbursement will be sought. Once the emergency contract is in place and operations are ongoing, the state or local entity can use the duration of the emergency contract to procure long-term debris manage- ment services. This process allows them to comply with governing procurement regulations and also negotiate with suppliers to try to get a fair price. Another option is to use mutual-aid resources to supplement force account resources until long-term contracts can be issued. Entities that use this option as a primary source of support should be aware that their mutual-aid partners might be impacted by the same event, which could impede the partner’s ability to provide mutual aid. How to Contract for Debris Management Services If a state or local agency decides that it will issue debris management contracts, a scope of work and in-house cost estimate should be developed by the issuing agency, typically the DPW or high- way department. Within the procuring agency, the technical part of the scope of work may be developed by the debris manager, the debris planning committee, or other knowledgeable per- sonnel. Often the debris-related scope of work is given to the contracts or procurement depart- ment and added to boilerplate language containing standard clauses, terms, and conditions. Jurisdictions must follow their own procurements policies and those of the states in which they are located. If a state or local procurement policy is more stringent than the federal policy, then the more stringent policy should be followed. Example: 2004 Florida Hurricanes (20) In 2004, the state of Florida was hit by four major hurricanes in 5 weeks, resulting in over 53 million cubic yards of debris. Many state and local agencies did not have pre-event debris management contracts in place, and thus had to issue emergency contracts for debris removal, sign and signal repair and replacement, and roadway repairs to federal-aid roads. These agen- cies learned that it is important to follow federal contracting requirements, regardless of the nature or magnitude of the emergency. For example, the FHWA ER program requires that all contracts include a requirement for using Davis-Bacon prevailing wage rates and FHWA 1273 provisions. Failure to include these could result in emergency expenses being ineligible for reimbursement. Consequently, the Florida Department of Transportation (FDOT) developed a model contract to aid state and local agencies in drafting pre-event contracts as well as issuing emergency contracts. Once contracts are issued, it is important for the administering agencies to properly manage the contracts. FDOT found that documenting how issues were handled was essential for estab- lishing and maintaining consistency in the FHWA Emergency Relief process. They developed a frequently-asked-questions document for their transportation engineers, which they also shared with other state and local agencies.

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TRB’s National Cooperative Highway Research Program (NCHRP) Report 781: A Debris Management Handbook for State and Local DOTs and Departments of Public Works provides debris management practices for local, tribal, and state departments of transportation and for public works agencies. A PowerPoint presentation and a final report describing the methodology of the project are available online.

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