DCMC PARTNERS. Alternative Procedures for Permanent Work (428) In Puerto Rico March 29, 2018
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1 Alternative Procedures for Permanent Work (428) In Puerto Rico March 29, 2018 DCMC Partners
2 Overview The President signed Alternative Procedures (Section 428 of the Stafford Act) into law in January of 2013, three months after Hurricane Sandy. Alternative Procedures are available for Debris Removal (Category A) and Permanent Work (Categories C-G). For DR 4339, Alternative Procedures for Debris Removal were not implemented. Alternative Procedures do not change the basic eligibility rules for Permanent Work (with a few exceptions) under Section 406 (Categories C-G). 2
3 Congressional Purpose of Alternative Procedures for Permanent Work 1. Reduce costs to the federal government in providing assistance. 2. Increase the flexibility in the administration of assistance. 3. Expedite the provision of assistance. 4. Provide financial incentives for timely and costeffective completion of projects. Stafford Act section 428(c) 3
4 What is 428 Normally? For permanent work, the Alternate Procedures involves the Subgrecipient agreeing to a fixed estimate for a specific subgrant. The Subrecipient is responsible for developing estimates and submitting them to FEMA for review and acceptance. Once FEMA accepts the estimates, an expert panel is convened (determined by FEMA, but most commonly the USACE) to review cost estimates and approve a final amount. It allows funding recipients to utilize the money for FEMAeligible work without any penalty if an alternate or improved project is constructed 4
5 What is 428 Normally? (Cont.) Multiple projects may be consolidated into a single fixed-cost subgrant, allowing greater flexibility on what is to eventually be built back. Any excess funds may be utilized for hazard mitigation or for activities that will enhance the ability to implement the PA program in the future. The Subrecipient is responsible for any and all costs above the agreed-upon fixed estimate. Work must still comply with environmental and historic preservation. In addition, the funding will be reduced based on actual or anticipated insurance proceeds, as appropriate. Section 406 Hazard Mitigation funds may be included in the fixed estimated grant amount. 5
6 Regular 428: Benefits and Risk of Alternative Procedures for Permanent Work Benefits Risk Subrecipients have an established budget for their recovery. Elimination of the 10% or 25% reduction for alternate projects (when facility function is not restored). Consolidation of projects. Use of excess funds for mitigation or planning. Flexibility in the use of funds. Greater opportunities for 406 mitigation funding (potentially). FEMA validates subrecipient engineering estimates, which become the basis of fixed cost subawards Subrecipient is responsible for overruns. 6
7 Differences Between National and Puerto Rico 428 Implementation National (Version 3) Puerto Rico (DR 4339) Participation Voluntary Mandatory per the FRN Cost Estimating Project Formulation Timeline Subrecipient s engineer develops, FEMA validates. The Subrecipient, Recipient, and FEMA collaborate. Will use methodologies developed by the Center of Excellence. Ultimately FEMA will determine the cost estimate. 12 months from declaration 18 months from the publication of the guide Expert Panel USACE To be determined, but panel will be agreedupon between FEMA and Puerto Rico, and will including local engineering expertise If No Agreement at End of Project Formulation Approach to 406 Mitigation for Improved/Alternate Projects Critical Services and Pre- Disaster Damage Revert to standard practices of closing out based on actual eligible project costs. Hazard mitigation funding under 406 can be retained on a case-by-case basis with flexibility in quantifying benefits. N/A Subrecipient must accept FEMA s cost estimate or decision of the Expert Panel. Subrecipient proposed Hazard Mitigation Proposals (HMPs) will be evaluated for technical feasibility and cost effectiveness. HMPs must be developed within project formulation timeline. Only one change to the HMP SOW allowed by FEMA. Without regard to pre-disaster damage for critical services provision, details of implementation are pending. 7
8 Damage Descriptions and Dimensions (DDD) Scope of Work (SOW) Resolving Disagreements Facilitated Discussion (Internal JFO Dispute Resolution Process) All other determinations besides cost estimates Appeals Cost Estimates Only Expert Panel 8
9 Mitigation 406 Mitigation Fully explore 406 Mitigation for every permanent work project. For in-kind restoration with same basic size/capacity, standard approach to 406 mitigation. For improved, alternate, or other projects in which there is a departure from restoring the pre-disaster design and/or capacity of the facility, HMPs will be developed based on the solution proposed by the Subrecipient, and BCA calculated per the forward-looking HMP. All HMPs must be developed and approved within the 18-month project formulation period. FEMA is allowing only one change to the HMP SOW, which has to occur within the 18-month project formulation period. Hazard Mitigation Grant Program (404) No changes to the program, which remains a separate program from PA. The FRN requires HMGP to be prioritized toward the protecting federal investments in Puerto Rico s public infrastructure. 9
10 Sector-Based Solutions Decision Point: Unified Solutions prioritized to receive PA funding by key partners based on eligibility, Governor s recovery priorities, desired speed of execution, and availability of other funding Unified Solutions Identified Decision Point Prioritized Solution Solutions and Funding Sources Finalized Total Fixed Cost Estimate FCE $ No change in SOW Subaward + PR $ $ + Other Federal $ + Private Sector $ Solutions Realized Solution Prioritized Solution FCE $ Change to Improved / Alternate Project Revise SOW and FCE* Subaward + PR $ $ + Other Federal $ + Private Sector $ Solution Prioritized Solution FCE $ FCE $ FCE $ FCE $ Can include FCEs from other SRs per agreement Combine into Improved / Alternate Project Revise SOW and FCE* Subaward + PR $ $ + Other Federal $ + Private Sector $ Solution *FCE revisions only for changes to 406 mitigation and insurance as described in PAAP Guide for Permanent Work in Puerto Rico FCE = Fixed Cost Estimate; 404 = Hazard Mitigation; SR = Subrecipient; PR = Puerto Rico (Recipient)
11 A/E Services Architectural and Engineering (A/E) Services FEMA will provide eligible funding for A/E services for permanent work projects, when design services are necessary for the eligible reconstruction. A/E fees will be considered direct project costs and may be calculated as a CEF factor. Subrecipients should consider requesting advanced FEMA funding if design work is needed prior to or during project formulation. 11
12 Direct Administrative Costs Direct Administrative Costs (DAC) DAC funding is for site inspections, project formulation, reviewing subawards, requesting project funding, and similar. On March 26, 2018, FEMA notified the Recipient that a 5% allowance for DAC will be provided to Subrecipients. This will be administered as a 4% + 1% (retained incentive for closeout), though FEMA s written guidance is pending for DR
13 Grants Management Alternative Procedures projects (PA C-G) will be subject to the standard grants management processes and requirements. Title 2 CFR requirements remain applicable (procurement, records retention, cost documentation, etc.) Subrecipients will obtain funding and be responsible for reports per standard processes. FEMA has developed a Public Assistance Alternative Procedures (Section 428) Internal Controls Considerations and Assessment Plan which outlines FEMA s pre-award and postaward requirements, reviews, and controls. 13
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