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Contractors know with federal disaster money comes greater scrutiny

Consulting company warns Washington can seize funding it decides was applied to ineligible costs

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Rebuilding efforts have been helpful for contractors, who have been hurting for work since the 2008 recession. Robert Briant Jr. says 'it was pretty bad' until the prospect of post-storm work rolled in.
Rebuilding efforts have been helpful for contractors, who have been hurting for work since the 2008 recession. Robert Briant Jr. says 'it was pretty bad' until the prospect of post-storm work rolled in. - (AARON HOUSTON)

In the aftermath of a natural disaster, knowing the ins and outs of Federal Emergency Management Agency regulations can make a difference of millions of dollars.

Ken Burris, CEO of Witt O'Brien's, a Washington, D.C.-based disaster recovery consultancy, said towns, counties and other government officials hoping Uncle Sam will fund the bulk of their rebuilding work need to keep an eye on details.

"The one thing I'd emphasize is you have to pay attention to the paperwork," he said. "At the end of the day, if things aren't right, the federal government will come and recoup those funds."

Burris is a former chief operating officer at FEMA. Even if a local government is awarded FEMA reimbursement, the government can later take the funds back if they find they were applied to ineligible costs. Back when he was at the agency, it recouped about $600 million per year in eligible costs, he said.

Robert Briant Jr., CEO of the Utility and Transportation Contractors Association, said contractors are prepared for state supervision, too.

"There will be more oversight, because the state Legislature and the governor are placing some extra review processes on these projects to make sure the money's well spent," he said, referring to a recently signed bill to install integrity monitors to watch over state contracts.

Burris said FEMA also subjects rebuilding contracts to a number of limits.

"One of the interesting nuances of the Stafford Act is by administrative law… disaster funds can only supply the funding to build back to pre-disaster condition," he said.

That means a town that's been deferring capital maintenance on a school building for years can't take advantage of the federal funds to make the building good as new. The town can only get the building back to where it was before the storm.

Burris said the rules also state 25 percent of FEMA funding has to be used to get the local economy back on its feet by hiring local contractors.

"The problem with all that is there's more business there than local contractors can get done in a timely manner," he said. "So that requires out-of-state contractors to come in and assist. But there is an effort to try to use as much local work as they can."

Briant said he's aware of the out-of-state competition, but believes New Jersey companies will win the "lion's share" of rebuilding contracts.

E-mail to: jaredk@njbiz.com
On Twitter: @jaredkaltwasser

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