DCMC PARTNERS

Alternative Procedures for Permanent Work (428)

In Puerto Rico
March 29, 2018 DCMC Partners
DCMC
 Overview

DCMC PARTNERS
• 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).

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 Congressional Purpose of Alternative Procedures for Permanent Work

DCMC PARTNERS
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 cost-

effective completion of projects.
Stafford Act section 428(c)

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What is 428 Normally?

DCMC PARTNERS
• 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 FEMA-
eligible work without any penalty if an alternate or
improved project is constructed

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What is 428 Normally ? (Cont.)

DCMC PARTNERS
• 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
 “Regular” 428: Benefits and Risk of Alternative Procedures for Permanent

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Work
Benefits Risk
Subrecipients have an established Subrecipient is responsible for
“budget” for their recovery. overruns.
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

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 Differences Between National and Puerto Rico 428 Implementation

DCMC PARTNERS
National (Version 3) Puerto Rico (DR 4339)

Participation Voluntary Mandatory per the FRN

Cost Estimating Subrecipient’s engineer develops, The Subrecipient, Recipient, and FEMA
FEMA validates. collaborate. Will use methodologies
developed by the Center of Excellence.
Ultimately FEMA will determine the cost
estimate.
Project Formulation 12 months from declaration 18 months from the publication of the guide
Timeline
Expert Panel USACE To be determined, but panel will be agreed-
upon between FEMA and Puerto Rico, and
will including local engineering expertise
If No Agreement at End of Revert to standard practices of closing Subrecipient must accept FEMA’s cost
Project Formulation out based on actual eligible project estimate or decision of the Expert Panel.
costs.
Approach to 406 Mitigation Hazard mitigation funding under 406 Subrecipient proposed Hazard Mitigation
for Improved/Alternate can be retained on a case-by-case basis Proposals (HMPs) will be evaluated for
Projects with flexibility in quantifying benefits. technical feasibility and cost effectiveness.
HMPs must be developed within project
formulation timeline. Only one change to
the HMP SOW allowed by FEMA.
Critical Services and Pre- N/A Without regard to pre-disaster damage for
Disaster Damage critical services provision, details of
implementation are pending.
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 Resolving Disagreements

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Damage Descriptions and
Dimensions (DDD) Facilitated Discussion
(Internal JFO Dispute
Scope of Work (SOW) Resolution Process)

All other determinations Appeals

besides cost estimates

Cost Estimates Only Expert Panel

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 Mitigation

DCMC PARTNERS
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.
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 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 and Funding Sources Finalized Solutions

Solutions Realized
Identified Decision Point Total Fixed Cost
Estimate
Prioritized Subaward
FCE $ No change in SOW
Solution + PR $ + 404 $ Solution
+ Other Federal $
+ Private Sector $

Prioritized Change to Improved / Subaward

Solution
FCE $
Alternate Project + PR $ + 404 $ Solution
+ Other Federal $
Revise SOW and FCE* + Private Sector $

FCE $ FCE $ Combine into Improved /

Prioritized Subaward
Solution Alternate Project
FCE $ FCE $ + PR $ + 404 $ Solution
+ Other Federal $
Can include FCEs from Revise SOW and FCE*
+ Private Sector $
other SRs per agreement

*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)
 A/E Services

DCMC PARTNERS
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.

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 Direct Administrative Costs

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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 4339.

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 Grants Management

DCMC PARTNERS
• 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 post-
award requirements, reviews, and controls.

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