Municipal and cooperative utilities: Year-round considerations to prepare for disasters

While hurricane and wildfire seasons are ending, winter storms are already impacting communities across the country, highlighting that disaster preparedness is a year-round consideration. It’s important to have the right plans and procedures in place to recover quickly and efficiently after a disaster.

When a disaster hits the service territory of a municipal or cooperative utility, FEMA Public Assistance funding can be used for recovery, infrastructure resilience improvements, and mitigation against future disaster events. Although restoring power as quickly and safely as possible is the priority after a disaster, the way your recovery work is completed and documented impacts your eligibility for FEMA dollars. It’s critical to understand the FEMA process well before a disaster hits so you remain compliant with all applicable regulations.

Keep reading to learn the steps you should take to better prepare your utility for future disasters.

Assess current conditions of facilities

Throughout the year, it’s important to conduct routine maintenance and retain detailed records of facility conditions. This tells FEMA that your assets were in good working condition prior to the disaster event. Without these records, FEMA may determine that your recovery work is ineligible due to deferred maintenance.

Make sure to develop a pre-disaster baseline to record the condition of infrastructure during blue sky days to support damage status and source. This can also be used to prioritize projects for resilience funding.

Notate construction in progress

Inventory all construction projects in process. Identify construction projects at risk of potential hazards such as flood and wind. Review builders’ risk policies and identify who is responsible for disaster-related repairs. Coordinate with contractors about emergency protective measures that could be needed.

Review existing emergency response plan and key roles

To be eligible for reimbursement, FEMA requires projects to include detailed cost tracking and detailed, accurate record keeping for costs. It’s critical that you develop financial and operational procedures that clearly capture post-disaster costs to streamline the federal funding process and maximize reimbursement.

Operations teams should work with their accounting departments to establish processes for tracking work. This includes establishing dedicated general ledger accounts post-disaster, allocating costs to specific work orders, and thoroughly documenting damage and repair information.

Oftentimes a blanket work order is opened immediately following the event, but more detailed records are better for when projects need to be staked and converted to individual work orders. For example, you can’t just say you replaced 100 poles after an event; you need to know the specific locations (GPS coordinates), associated labor, and equipment used.

Build compliance into day-to-day operations

FEMA is prescriptive in how they want force account labor and equipment usage to be tracked and reported. Tracking the required inputs by staff daily when they complete their timesheets or by the finance department when time is entered into the accounting system from paper timesheets will reduce the level of effort needed to find and allocate expenses later.

For example, FEMA has a set schedule of equipment rates. Identifying your vehicles and equipment in accordance with FEMA’s schedule, tracking all equipment used in a specific work order (i.e., truck and trailer), and assigning vehicles to the person actually operating the vehicle will reduce the reconciliation work needed to account for equipment usage after a disaster allowing for faster reimbursement.

Review procurement policy and pre-positioned contracts

FEMA only provides funding for contract costs if the federal procurement and contracting requirements are met. This means you need to develop procurement policies that comply with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200). These principles outline requirements for procurement methodology based on size and scope of contract, conducting outreach to disadvantaged business enterprises, and provisions that must be included in contracts to be eligible for funding.

While there are exceptions to non-competitive procurement, such as exigent circumstances immediately following a disaster, these are the general requirements that need to be followed for vendor costs to be eligible for reimbursement. Build on existing policies and processes to incorporate compliance with federal requirements. It’s also helpful to develop pre-positioned contracts so you have vendors in place prior to a disaster event.

Complete material inventory

Similar to labor and equipment, accurate tracking of materials is critical to ensuring costs are eligible for reimbursement. FEMA may question the cost basis of existing inventory—versus procurement of new materials—after a disaster event. The agency may also look at how inventory is accounted for from an invoicing perspective. To address this and expedite FEMA’s approval of reimbursement, develop a process with itemized material orders categorized by repair location and assigned to individual work orders.

Especially with major disasters, it’s important to not only establish general ledger accounts for project cost accounting, but also identify materials for specific work orders for accurate tracking to maximize eligibility. Additionally, staff who work on material ordering and inventory should charge their time to specific work orders, instead of an overhead account, to maximize reimbursement.

Review mutual aid agreements

Insufficient documentation may lead to delays in document validation and a reduction in reimbursement amounts. Ensure completeness of documentation by addressing the following:

• Provisions in the mutual aid agreement that provide clear guidance.
• Submit materials with clarification on how work is to be completed and documented.
• Have mutual aid providers submit invoices on a timely basis (every 30 days).
• Manage review in real time for accuracy and completeness.
• Develop a standard for expense descriptions and templates.

Your agreements should specify the use of FEMA equipment rates and specify crew labor rates. This should be updated annually to streamline the documentation process after a hazard event.

FEMA “Obtain and Maintain” requirements

FEMA regulations require applicants who receive FEMA assistance to purchase flood insurance for future flood damage to any insurable property. If an Applicant does not obtain and maintain insurance, FEMA will not provide assistance for that facility in future disasters.

Keep in mind, transmission and distribution lines are generally not insured. However, substations and other buildings are insurable. It helps to look at past FEMA claims to understand Obtain and Maintain requirements. You should also work with your insurance provider to understand what assets are covered by your insurance policy.

The FEMA process is complex and requires multiple steps and reviews to obligate projects. Our team has supported more than 100 state and local entities with complex disaster recovery projects, including several municipal and cooperative utilities. I hope this information helps you navigate the complicated FEMA Public Assistance funding process.