In-Kind Memorandum of Understanding for Design Work Performed Prior to Execution of a Design Agreement
What is an In-Kind Memorandum of Understanding (MOU)?
An In-Kind MOU is a document executed by the Corps and a non-federal sponsor (such as the City) which allows for eventual credit for the value of materials or services provided by the non-federal sponsor prior to execution of a formal project agreement (such as a design agreement). In this case, credit for eligible in-kind contributions would go toward the City’s required non-federal cash contribution should a design agreement subsequently be executed. The statutory authority for an In-Kind MOU is found in Section 221(a)(4) of the Flood Control Act of 1970, as amended (42 U.S.C. 1962d-5b(a)(4)).
What led to the execution of an In-Kind MOU between the Corps and the City?
By letter dated June 11, 2024, the City requested to enter into an In-Kind MOU to carry out certain proposed design work prior to the execution of a design agreement for the Charleston Peninsula CSRM project. After some discussion regarding the scope of in-kind design work, the Corps and City executed an In-Kind MOU on October 24, 2024. The MOU does not deviate from the standard provisions of the model MOU developed by the Corps for in-kind work prior to execution of a design agreement.
What design work is covered by the MOU?
The design work contemplated in the MOU generally consists of preliminary preconstruction engineering and design (PED) work and design-related studies regarding storm surge structure alignment and form, along with supporting data collection and assessments, as well as public engagement.
Are there requirements that the City’s design work has to meet in order to be eligible for credit?
Yes. First, the Corps must determine that the City’s design work is integral to the Project prior to the execution of a design agreement. The non-federal design work must constitute work that the Government would otherwise have undertaken for design of the Project in order for it to be deemed integral, and must be consistent with the general parameters of PED work outlined during the feasibility phase of the Project. Second, creditable non-federal design work does not include activities which the City would be obligated to perform as part of a design agreement (such as serving on a design coordination team). Third, the Corps must verify that the City’s design work was accomplished in a satisfactory manner, and in accordance with applicable Federal laws, regulations, and policies. Fourth, after the design work is performed by the City pursuant to the In-Kind MOU, the Corps will conduct an audit to determine the reasonableness, allocability, and allowability of the City’s costs.
What if the City wants to achieve more with its design work than the Corps would otherwise do for design of the Project?
The City is not prevented from achieving complementary goals which are in addition to or which exceed those that the Corps would otherwise apply to design of the Project. Where non-federal design work exceeds the standards that the Corps would otherwise apply to design of the Project, it is considered a “betterment”. Design work associated with additional work or betterments is not eligible for credit under the In-Kind MOU.
Does the MOU provide a guarantee that covered design work will receive credit if a design agreement is executed?
No. In addition to the conditions for eligibility noted above, credit for in-kind design work may be impacted by such things as project authority and funding, or by future modification of the project which could result in certain in-kind design work no longer being an integral part of the Project.