The level of devastation caused by Hurricanes Harvey and Irma in Texas and Florida, respectively, is estimated to have caused $150-200 billion in damages. With this devastation comes a multibillion-dollar recovery effort that will bring federal money and procurement into the affected areas. With past natural disasters as a guide, much of the work needed for short and long-term cleanup and rebuilding will be contracted to government contractors. The Robert T.  Stafford Disaster Relief and Emergency Assistance Act of 1988 (Stafford Act) will help facilitate these contracts but come with unique preference requirements aimed to favor the affected communities.

How does the Stafford Act assist in hurricane recovery?

The Stafford Act provides the legal authority for the federal government’s assistance to affected states during declared major disasters and emergencies. It allows the federal government to provide states with technical, financial, logistical, and other assistance when the magnitude of a disaster overwhelms the state’s resources. Under the Stafford Act, the federal government has access to the Disaster Relief Fund worth several billion dollars. This fund allows the federal government and contractors to work together in the wake of disasters to provide local communities with some form of relief, whether that be delivering supplies, removing debris, or permanent rebuilding.

How do government contract laws differ under the Stafford Act?

Traditional government contracts laws— i.e.  the CICA and the FAR— govern these federal contracts.  However, the Stafford Act implements unique regulations, such as a local preference, that contractors must keep in mind when submitting their proposals. Under § 5150 of the Stafford Act (FAR Subpart 26.2), contracts pertaining to “debris clearance, distribution of supplies, reconstruction, and other major disaster or emergency assistance activities” give preference— “to the extent feasible and practicable” — to contractors residing, or doing business, in the affected area. The preference is given through a “local area set-aside” or an “evaluation preference.”  A “set-aside” may be limited to firms within a specific geographic area identified in the RFP to compete (within the declared disaster area) and can be further set-aside for small business concerns.

“Set-aside” contractors should not only be aware of the local firm preference, but also all the requirements set forth in FAR 52.226-5, Restrictions on Subcontracting Outside Disaster or Emergency Areas. This clause requires the local prime contractor in a services contract to set-aside at least 50 percent of the cost of contract performance incurred for personnel shall be expended for employees of the prime contractor or employees of other businesses residing or primarily doing business in the area designated in the RFP.

How should contractors prepare for hurricane assistance opportunities under the Stafford Act?

This preference for the affected local workforce can be difficult to accommodate not only when bidding, but during performance, due to the potential lack of local businesses available to assist in the recovery effort. For this reason, the government will sometimes override the local preference requirement and justify their reasons for doing so within the RFP. That said, as contractors approach the opportunities arising from Hurricanes Harvey and Irma, they should be aware of the Stafford Act preference and always inquire as to whether it applies. If it does apply, contractors should further inquire as to which counties are being considered as local and incorporate the local workforce to increase their chances of being selected and/or complying with performance of work requirements. If you have further questions about the Stafford Act and how you can prepare, please contact me or another member of the Government Contracts practice at Bass, Berry & Sims.