Department of Homeland Security
 

Costs Claimed by Brunswick Volunteer Fire 

Company under Fire Station Construction Grant 

Number EMW-2009-FC-00409 

American Recovery and Reinvestment Act of 2009 

OIG-12-113 August 2012
 
 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

 Washington, DC 20528 / www.oig.dhs.gov 

AUG 13 2012 

MEMORANDUM FOR: Elizabeth M. Harman

Assistant Administrator, Grant Programs Directorate 

Federal Emergency Management Agency 

FROM: 

SUBJECT: Costs Claimed by Brunswick Volunteer Fire Company, Inc. 

Under Fire Station Construction Grant Number EMW-2009-

FC-00409R

Anne L. Richards

Assistant Inspector General for Audits

Attached for your information is our final letter report, Costs Claimed by Brunswick 

Volunteer Fire Company, Inc. Under Fire Station Construction Grant Number EMW-2009-

FC-00409R. Since the report contains no recommendations to the Federal Emergency 

Management Agency, we did not solicit formal comments and no further response to 

this report is necessary. 

Consistent with our responsibility under the Inspector General Act, we are providing 

copies of our report to appropriate congressional committees with oversight and 

appropriation responsibility over the Department of Homeland Security. We will post 

the report on our website for public dissemination.

Major contributors to this report are Roger La Rouche, Director of Recovery Act Audits; 

William Gillies, Audit Manager; Gary Greer, Auditor; and Jeanne Genao, Report 

Referencer. 

Please call me with any questions, or your staff may contact John E. McCoy II, Deputy 

Assistant Inspector General for Audits, at (202) 254-4100. 

Attachment

 
 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Background 

The American Recovery and Reinvestment Act of 2009 (Recovery Act), as amended, 

appropriated $210 million to the Federal Emergency Management Agency (FEMA) for 

competitive grants for modifying, upgrading, or constructing nonfederal fire stations. 

On June 10, 2010, FEMA awarded a grant of $2,431,161 to the Brunswick Volunteer Fire 

Company, Inc. (Fire Company), Brunswick, Maryland, for constructing a new fire station. 

The grant specified a period of performance from June 10, 2010, to June 9, 2013. As of 

March 2012, the Fire Company had completed construction of the new fire station (see 

figure 1) and had received reimbursement of $2,431,161 from FEMA. 

Figure 1. Brunswick Volunteer Fire Company Station No. 5. 

Source: Brunswick Volunteer Fire Company. 

Under the terms of the grant, the Fire Company agreed to use the grant funds according 

to FEMA’s American Recovery and Reinvestment Act Assistance to Firefighters Fire 

Station Construction Grants Guidance and Application Kit (“Guidance and Application 

www.oig.dhs.gov 2 OIG-12-113 
 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Kit”), and to comply with Office of Management and Budget (OMB) Circular A-87, 

Revised, Cost Principles for State, Local, and Indian Tribal Governments, and the Uniform 

Administrative Requirements for Grants and Cooperative Agreements to State and Local 

Governments in 44 Code of Federal Regulations Part 13. 

The grant also includes requirements for complying with OMB Circular A-133, Revised, 

Audits of States, Local Governments, and Non-Profit Organizations, and Recovery Act 

provisions for submitting quarterly recipient reports to the Federal Government on the 

use of Recovery Act funds; paying prevailing wages as determined by the Secretary of 

Labor; and using American-made iron, steel, and manufactured goods. The objective of 

this audit was to determine whether costs claimed were allowable, allocable, and 

reasonable according to the grant agreement and applicable Federal requirements.

Results of Audit 

We determined that the Fire Company incurred sufficient allowable, allocable, and 

reasonable costs to earn the $2,431,161 provided under the grant. In addition, we 

concluded that the Fire Company complied with Recovery Act requirements for 

submitting quarterly Recovery Act reports to the Federal Government and for ensuring 

that the contractors paid prevailing wages and used American-made iron, steel, and 

manufactured goods in the construction of the new fire station. However, the Fire 

Company did not follow OMB guidance in determining the number of jobs created by 

the Recovery Act.

Compliance With Requirements for Reporting, Buying American, and Paying Prevailing 

Wages

Section 1512 of the Recovery Act requires recipients to submit quarterly reports to the 

Federal Government that include information on funds received and expended, project 

activities, and the number of jobs created and retained. The Recovery Act also 

stipulates that recipients use American-made iron, steel, and manufactured goods 

(Section 1605) and that laborers and mechanics be paid, at a minimum, prevailing wage 

as determined by the Secretary of Labor under 40 U.S.C. Chapter 31, Subchapter IV 

(Section 1606). 

We verified that the Fire Company submitted the required quarterly reports. The 

reports submitted for fiscal year 2011 showed the creation of 35 jobs “associated with 

construction of the building as well as administration and manager positions.” OMB 

www.oig.dhs.gov 3 OIG-12-113 
 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Memorandum M-10-081

 requires grantees to estimate the number of Recovery Act jobs 

created based on (1) work performed by the grantees only in the quarter being reported 

(not cumulative); (2) work performed by subrecipients; and (3) a calculation that divides 

the total actual hours worked in funded jobs by the number of hours representing a full 

work schedule for the kind of job being estimated. This calculation converts part-time 

and temporary jobs into full-time equivalent positions. Instead of computing the 

number of full-time equivalent positions, the Fire Company reported an estimate of the 

number of workers on the job site on any given day. We are not recommending any 

corrective action regarding this matter because OMB Memorandum M-10-342

 states, 

“Changes to prior [quarterly recipient] reports may not be initiated for the ‘Number of 

Jobs’ field.” 

For the other compliance areas, we confirmed that the Fire Company included the 

prevailing wage requirement in its public solicitation for construction bids and the 

manufacturing source identification requirements in the building specifications. 

Moreover, the Fire Company developed sufficient controls to ensure that these 

provisions were honored. Controls included a requirement for subcontractors and 

suppliers to comply with the Buy American provisions, review and certification of 

invoices by the architect, and a requirement for contractors to submit payroll reports

showing payment of prevailing wages. 

1 Updated Guidance on the American Recovery and Reinvestment Act – Data Quality, Non-Reporting 

Recipients, and Reporting of Job Estimates, December 18, 2009.
 2 Updated Guidance on the American Recovery and Reinvestment Act, September 24, 2010.
 

www.oig.dhs.gov 4 OIG-12-113 
 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix A 

Objectives, Scope, and Methodology 

The Department of Homeland Security (DHS) Office of Inspector General (OIG) was 

established by the Homeland Security Act of 2002 (Public Law 107-296) by amendment 

to the Inspector General Act of 1978. This is one of a series of audit, inspection, and 

special reports prepared as part of our oversight responsibilities to promote economy, 

efficiency, and effectiveness within the Department. 

The objective of this audit was to determine whether costs claimed by the Fire Company 

were allowable, allocable, and reasonable according to the grant agreement and 

applicable Federal requirements. This audit covered costs of $2,459,660 incurred by the 

Fire Company from June 2010 to April 2012. 

In conducting our audit, we— 

•	 Obtained and reviewed the Recovery Act, the grant application and award, the grant 

Guidance and Application Kit, and Federal cost principles and grant administrative 

requirements; 

•	 Interviewed Fire Company personnel to gain an understanding of their accounting 

system and the applicable internal controls; 

•	 Reviewed the Fire Company’s internal controls specifically related to our objectives; 

•	 Examined contractor invoices and other evidence supporting 100 percent of FEMA 

project costs; 

•	 Reviewed accounting transactions related to purchases, payments, and receipt of 

FEMA reimbursements; 

•	 Used the grant provisions and applicable Federal requirements to determine 

whether amounts claimed were eligible for reimbursement; 

•	 Performed fraud detection procedures; 

•	 Inspected the new fire station and surrounding property; and 

www.oig.dhs.gov 5	 OIG-12-113 
 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

•	 Obtained and reviewed source documents to determine whether the Fire Company 

complied with requirements for reporting; buying American-made iron, steel, and 

manufactured goods; and paying prevailing wages. 

We conducted this performance audit between March 2012 and July 2012, pursuant to 

the Inspector General Act of 1978, as amended, and according to generally accepted 

government auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our

findings and conclusions based upon our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based upon our 

audit objectives. 

www.oig.dhs.gov 6	 OIG-12-113 
 

 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix B 

Report Distribution 

Department of Homeland Security

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff

General Counsel 

Executive Secretary 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs

Assistant Secretary for Office of Legislative Affairs 

Acting Chief Privacy Officer 

Recovery Act Coordinator 

Administrator, Federal Emergency Management Agency

Audit Liaison Office, Federal Emergency Management Agency 

Office of Management and Budget

Chief, Homeland Security Branch 

DHS OIG Budget Examiner

Congress

Congressional Oversight and Appropriations Committees, as appropriate 

www.oig.dhs.gov 7 OIG-12-113 
 

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at: @dhsoig. 

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