Source: http://www.ccmedicalreservecorps.org/news-and-events/fema-news-feeds/17-fema-news-feeds/5-fema-region-i-news-releases
Timestamp: 2014-03-08 16:51:29
Document Index: 34439190

Matched Legal Cases: ['§ 206', '§ 5172', '§ 206', '§13', '§13', '§13', '§13', '§13', '§206', '§206', '§206', '§206', '§206', '§ 206', '§ 206', '§ 206', '§ 206', '§ 206', '§206']

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Appeal Type: 2ndReport Type: PWAppeal Categories: Pre-Disaster ConditionsScope of WorkApplicant Name: City of Cedar Rapids Disaster Number: 1763-DR-IADSR: 10300Date Signed: Friday, February 28, 2014PA ID: 113-12000-00Summary/Brief: Conclusion: The Applicant sufficiently demonstrated that costs claimed for two contractors were associated with work within the approved scope of work to restore a pool complex and could be separated from ineligible costs associated with upgrades. As to a third contractor’s costs, the work performed was neither project management nor engineering services. The work was not directly related to the performance of eligible work and, therefore, the costs associated with that work, if eligible, would constitute DAC. The documentation provided was not sufficient to support reimbursement as DAC.
The Applicant provided sufficient documentation with respect to two contractors demonstrating the bifurcation of costs associated with work within the approved scope of work from ineligible costs associated with upgrades.Letter: February 28, 2014
Re: Second Appeal—City of Cedar Rapids, PA ID 113-12000-00, Ellis Pool Complex Repair, FEMA-1763-DR-IA, Project Worksheet 10300
This is in response to a letter from your office dated June 12, 2013, which transmitted the referenced second appeal on behalf of the City of Cedar Rapids (Applicant). The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) partial denial of claimed costs for engineering and project management services related to the repair of the Ellis Pool complex, resulting in a denial of $174,405.18 in additional project costs claimed by the Applicant.
As explained in the enclosed analysis, the Applicant provided sufficient documentation, with respect to two contractors, that allows design and project management costs associated with the approved project scope of work to be separated from those associated with project upgrades. As to a third contractor’s costs, additional documentation is necessary to determine whether the costs may be reimbursed as direct administrative costs (DAC). Therefore, I am partially granting the appeal for $94,755.80. By copy of this letter, I am requesting the Regional Administrator to take appropriate action to implement this determination. Specifically, I am requesting the Regional Administrator accept and consider any documentation the Applicant provides with its request for project closeout associated with the third contractor’s costs that could substantiate reimbursing those costs as DAC. Please inform the Applicant of my decision. This determination constitutes the final decision on this matter pursuant to 44 C.F.R. § 206.206.
cc: Beth Freeman Regional Administrator FEMA Region VIIAnalysis: Background
From May 25, 2008 through August 13, 2008, severe storms and flooding caused damage throughout the State of Iowa. During the incident, the Cedar River exceeded flood stage and the flooding damaged the Ellis Pool complex, which consists of three buildings supporting a main swimming pool and auxiliary wading pool and is owned and operated by the City of Cedar Rapids (Applicant).
FEMA prepared Project Worksheet (PW) 10300 for $551,198, including $3,750 in direct administrative costs (DAC), to fund the Ellis Pool repairs. The Applicant completed the scope of work to restore the pool to its pre-disaster design as well as certain enhancements and upgrades to the facility. At project closeout, the Applicant requested reimbursement in the amount of $726,603, a cost overrun of $175,405. The Applicant’s claimed costs included repair costs, contract and force account DAC, engineering and design services, project management costs, and materials costs. The Iowa Homeland Security and Emergency Management Division (Grantee) determined that the Applicant had completed an improved project and recommended that project funding be capped at the originally obligated amount of $551,198. FEMA determined that the Applicant had failed to provide sufficient documentation allowing for the ineligible costs associated with the upgrades to be separated from the eligible costs associated with work within the approved project scope of work. In August 2012, FEMA closed out the project at the originally obligated amount, $551,198.
First Appeal The Applicant submitted a first appeal in a letter dated October 12, 2012, which the Grantee forwarded to FEMA in a letter dated November 29, 2012. In its first appeal, the Applicant acknowledged that the Grantee had concluded at project closeout that documentation for two firms with which it contracted, a design firm and a consultant, did not adequately distinguish between costs for upgrades and work within the approved scope of work. The Applicant asserted documentation that it provided with the appeal (1) identified the design firm’s costs associated with the upgrades, (2) showed its consultant did not perform any work related to the upgrades, and (3) documented costs associated with a third firm. The Grantee supported the appeal, stating that the documentation the Applicant provided had not been available at the time of project closeout.
The FEMA Region VII Regional Administrator denied the first appeal in a letter dated March 11, 2013, concluding that the Applicant failed to provide sufficient documentation to allow contractor costs for the approved scope of work for the Ellis Pool complex to be separated from those for upgrades. With regard to one contractor the Applicant hired, Novak Design Group, the Regional Administrator noted that at project closeout the Applicant did not provide any documentation to allow for such a breakdown. Submitted in conjunction with its appeal, the Applicant provided a single-page letter from Novak Design dated September 28, 2012, that separated out its upgrade costs. In rejecting the sufficiency of this documentation, the Regional Administrator noted that the letter did not include any source documentation, such as timesheets, or an explanation of the methodology used to separate out costs associated with upgrades. As to another contractor, Howard R. Green Company, the Regional Administrator expressed concern that the firm, which the Applicant hired to complete damage assessments and help develop scopes of work for multiple projects within its jurisdiction, signed multiple contract amendments with the Applicant, extending deadlines and increasing incurred costs, without explanation. The Regional Administrator also noted that, at closeout, the Applicant had not adequately separated Howard R. Green costs associated with improvements from those associated with work within the approved scope of work. As for the third contractor, Ryan Companies US, Inc., the Regional Administrator noted that an invoice the Applicant provided did not include any source documentation, such as timesheets. The Regional Administrator concluded that the Applicant failed to provide any explanation of how the invoice provided related to the approved scope of work. Finally, the Regional Administrator stated that the cost estimate developed by FEMA using the Cost Estimating Format (CEF), which allows a total of $87,485 for project management and design costs, exceeds the amount the Applicant requested for such services provided by Novak Design and Howard R. Green.
The Applicant submitted a second appeal in a letter dated May 16, 2013, which the Grantee transmitted to FEMA in a letter dated June 12, 2013. In its second appeal, the Applicant provided a second letter from Novak Design dated May 8, 2013. In it, Novak Design acknowledged miscalculations in its prior letter from September 2012 and, based on new figures, asserts that, out of a total of $67,723.65 in professional services billed to the Applicant, $3,656.25 represented costs associated with “non-sustainable upgrades.” The Applicant also included timesheet records provided by Novak Design. The Applicant now claims a total of $64,067.40 for costs associated with Novak Design – $67,723.65 less the $3,656.25 in “non-sustainable upgrades.”
Regarding Howard R. Green, the Applicant asserts that that contractor’s work related only to performing damage assessments and developing scopes of work at multiple locations, all of which related to only the “damaged elements” of such locations, not improvements or upgrades.
As for Ryan Companies, the Applicant’s construction management firm, the second appeal included eleven additional invoices and a spreadsheet summarizing costs associated with the Ellis Pool project. The Applicant claims a total of $30,688.40 in Ryan Companies’ costs and states that it is not claiming $184.00 identified as related to “sustainable upgrades.”
Finally, the Applicant notes that costs it is claiming for project management and design associated with Novak Design and Ryan Companies (rather than Howard R. Green) – $64,067.40 and $30,688.40, respectively – exceeds the $87,485 CEF estimate for project management and design costs. The Grantee supports the Applicant’s appeal.
Under Section 406(e)1) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), FEMA is authorized to reimburse the cost of repairing, restoring, reconstructing, or replacing an eligible facility “on the basis of the design of such facility as it existed immediately prior to the major disaster.”[1] Public Assistance (PA) applicants may elect to make improvements to facilities being repaired or restored to its pre-disaster function. If so, “the Grantee’s approval must be obtained” and “Federal funding for such improved projects shall be limited to the Federal share of the approved estimate of eligible costs.”[2] PA guidance further explains that any improved facility must have the same function and at least the capacity of the pre-disaster facility.[3] In addition:
Funding for such projects is limited to the Federal share of the costs that would be associated with repairing or replacing the damaged facility to its pre-disaster design, or to the actual costs of completing the improved project, whichever is less. If eligible repair or replacement costs exceed the original estimate and costs can be separately documented (i.e., if approved costs can be tracked separately from improvement costs), the applicant may appeal the amount of the grant.[4]
With the Ellis Pool project, the Grantee concluded that the Applicant had completed an improved project, and it recommended that the project amount be capped at $551,198, the originally obligated amount, specifically because, at project closeout, costs could not be split between ineligible upgrade costs and costs associated with work within the approved scope of work. This recommendation was consistent with the general approach to improved project funding outlined in applicable regulations, which is to limit federal funding to the federal share of the approved estimate of eligible costs. As the Public Assistance Guide explains, however, an applicant may appeal the amount of the grant for an improved project, provided that eligible repair costs can be documented and tracked separately from ineligible improvement costs.[5]
Here, the Applicant has adequately demonstrated that such a breakdown of costs for the Ellis Pool project is possible. As to the Novak Design costs, the Applicant, in its first appeal, provided a one-page letter from Novak Design stating that its work on “sustainable upgrades” amounted to $3,823.65. Such upgrades, the letter stated, included canopy structures, preparing and painting a wood trellis, and developing “an exterior color scheme.” The remaining work, categorized as “flood recovery,” amounted to $58,900. The Applicant provided no additional documentation supporting this claim on first appeal. On second appeal, however, the Applicant included a follow-up letter from Novak Design, along with timesheets for the three employees that worked on the upgrades. The follow-up letter corrects a “discrepancy” and provides new figures. The letter lists the three staff members, their hours worked, and their rates for work performed on the upgrades. In Novak Design’s amended figures, the upgrades amount to $3,656.25, and the remainder amounts to $64,067.40. The timesheets provide sufficient backup documentation for those figures. They track each individual employee’s work associated with upgrades by noting specific hours worked on “non-sustainable upgrades.” This allows for a separation of costs associated with upgrades from costs associated with work within the approved scope of work. Given the time-sheets’ descriptions of work associated with upgrades versus work associated with the approved scope of work, the Applicant has demonstrated that it adequately tracked improvement costs versus approved costs related to Novak Design.
The Applicant’s documentation for claimed costs associated with Ryan Companies is similarly sufficient. In its first appeal, the Applicant provided documentation in the form of an invoice prepared by Ryan Companies totaling $24,771.75. In its second appeal, the Applicant provided additional invoices and vouchers, as well as a spreadsheet summarizing total costs for Ryan Companies. The Applicant now claims a total of $30,688.40, stating that it is not claiming $184.00 associated with “sustainable upgrades.” The additional invoices and vouchers provide sufficient detail to separate costs associated with upgrades from costs associated with work within the approved scope of work. The Applicant states that line items marked “PRE005-S” represent work associated with upgrades. There is one such line item in the Applicant’s documentation, totaling $184.00. Because the Applicant’s documentation indicates that it tracked ineligible upgrade costs separately from eligible costs for work within the approved scope of work, the Ryan Companies’ costs are allowable.
As to the Howard R. Green costs, the Applicant provides its original contract and amendments to the contract which list estimated fees by facility. The total estimated fee for the Ellis Pool shown in the documents is $15,760. The scope of work of the Applicant’s contract with Howard R. Green is for professional services “to provide an opinion of probable cost associated with the post flood reconstruction of buildings and other structures …” The Applicant explains that Howard R. Green completed damage assessments of the Ellis Pool and other facilities and the work performed was unrelated to upgrades. Assuming arguendo Applicant’s assertion, the work Howard R. Green performed was neither project management nor engineering services. As the work was not directly related to the performance of eligible work, the costs associated with that work, if eligible, would constitute DAC. DAC includes costs that can be tracked, charged and accounted for directly to a specific project. Such costs must be reasonable and properly documented in order to qualify for reimbursement. The Applicant has not provided a detailed description of the work Howard R. Green performed with respect to the Ellis Pool and associated costs. Without such a description, FEMA is unable to analyze the eligibility of the Howard R. Green DAC.
The Applicant has provided sufficient documentation with respect to Novak Design and Ryan Companies to enable FEMA to differentiate Ellis Pool project costs associated with upgrades from costs associated with work within the approved scope of work. Accordingly, the Applicant should be reimbursed for the costs associated with work within the approved scope of work performed by those contractors (specifically, $64,067.40 for Novak Design and $30,688.40 for Ryan Companies). As to the Howard R. Green DAC, the Applicant has not provided documentation that would allow FEMA to properly analyze whether the $15, 760 listed in the contract is an actual cost costs eligible in accordance with FEMA policy. The Applicant may submit documentation in support of the eligibility of the $15,760 in DAC for consideration at project closeout. [1] See 42 U.S.C. § 5172(e)(1).
[2] See 44 C.F.R. § 206.203(d)(1).
[3] See FEMA 322, Public Assistance Guide (June 2007) (PA Guide), at 110.
OIG Audit Report DD-10-08
Appeal Type: 2ndReport Type: PWAppeal Categories: Reasonable CostApplicant Name: Orleans Parish Sheriff’s OfficeDisaster Number: 1603-DR-LADSR: 1320 and 15882Date Signed: Wednesday, February 26, 2014PA ID: 071-UPP9W-00Summary/Brief: Citation: FEMA-1603-DR-LA, Orleans Parish Sheriff’s Office, Office of Inspector General, Audit Report DD-10-08
Cross-Reference: Reasonable Cost
Summary: High winds and flooding during Hurricane Katrina damaged 10 correctional facilities owned and operated by the Orleans Parish Sheriff’s Office (Applicant). As a result, the Applicant’s kitchen facilities, from which meals were prepared for employees and inmates at all 10 facilities, were rendered inoperable. FEMA documented the costs for both the inmates’ and employees’ catered meals on PWs 1320 and 15882. On January 31, 2010, the Department of Homeland Security Office of the Inspector General (OIG) issued the results of an audit of the Applicant’s disaster related expenses. The OIG recommended FEMA reduce the funding for employee meals by $1,000,249 due to lack of competitive contracting that resulted in unreasonable costs. In addition, the audit noted that the Applicant received $44 million in 2005 and $39 million in 2006 from outside sources for inmate custody and care, and claimed that meal costs were part of the cost for overall care. The Regional Administrator determined that the Applicant’s argument, that costs for employee meals were reasonable because they were less than the federal per diem rate, was not an acceptable measure for employee or inmate meals. Additionally, the Regional Administrator stated that the external payments for inmate per diem were not grants or donations but specific payments for the custody and care of their respective inmates which would include meals. In its second appeal, the Applicant maintains that FEMA should not de-obligate the funding because if the federal per-diem rate for food was considered reasonable for FEMA’s employees, then any daily food rate for the Applicant’s employees which fell below the federal per-diem at that time would have been reasonable. The Applicant also claimed that there was no duplication in benefits from the City of New Orleans.
Issues: 1. Has the Applicant demonstrated that its employees’ meal costs were reasonable?
2. Was there a duplication of benefits from the city of New Orleans for inmate meals?
Rationale: 44 CFR §13.36 (d)(2); 44 CFR §13.43(a)(2)
Letter: February 26, 2014
Kevin DavisDirectorGovernor’s Office of Homeland Security and Emergency Preparedness7667 Independence BoulevardBaton Rouge, LA 70806
Re: Second Appeal–Orleans Parish Sheriff’s Office, PA ID 071-UPP9W-00, OIG Audit Report DD-10-08, FEMA-1603-DR-LA, Project Worksheets (PWs) 1320 and 15882
This is in response to a letter from your office dated September 12, 2012, which transmitted the referenced second appeal on behalf of the Orleans Parish Sheriff’s Office (Applicant). The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) decision to reduce PWs 1320 and 15882 by $1,538,469 and $109,645, respectively, for what were determined to be unreasonable costs for providing employee and inmate meals following Hurricane Katrina.
As explained in the enclosed analysis, I concur with the Regional Administrator’s determination that a daily meal cost of $29.75 per employee was a reasonable cost after mid-January 2006 and that $53,457 was a reasonable cost for the employees’ use of the basecamp. In addition, the Regional Administrator’s determination that funding from the city of New Orleans constituted a duplication of benefits which resulted in the deobligation of $1,471,804 for inmate meals based on a daily meal rate of $3.82 per inmate (year 2004) was consistent with Public Assistance regulations and policy. Therefore, the Applicant’s appeal is denied.
cc: George A. Robinson Regional Administrator FEMA Region VIAnalysis: Background
High winds and flooding associated with Hurricane Katrina damaged 10 correctional facilities owned and operated by the Orleans Parish Sheriff’s Office (Applicant). As a result of the damage, the Applicant’s kitchen facilities, from which meals were prepared and provided to employees and inmates at all 10 facilities, were rendered inoperable. During that time, the Applicant was responsible for feeding approximately 6,000 inmates and its employees (as a general practice, meals were provided to employees so that they did not need to leave the jail facilities). While the Applicant constructed an emergency and temporary kitchen, meals for employees and inmates were obtained from a caterer from September 2005 until August 2006.
Initially, employees’ and inmates’ meal costs were priced at $46.00 per individual per day. In November 2005, the Applicant renegotiated, but did not re-bid, the employee’s meals to a cost of $40.00 per day. At approximately the same time, inmate meals were re-bid to a cost of $27.50 per day. The Applicant did not negotiate lower meal costs for employees between January 2006 and July 2006, nor did the Applicant solicit competitive bids during that time. FEMA documented on PWs 1320 and 15882, the costs the Applicant incurred for both the inmates’ and employees’ catered meals until the temporary kitchen became partially functional on August 13, 2006 and fully functional on August 31, 2006.
The Applicant paid the following daily employee meal rates:
$46.00 per employee from 9/13/05 to 11/2/05.
$40.00 per employee 11/3/05 to 7/1/06.
$31.00 per employee 7/1/06 to 7/8/06 (first week).
$25.00 per employee 7/9/06 to end.
The Applicant paid the following daily meal rates for inmate meals (meals of a lower quality):
$46.00 per inmate 10/18/05 through 11/2/05.
$27.50 per inmate on 11/3/05 through 1/23/06.
$7.25 per inmate on 1/23/06 through 8/06.
Office of Inspector General Audit DD-10-08
On January 31, 2010, the Department of Homeland Security Office of the Inspector General (OIG) issued OIG Audit Report Number DD-10-08 of the Applicant’s disaster related expenses. The OIG found that prior to the disaster, employees’ daily meal costs were $2.69 per employee and inmates’ daily meal costs were $3.82 per inmate.
Finding C- Employee meal rate
The OIG concluded that the Applicant paid an excessive amount for employees’ meals because the Applicant did not solicit proposals though full and open competition or conduct a price analysis as required by Title 44 of the Code of Federal Regulations (44 CFR) §13.36 (d)(2) and (3) and §13.36 (f)(1) and (2). The OIG asserted that the Applicant was able to solicit competitive bids as early as January 2006 and should have solicited proposals from contractors to reduce its employees’ meal costs along with its inmates’ meal costs. The OIG recommended FEMA reduce the total funding for employee meals of $1,000,249 due to lack of competitive contracting that resulted in unreasonable costs. The OIG report contended that because employee meal costs ($2.69 per person, per day) and inmate meal costs ($3.82 per person, per day) were similar before the disaster, there was no justification for higher employee meal costs after the disaster. OIG therefore recommended disallowing the difference between employee and inmate meal rates after November 2, 2005.
Finding D- Duplicate funding for inmate meals The audit also recommended reducing the costs for inmate meals of $1,471,804 because there was duplicate funding from local, state, and federal agencies. The audit revealed the Applicant received $44 million in 2005 and $39 million in 2006 from these outside sources for inmate custody and care, and claimed that meal costs were part of the cost for overall care.
In reviewing the Audit Report, FEMA partially agreed with the OIG audit recommendations. FEMA concluded that employees’ meals included the use of the caterer’s base camp that had other amenities and would account for some of the higher meal costs charged by the caterer. FEMA also concluded that the higher costs were unavoidable before mid-January 2006, but after that date, the Applicant would reasonably have had the opportunity to competitively bid the meal services. After surveying similar meal service contracts in the area, FEMA determined that $29.75 per employee per day was a reasonable cost after mid-January and $53,457 was a reasonable cost for the employees’ use of the base camp. Based on this rationale, FEMA de-obligated $176,310 for employee meals. In addition, FEMA agreed that there was a duplication of funding from the City of New Orleans and deobligated $1,471,804 for inmate meals based on a daily meal rate of $3.82 per inmate (year 2004).
In its first appeal letter, dated October 3, 2011, the Applicant claims the FEMA surveyed employee daily meal rate of $29.75 does not reflect similar conditions as experienced in New Orleans, and the base camp used by the employees offered more services than FEMA acknowledged. The Applicant also claims that payments from local, state, and federal agencies in support of a per diem rate for their respective inmates were not a duplication of benefits for the Applicant. The Governor’s Office of Homeland Security and Emergency Preparedness (Grantee) transmitted the first appeal to FEMA on November 4, 2011, and supported the Applicant’s arguments. The Grantee stated in its appeal analysis that the Applicant’s meal costs for the employees were reasonable by virtue of being less than the federal per diem rate. The Grantee also stated that if FEMA concludes there was a duplication of benefits, FEMA should consider a pre-disaster inmate meal cost of $2.61 per day, resulting in a maximum reduction of $0.87 per inmate meal.
The FEMA Region VI Regional Administrator responded to the Applicant’s appeal with a letter dated April 24, 2012. The Regional Administrator concluded that the Applicant negotiated reductions in meal costs but did not have a competitively bid contract for meals following the disaster. The Regional Administrator agreed that the methods for determining a value for the use of a base camp by the employees based on the reasonable cost for similar activities used in FEMA’s response to the Audit Report to be acceptable. The Regional Administrator determined that the Applicant’s use of federal per diem rates as the basis for determining the reasonableness of the employee meal costs was not a valid comparison.
Additionally, the Regional Administrator argued that the payments for inmate per diem were not grants or donations but specific payments for the custody and care of their respective inmates which would include meals. FEMA stated that if the total cost of catered meals for inmates was $1,850,000, that cost would have included what the Applicant would normally pay for meals during that time. Thus concluding that the Applicant was paid for meals through per diem from other agencies, the normal cost of meals was being duplicated and the Applicant showed insufficient detail to demonstrate reasonableness and withstand its argument. However, the FEMA Louisiana Recovery Office (LRO) staff has further refined the number of inmate days from 385,289 to 384,390 which reduces the amount of duplicative benefits to $1,468,369. In the first appeal, FEMA concluded that the higher costs were unavoidable before mid-January 2006, but after that date, the Applicant had the opportunity to competitively bid the meal services.
The Applicant’s second appeal, submitted on March 16, 2012, reiterates the arguments presented in the first appeal and emphasizes that in comparison the effects of the disaster put the Applicant’s employees on the same footing as FEMA employees relative to food costs. If the federal per-diem rate for food was considered reasonable for FEMA’s employees, then any daily food rate for the Applicant’s employees which fell below the federal per-diem at that time should be reasonable. The second appeal also argued that neither OIG’s recommendations nor FEMA’s first appeal determination offered a reasonable basis for the de-obligations to the Applicant’s employee meal costs. In addition, the Applicant argued that cost reasonableness is considered when there is no competitive procurement and that there was no duplication in benefits from the City of New Orleans. Additionally, the Applicant met with the Assistant Director of Public Assistance on February 21, 2013. The Applicant presented information that a bid protest by potential meal service contractors delayed securing a lower bid until November 2005. Discussion
Pursuant to 44 CFR §13.43(a)(2) Enforcement, Remedies for noncompliance, FEMA can limit the reimbursement of the Applicant’s costs to amounts determined to be reasonable. For the purposes of responding to the appeal issues, this discussion is presented in two sections: Employee Meals Cost Reasonable Analysis and Duplicate Funding for Inmate Meals.
Employees Meals Cost Reasonableness Analysis The Applicant argues that the Applicant’s employees’ daily meal rate should be considered reasonable because it fell below the federal per-diem rate at the time of the disaster. The General Services Administration (GSA) establishes the meals and incidental expenses (MI&E) per diem allowance, and the dollar amount varies by location. Historically, GSA conducts a survey of meal prices every three years and bases the meals per diem rates on the results of this survey. As noted in footnote 2 of the OIG Audit Report, the Federal per diem rates computed for a single diner purchasing meals at local restaurants in a travel status include allowances for incidental expenses ($2.00), taxes, and a 15% gratuity on meals. The employee’s meal rate does not consider such factors. Moreover, federal MI&E rates were developed for use to fund federal employees in a travel status. As both the OIG and Regional Administrator found, the federal per diem rate was not designed to assess the reasonableness of costs associated with recurring, large volume catered meals purchases that were procured without competition. As such, FEMA does not consider the Applicant’s argument that its rate was lower than the federal MI&E to be a justifiable comparison.
In addition, FEMA concluded that employee meals included the use of the caterer’s base camp and that the higher costs were unavoidable before mid-January 2006. FEMA determined that $29.75 per employee per day was a reasonable cost after mid-January and $53,457 was a reasonable cost for the employees’ use of the base camp. In the second appeal, the Applicant claims the FEMA surveyed rate for employee meals does not reflect similar conditions as experienced in New Orleans, and the base camp used by the employees offered more services than FEMA acknowledged. Specifically the Applicant provided a Cost Market Analysis on a per person per day basis, comparing the initial $46 dollar rate paid by the Applicant contained food, dining services, clean-up, dining location, services, facilities, snacks, ice, generator, fuel, and restrooms.
To determine a reasonable cost for the employee meals, FEMA reviewed the scope and unit costs of similar meal rates listed in the Market Analysis below. Applicant
Meal Cost per person per Day
Dyncorp/Mantilla Catering
Bulk food delivered, service, and cleanup
Bulk food delivered
Jefferson Davis Electrical Co-Op
Food, service, and cleanup
OIG Report DD-09-08
City of Kenner-Katrina
City of Kenner-Rita
ContractThe Applicant argues that other Applicants may have received better unit rates for meals based on buying a higher quantity of meals. FEMA agrees that general economy of scale explains some differences in contract rates depending on the quantity. After review, FEMA has determined that FEMA evaluated each example based on its unique merits and believes that comparing the Applicant’s cost to others is a comparison of different and unequal things.
Duplicate Funding for Inmate Meals
The Applicant claims that payments from local, state, and federal agencies in support of a per diem rate for their respective inmates were not a duplication of benefits. The Applicant provided FEMA with a letter from the City of New Orleans subsequent to the meeting with Public Assistance at FEMA headquarters. The letter states that the City of New Orleans, as required by law and by a consent judgment, has paid its per diem to the Orleans Parish Sheriff's Office. Additionally, in the Applicant’s letter to FEMA forwarding the City of New Orleans’s letter, the Applicant states that they recognize that the City of New Orleans’s letter is “not unambiguously clear”; however, the letter does state that it support the Applicant’s appeal of the denial of reimbursement by FEMA of the cost of the inmate meals incurred prior to the establishment of the temporary kitchen, and further, that the City of New Orleans paid the required per diem.
Grants or donations received for unspecified purposes or ineligible work does not constitute a duplication of benefits. However, the Applicant was a party to a settlement agreement with the City of New Orleans under which the Applicant received a housing and board per-diem of $22.39 for the inmates. The payments for inmate per diem are not grants or donations but specific payments for the custody and care of their respective inmates which includes meals.
Based on the daily meal rates for entities with similar contract requirements the rate of $29.75 per employee per day was a reasonable cost in lieu of competitive procurement of the services. Furthermore, the Applicant has not sufficiently demonstrated that funding from the City of New Orleans did not constitute a duplication of benefits. Therefore, the previous deobligation of $1,471,804 in ineligible costs for inmate meals based on a daily meal rate of $3.82 per inmate (year 2004) is justified.	Building Repairs
Appeal Type: 2ndReport Type: PWAppeal Categories: Codes & StandardsGeneral EligibilityPre-Disaster ConditionsApplicant Name: Steele CountyDisaster Number: 1941-DR-MNDSR: 941, 947, 952, and 959Date Signed: Wednesday, February 26, 2014PA ID: 147-99147-00Summary/Brief: Citation: FEMA-1941-DR-MN, Steele County, Building Repairs, Project Worksheets (PWs) 941, 947, 952, and 959
Cross-Reference: General Eligibility, Pre-disaster Condition, Codes and Standards
Summary: Four buildings located in the Steele County (Applicant) Highway Operations Complex (HOC) flooded during a severe storm and flooding event. FEMA prepared PWs 941, 947, 952, and 959 to fund repair of the disaster-related damage to each of the four buildings. The buildings are located in a Special Flood Hazard Area. After applying mandatory flood insurance reductions, FEMA approved $8,980; $1,925; $8,095; and $68,007 with the PWs, respectively. The Applicant submitted a Highway Operations Complex Restoration report to FEMA which presents a feasibility study for the restoration of the HOC and includes cost estimates for repair of all damage to the buildings. The Applicant requested FEMA use the cost estimates recommended in the report to determine the eligibility of the replacement of the HOC buildings. Subsequently, the Applicant informed FEMA that the local floodplain manager determined Buildings 1 and 4 are substantially damaged. If repaired, the Applicant is required to bring Buildings 1 and 4 into compliance with local floodplain ordinance by elevating or dry flood proofing the buildings. FEMA determined that replacing the buildings was not eligible for funding. The Applicant submitted first appeals of the approved scopes of work and cost estimates documented in the PWs. The Applicant stated that the scopes of work and cost estimates developed by the FEMA Project Specialist “were significantly lacking” based on the results of the feasibility study presented in the report. The FEMA Regional Administrator denied the Applicant’s first appeal of PW 941 and partially granted the first appeals of PWs 947, 952, and 959 by approving costs for disaster required work and denying the remaining requested costs. In the second appeal, the Applicant requests funding for repairs recommended by the feasibility study and the costs to comply with the local floodplain ordinance.
Issues: 1. Does the documentation submitted by the Applicant demonstrate that the damage detailed in the feasibility study was a result of the declared the disaster?
2. Is the Applicant required by code or standard to elevate or dry flood proof Buildings 1 and 4?
2. Yes, but the work is eligible for Building 1 only as Building 4 was substantially damaged prior to by the event.
Rationale: 44 CFR §206.223 General Work Eligibility; 44 CFR §206.226(d) Restoration of Damaged Facilities, Standards
Kris EideDirectorDivision of Homeland Security and Emergency Management445 Minnesota Street, Suite 223Saint Paul, Minnesota 55101-6223
Re: Second Appeal–Steele County, PA ID 147-99147-00, Building Repairs, FEMA-1941-DR-MN, Project Worksheets (PWs) 941, 947, 952, and 959
Dear Ms. Eide:
This is in response to a letter from your office dated September 24, 2012, which transmitted the referenced second appeal on behalf of Steele County (Applicant). The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of a portion of the scopes of work that the Applicant claims are required to repair all disaster-related damage to four of the five buildings in the Highway Operation Complex.
As explained in the enclosed analysis, I have determined that the Applicant’s appeal should be partially granted. The Applicant has not demonstrated that all damage detailed in its contractor’s report was caused by the event. The approved scopes of work in PWs 941, 947, 952, and 959 include all eligible repairs. The additional repairs detailed in the report are not required by the event and are not eligible for funding; however, the work required to comply with the local floodplain ordinance for Building 1 is eligible. By this letter, I am requesting that the Regional Administrator take appropriate action to implement my decision. This action should include a review of alternatives for floodplain ordinance compliance for inclusion in PW 959. Please inform the Applicant of my decision. This determination constitutes the final decision on this matter pursuant to 44 CFR §206.206, Appeals.
cc: Andrew Velasquez, III Regional Administrator FEMA Region VAnalysis: Background
Four buildings located in the Steele County (Applicant) Highway Operations Complex (HOC) flooded to an approximate depth of four to six feet during the severe storm and flooding event that occurred from September 22 to October 14, 2010. FEMA prepared four PWs to fund repair of the disaster-related damage to each of four buildings: Building 3 (PW 941), Building 2 (PW 947), Building 4 (PW 952), and Building 1 (PW 959). The buildings are located in a Special Flood Hazard Area (SFHA), and the Applicant did not have National Flood Insurance Program (NFIP) coverage on the buildings. After applying mandatory NFIP reductions to the eligible funding for the each building, FEMA approved $8,980; $1,925; $8,095; and $68,007 with each PW, respectively.
The Applicant submitted a Highway Operations Complex Restoration report, dated March 21, 2011, to FEMA which presents a feasibility study of the restoration of the HOC based on structural, architectural, mechanical, electrical, indoor air quality, fungal, hazardous materials, and environmental assessments. The report includes cost estimates for repair of the damage identified by various assessments to the five HOC buildings, four of which are addressed in this appeal. The Applicant requested FEMA use the cost estimates recommended in the report to determine the eligibility of the replacement of the HOC buildings. Subsequently, the Applicant informed FEMA that the local floodplain manager determined Buildings 1 and 4 to be substantially damaged. If repaired, the Applicant is required to bring Buildings 1 and 4 into compliance with local floodplain ordinance by elevating or dry flood proofing the buildings.
FEMA determined that replacement of the buildings was not eligible for funding, because the costs to repair the disaster-damage to each building was less than 50 percent of the cost to replace each building. FEMA used the repair estimates from each of the PWs for the calculations instead of those in the feasibility study because the estimates proposed in the March 2011 report included costs for repairs to structural damage that was not identified by FEMA’s Project Specialists or the previous engineer hired by the Applicant.
The Applicant submitted first appeals of the approved scopes of work and cost estimates documented in PWs 941, 947, 952, and 959 on September 30, 2011. In the appeals, the Applicant stated that the scopes of work and cost estimates developed by the FEMA Project Specialist “were significantly lacking” based on the results of the feasibility study presented in the March 2011 report. The Applicant asserted that the visual damage inspections performed by the FEMA Project Specialist were inadequate and resulted in inaccurate damage assessments and repair cost estimates. The Applicant requested that FEMA use the information from the feasibility study based on damage assessments performed by licensed engineers to perform a “scope alignment” for each PW. The Applicant also requested that all PWs for the HOC buildings be replaced with one PW for the entire “complex.”
The Minnesota Division of Homeland Security and Emergency Management (Grantee) transmitted the first appeals to FEMA but did not support the Applicant’s requests. A Grantee representative attended the initial site visit/damage assessment conducted by a team of FEMA Project Specialists comprising an architect and a structural engineer, and concurred that the damage descriptions in the PWs are “detailed and correct.” The Grantee stated that the March 2011 report does not delineate the flood damage that resulted from the declared disaster, but instead summarizes the overall condition of the HOC buildings.
On April 5, 2012, the FEMA Regional Administrator denied the Applicant’s first appeal of PW 941, because the additional funding requested by the Applicant included work that was not required as a result of the declared disaster. Also on April 5, 2012, the FEMA Regional Administrator partially granted the first appeals of PWs 947, 952, and 959, approving costs determined to be for repair of disaster-related damage and denying the remaining requested costs. Table 1 summarizes the FEMA approved repair costs and the Applicant requested repair costs for each PW.
Initial FEMA Approved Estimate
Initial FEMA Approved PW Amount after NFIP Reduction
Applicant’s Feasibility Study Estimate
Approved Estimate – First Appeal Determination
Current FEMA Approved PW Amount after NFIP Reduction
PW 941
PW 947
PW 952
PW 959
$129,922Second Appeal
On August 13, 2012, the Applicant submitted second appeals of the scopes of work and cost estimates approved under PWs 941, 947, 952, and 959. In general, the Applicant is requesting that FEMA approve the scopes of work for building repairs and cost estimates presented in the feasibility study. The Applicant states that “the absence of consideration for structural damage … and environmental hazards” caused by the flooding event “has created the significant delta in scopes of work and cost estimates” between those presented in the feasibility study and those FEMA approved with the four PWs. For Buildings 1 and 4 (PWs 959 and 952), the Applicant is also requesting funding to elevate or dry flood proof the facilities as is required by the local floodplain ordinance if repairs are to be made to substantially damaged buildings. The Applicant presents options for elevating the two substantially damaged buildings ($816,720) and for building a flood wall around all four buildings ($1,859,000). According to the Applicant, a more practical and cost effective approach to repairing and flood proofing or elevating would be to replace the two buildings at a cost of $2,580,685 for Building 1 and $735,130 for Building 4. The Applicant also reiterates that the HOC buildings should be treated as a complex and FEMA should consider funding replacement of all of the HOC buildings at a total estimated cost of $4,997,336. Lastly, the Applicant requests that FEMA consider providing funding for Direct Administrative Costs (DAC) associated with preparing and submitting the Applicant’s first and second appeals.
The Grantee transmitted the second appeals to FEMA but did not support the Applicant’s requests, stating that the Applicant did not provide sufficient documentation to reverse the FEMA Regional Administrator’s first appeal determinations.
According to Title 44 of the Code of Federal Regulations (44 CFR) §206.223 General Work Eligibility, to be eligible, work must be required as the result of the declared disaster. The Applicant submitted a report identifying all damage to each of the HOC buildings; however, the Applicant did not submit documentation to support its claim that damage determined by the FEMA Regional Administrator to be ineligible was caused by the declared event. With its appeal, the Applicant provides memos from its consultant addressing the work items found by FEMA to be ineligible for each building. A detailed discussion of the damage and work at issue for each PW is provided below.
With respect to the Applicant’s request that FEMA consider providing funding for DAC associated with submitting the first and second appeals, the Applicant has provided no documentation that would enable FEMA to determine whether the DAC for preparing the appeals was reasonable and eligible.
The Applicant’s consultant addresses three work items in the appeal which FEMA determined to be ineligible: the replacement of five exterior overhead doors, encapsulating a wood deck, and replacing an air compressor. The scope of work documented in PW 941 includes replacing only the bottom two sections of each of the five exterior overhead doors as only the bottom two sections of each door were damaged by the flood. The Applicant’s consultant states that the doors need to be completely replaced to eliminate contamination found on the surfaces; however, the information provided in the feasibility study states that any fungal, sewage, and/or chemical surface contamination can be removed by thoroughly cleaning the surfaces. The study gives no indication that the contamination found on the undamaged sections of the overhead doors cannot be removed by cleaning. Regarding encapsulating a wood deck in Building 3, the Applicant’s consultant states that the Indoor Air Quality Assessment included in the feasibility study states that the “surfaces should be thoroughly cleaned and encapsulated;” however, the Indoor Air Quality Assessment specifically recommends wood encapsulation in Building 2, but not in Building 3. Lastly, the Applicant’s consultant states that the air compressor system has to be replaced to eliminate contamination found on its surfaces; however, the Indoor Air Quality Assessment includes no recommendation to replace the air compressor system, but discusses that the existing air-handling equipment and associated ventilation ductwork, if salvaged, should be cleaned by a professional HVAC duct cleaning contractor. FEMA denied funding for the replacement of the air compressor, because there is no documented damage to the system. The Applicant did not provide any documentation with its second appeal to support its claim that the system was damaged. The three work items discussed above are not required as the result of the event and are not eligible for funding.
The Applicant’s consultant addresses two work items in the appeal which FEMA determined to be ineligible: the removal and replacement of contaminated dirt and hazardous materials abatement. The Applicant’s consultant states that the environmental report contained in the feasibility study shows that the soil is contaminated with regulated substances and must be removed and discarded in accordance with the Minnesota Pollution Control Agency (MPCA) and Minnesota Department of Public Safety. Further, the Applicant states that the hazardous material abatement is related to the disposal of the contaminated soil. The environmental report does recommend that the Applicant notify the MPCA; however, the Applicant did not submit any documentation supporting that the MPCA required the removal of the soil. Further, the report does not establish that the regulated substances found in the soil were deposited by or during the event; therefore, the removal of the soil and the associated hazardous materials abatement is not eligible for funding.
The Applicant’s consultant addresses numerous work items in the appeal which FEMA determined to be ineligible, including the repair of extensive damage to the exterior wall and interior masonry systems and the replacement of the cracked concrete slab. The Applicant asserts that this structural damage was caused by the event and points to statements included in the feasibility study to support that assertion. While the feasibility study does include statements that some of this damage was caused by the event, the Applicant did not provide sufficient documentation in support of those statements, such as information regarding the pre-disaster condition of the building. According to the documentation and the information gathered by both FEMA and Grantee representatives, the building was in poor structural condition prior to the event, and the structural damage described in the feasibility study was not caused by the event. Accordingly, the repair of this damage and the work associated with the repair, such as shoring the roof and replacing the aluminum windows, is not eligible for funding.
Other work items addressed by the Applicant’s consultant in the appeal are discussed below.
Clean and encapsulate wood and deck, replace laundry tubs, and clean and sanitize interior of conduit: The Applicant states that these work items are required due to surface contamination identified in the Indoor Air Quality Assessment; however, the assessment does not recommend this work. This work is not required as the result of the event and is not eligible for funding.
Remove wood framing systems and replace architectural woodwork and floor and deck cleaning: The Applicant incorrectly includes these items in the list of ineligible items. This work is included in the scope of work of PW 952.
Clean and video waste system: The Applicant states that cleaning and scoping the waste system is required to determine if the waste lines are damaged. As stated in FEMA’s Public Assistance Guide (FEMA 322, June 2007), page 85, FEMA does not provide funding for general surveys to look for damage; therefore, this work is not eligible. In its appeal, the Applicant also requests funding for elevating or dry floodproofing Building 4. The Applicant is required to comply with the local floodplain ordinance, because the City of Owatonna has determined that Building 4 is substantially damaged (damaged beyond 50 percent of its fair market value.) To comply with the floodplain ordinance the Applicant must either elevate or dry flood proof the building if it makes repairs to the building. While the City of Owatonna’s floodplain ordinance meets the eligibility criteria outlined in44 CFR §206.226(d) Standards, the general work eligibility criteria discussed above also applies. Only work required as the result of the disaster is eligible. The Applicant’s cost estimate for the repair to Building 4 includes over $100,000 for the repair of structural, non-disaster damage. The fair market value of the building is $94,500, based on the city’s tax assessment record used by the floodplain administrator. Therefore, Building 4 was substantially damaged prior to the event, and the work required to comply with the local floodplain ordinance is not required by the event.
The Applicant’s consultant addresses numerous work items in the appeal which FEMA determined to be ineligible, including the removal and replacement of the exterior wall and interior masonry systems, removal and replacement of the wood mezzanine, and removal of the wood framing system. The Applicant asserts that although the structural report in the feasibility study does not state that the removal and replacement of the interior and exterior walls are required to repair the walls, the walls have to be removed and replaced due to the surface contamination described in the Indoor Air Quality Assessment. The assessment does not recommend complete removal and replacement of all walls and the framing system, but recommends cleaning all surfaces. It does state that cleaning may not remove all potential odor sources from the concrete block in the addition section of Building 1; however, the Applicant has given no indication that it has completed any cleaning at all. Should the cleaning of some surfaces not be adequate to address the issues, removal and replacement of some portion of the structure may be necessary. The removal and replacement of the walls and framing system are not required by the event and are not eligible for funding. The additional work items associated with this work, such as shoring the roof and slab and replacing aluminum windows, are also not eligible for funding.
Remove and replace concrete slab: The Applicant asserts that the cracking in the concrete slab was caused by the event and points to a statement included in the feasibility study that there is evidence of slab subsidence due to saturated soil under the slab. The Applicant states that some cracking “appears to be fresh” and the pre-existing cracks got worse after the event. According to the documentation and the information gathered by both FEMA and Grantee representatives, the building was in poor structural condition prior to the event. The Applicant did not provide sufficient documentation to support the claim that the slab subsidence and cracking was caused by the event. Accordingly, the repair of this damage is not eligible for funding.
Replace gas pump and meter and remove and replace car lift: The Applicant states that it had the condition of both the gas pump and the car lift assessed separately from the assessment performed as part of the feasibility study. The Applicant states that the results of both assessments indicated that the gas pump and car lift required replacement. The Applicant did not submit any documentation in support of those statements, such as inspection reports. There is no documented disaster related damage to the gas pump and car lift; therefore, the replacement of both is not eligible for funding.
Clean and sanitize interior of conduit and clean and disinfect domestic water piping: The Applicant states that these work items are required due to surface contamination identified in the Indoor Air Quality Assessment; however, the assessment does not recommend this work. This work is not required as the result of the event and is not eligible for funding.
Re-commission mechanical system: The Applicant states that the system should be cleaned and re-commissioned to eliminate contamination identified in the Indoor Air Quality Assessment; however, the assessment states that the system was not in direct contact with flood waters and should be re-commissioned to ensure reliable operation. There is no indication in the feasibility report that the mechanical system was damaged by the event; therefore, the re-commissioning is not required by the event and not eligible for funding.
Clean and video waste system: As stated above, this work is not eligible.Similar to Building 4, the City of Owatonna has determined that Building 1 is substantially damaged, and the Applicant is requesting funding for elevating or dry flood proofing Building 1 to comply with the local floodplain ordinance. Based on the documentation, Building 1 was not substantially damaged prior to the event. Further, the FEMA approved cost estimate for the repairs ($283,000) is greater than the fair market value of the building ($275,000). Therefore, the work required to comply with the floodplain ordinance is required by the event.
The Applicant has provided two alternatives for compliance – elevation and construction of a flood wall around the entire site. The construction of a flood wall around the entire site exceeds what would be required to comply with the floodplain ordinance. The Applicant did not provide sufficient documentation regarding a technically feasible and cost effective alternative for compliance for Building 1. Additional information is required to determine the eligible scope of work required to comply with the floodplain ordinance.
The Applicant has not sufficiently documented that the complete scopes of work detailed in the feasibility study are required as the result of the event. The scopes of work approved in PWs 941, 947, 952, and 959 include the repairs of all disaster related damage and no additional requested repair work is eligible. However, the Applicant is required to elevate or flood proof Buildings 1 and 4 if it moves forward with the building repairs, because the City of Owatonna determined the buildings are substantially damaged. The cost of the work required to comply with the ordinance for Building 1 is eligible for reimbursement, up to the replacement cost of the building. The work necessary to comply with the ordinance for Building 4 is not required by the event and, therefore, not eligible.	San Joaquin Flood-Fighting Activities
Appeal Type: 2ndReport Type: PWAppeal Categories: DocumentationApplicant Name: California Department of Water ResourcesDisaster Number: 1646-DR-CADSR: 824 and 858Date Signed: Tuesday, February 25, 2014PA ID: 000-U0FD2-00Summary/Brief: Citation: FEMA-1646-DR-CA, California Department of Water Resources, Flood-Fighting Activities, Project Worksheets (PWs) 824 and 858
Cross-Reference: Documentation
Summary: In 2006, a severe storm caused flooding, mudslides, and landslides in central California. The California Department of Water Resources (Applicant) performed emergency flood-fighting activities at dozens of levee sites along the San Joaquin River. Some work was performed in a county not included in the major disaster declaration. The Applicant utilized contract and force account labor, materials, and equipment to carry out the work. PW 838 was written to fund $1,035,620 in claimed contract costs. PW 858 was written to fund $935,244 in claimed force account costs. Numerous issues related to contracting, documentation, environmental compliance, and eligible costs prevented the obligation of PWs 824 and 858. Following an October 2007 meeting with representatives of the California Governor’s Office of Emergency Services (Grantee), the Applicant, and FEMA, the Applicant agreed to provide documentation that would address key, lacking information, including the exact location of each work site, a detailed description of work completed at each site, and an accounting of actual incurred costs for work completed at each site. The information was necessary for environmental compliance and to enable FEMA to determine what costs, if any, were eligible for reimbursement. The Applicant failed to provide adequate information, and FEMA issued a formal denial of eligibility. The Applicant submitted a first appeal, providing documentation consisting of a listing of work site locations and costs amounts, as well as records related to force account labor and equipment costs. The Deputy Regional Administrator denied the appeal, noting, among other things, that some work was performed in Fresno County, which was not included in the disaster declaration; that some work did not constitute emergency protective measures; and that contracted work was performed under an improperly procured and structured contract. The Applicant submitted a second appeal that briefly addresses each of the eligibility deficiencies highlighted in the first appeal decision and includes documentation in the form of email correspondence addressing the Applicant’s claimed costs, procurement materials, and a listing of work sites.
Issue: Has the Applicant provided documentation of its claimed force account and contract costs for emergency protective measures that is detailed enough to allow FEMA to determine which costs are eligible for reimbursement?
Finding: No. Rationale: 44 C.F.R. § 206.223(a); 44 C.F.R. § 206.225(a)(3)Letter: February 25, 2014
Mark S. GhilarducciSecretaryCalifornia Emergency Management Agency3650 Schriever AvenueMather, California 95655
Re: Second Appeal—California Department of Water Resources, PA ID 000-U0FD2-00, San Joaquin Flood-Fighting Activities, FEMA-1646-DR-CA, Project Worksheets 824 and 858
Dear Mr. Ghilarducci:
This is in response to a letter from your office dated February 15, 2013, which transmitted the referenced second appeal on behalf of the California Department of Water Resources (Applicant). The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of claimed costs for emergency protective measures related to flood-fighting activities.
As explained in the enclosed analysis, the Applicant has not provided sufficient documentation to enable FEMA to differentiate between eligible and ineligible work and determine the reasonableness of the costs for which the Applicant seeks reimbursement. Therefore, I am denying the appeal.
Please inform the Applicant of my decision. This determination constitutes the final decision on this matter pursuant to 44 CFR § 206.206, Appeals.
cc: Nancy Ward Regional Administrator FEMA Region IXAnalysis: Background
In the spring of 2006, a severe storm caused flooding, mudslides, and landslides in central California. On June 5, 2006, the President issued a major disaster declaration (FEMA-1646-DR-CA) with an incident period of March 29, 2006 to April 16, 2006. The California Department of Water Resources (Applicant) carried out emergency flood-fighting activities at dozens of sites along the San Joaquin River to prevent levee failure from seepage, erosion, and river water overtopping. The Applicant performed the work along flood-control facilities within three counties included in the major disaster declaration (Stanislaus, San Joaquin, and Madera counties), as well as along flood-control facilities in the City of Firebaugh and other parts of Fresno County, a county that was not included in the declaration. The Applicant utilized contract and force account labor, materials, and equipment to carry out this work. For the contracted work, the Applicant, employing an emergency procurement process, negotiated time-and-materials contracts with two contractors already performing work under other contracts with the Applicant. FEMA prepared Project Worksheets (PWs) 838 and 824 to reimburse the Applicant’s claimed contract costs for emergency protective measures. FEMA prepared PW 838 to fund costs claimed on time-and-material invoices for one contractor in the amount of $1,035,620. Later in 2006, FEMA processed PW 838 for $0, and the Applicant did not appeal that action. FEMA prepared PW 824 to fund costs claimed on time-and-material invoices for the other contractor in the amount of $2,656,725. That contractor had performed flood-fighting work in Madera County and Fresno County.
For the force account work, FEMA prepared PW 858 to reimburse the Applicant’s $935,244 in claimed costs for force account labor, materials, and equipment for emergency protective measures. These costs were associated with flood-fighting work the Applicant performed in Madera, San Joaquin, and Stanislaus counties, as well as for the establishment of an emergency command center at the Stockton Fair Grounds. FEMA did not obligate PWs 824 and 858 due to issues regarding contracting, documentation, environmental compliance, and eligible costs.
In a June 11, 2007 letter to the Applicant, the U.S. Department of Commerce’s National Marine Fisheries Service (NMFS) informed the Applicant of its concern that emergency levee repair work conducted along Paradise Cut in the San Joaquin River Basin could, without specific conservation measures, adversely impact riparian habitats. The NMFS provided the Applicant with specific conservation measures it could employ to help compensate for the loss of beneficial habitat features caused by the emergency work. In a June 18, 2007 letter to the Applicant, the U.S. Department of the Interior’s Fish and Wildlife Service (FWS) expressed similar concerns related to the repair work’s effect on certain endangered animal species. FWS requested that the applicant submit a complete biological assessment (BA) to either FEMA or the U.S. Army Corps of Engineers (USACE) to enable a formal federal agency consultation to take place pursuant to Section 7 of the Endangered Species Act (known as a “Section 7” consultation).
On October 4, 2007, representatives of the California Governor’s Office of Emergency Services (Grantee), the Applicant, FEMA, and a FEMA environmental contractor met to discuss funding eligibility. FEMA explained that a lack of project information precluded it from drafting the BA, and the Applicant subsequently agreed to gather the necessary information and draft the BA using contractor support. The parties also agreed that the Applicant would provide key pieces of information and documentation, including the exact location of each work site, a detailed description of work completed at each site, and an accounting of actual incurred costs for work completed at each site. In a December 20, 2007 letter to the Grantee, FEMA again requested this information and documentation and informed the Grantee that a response was required within 60 days.
The Applicant provided a response in a memorandum dated February 20, 2008, which the Grantee forwarded to FEMA in a letter dated March 24, 2008. In its response, the Applicant provided internal memoranda regarding contract procurement and environmental compliance, as well as a compact disc containing maps, photos, and some information about work that took place primarily along the Chowchilla Bypass.
FEMA issued a formal eligibility determination in a letter dated October 9, 2008. FEMA explained that PWs 824 and 858 could not be obligated because the Applicant had not provided sufficient information and documentation. In general, FEMA noted that information about the work completed at each site and the costs incurred at each site remained lacking. FEMA also explained that some of Applicant’s supporting documentation pertained to sites in and around the City of Firebaugh, which is located in Fresno County and outside of the designated disaster area, and that the work descriptions indicated some items of work did not constitute eligible emergency protective measures. As to PW 858, specifically, FEMA pointed out that the Applicant’s time-and-materials contract violated applicable federal regulations and that, although FEMA may reimburse fair and reasonable eligible costs in such situations, the Applicant failed to provide specific enough information to distinguish eligible and ineligible work and costs. FEMA also noted that the Section 7 consultation and Endangered Species Act compliance procedures required for obligation of both PWs could not move forward without the requisite information.
First Appeal The Applicant submitted a first appeal in a letter dated December 5, 2008, which the Grantee forwarded to FEMA in a letter dated December 30, 2008. The Applicant included a listing of work site locations and costs, as well as records related to force account labor and equipment costs. The Applicant asserted that this documentation would provide all of the information FEMA required.
During the appeal review, FEMA issued a letter to the Grantee dated October 5, 2010, reiterating that FEMA needed documentation and a draft BA from the Applicant in order to comply with Endangered Species Act requirements and that the Applicant’s failure to comply with that law would jeopardize its request for reimbursement. In a letter dated December 20, 2010, the Grantee forwarded a BA that the Grantee had received from the Applicant on December 6, 2010. The BA was dated April 2008. In a letter to the Grantee dated October 17, 2011, FEMA explained that the BA the Applicant provided failed to include the information necessary to initiate a formal Section 7 consultation. FEMA noted that, instead, the BA largely evaluated impacts to species resulting from permanent repairs to sites that would be funded by the USACE, not FEMA. FEMA again requested, within 60 days, a BA addressing the sites at issue in PWs 824 and 858. Due to a clerical oversight, the Grantee did not forward this letter to the Applicant until February 28, 2012. The Applicant responded in a letter dated March 20, 2012, pointing to email messages and correspondence that, it argued, demonstrated compliance with FWS and NMFS requirements and concerns.
The Region IX Deputy Regional Administrator denied the first appeal in a letter dated October 3, 2012. The letter included a bulleted summary of the numerous “deficiencies upon which the eligibility determination was predicated.” These included the fact that some work was performed in Fresno County, which was not included in the disaster declaration; that some work did not constitute emergency protective measures; that contracted work was performed under an improperly procured and structured contract; that some work was performed on projects under the authority of USACE; that the BA the Applicant provided addressed non-FEMA projects and projects not included in PWs 824 and 858 (except for one); and that the documentation the Applicant had provided did not identify specific work and associated costs with each site. With respect to documentation, the Deputy Regional Administrator’s letter noted that the Applicant had provided no new information with its first appeal. Second Appeal
The Applicant submitted a second appeal in a letter dated December 18, 2012, which the Grantee transmitted to FEMA in a letter dated February 15, 2013. The Applicant’s second appeal briefly addresses each of the eligibility deficiencies highlighted in the first appeal decision in bulleted form. The Applicant included documentation in the form of email correspondence addressing the Applicant’s claimed costs, procurement materials, and a listing of work sites.
Under the Public Assistance program, for any item of work to be eligible for financial assistance, it must (1) be required as a result of the emergency or major disaster event, (2) located within the designated area of the major disaster or emergency declaration, and (3) be the legal responsibility of an eligible applicant.[1] For emergency protective measures to be eligible, they must either (1) eliminate or lessen immediate threats to life, public health or safety, or (2) eliminate or lessen immediate threats of significant additional damage to improved public or private property through cost-effective measures.[2]
Of all the deficiencies related to the Applicant’s request for reimbursement under PWs 824 and 858, most significant is the lack of adequate supporting documentation demonstrating that the claimed costs relate to work that was required by FEMA-1646-DR-CA, located within designated areas, the responsibility of the Applicant, and necessary to address immediate threats to life, public health, safety, or property. The lack of adequate documentation has made it impossible for FEMA to distinguish between eligible and ineligible costs. Well after the event and the drafting of the PWs, the Applicant agreed, in October 2007, to provide key pieces of missing information, including work site locations, detailed descriptions of the work completed at each site, and an accounting of incurred costs for the work completed. Following a subsequent written request from FEMA, the Applicant provided, in early 2008, some documentation. This documentation provided little new information. A site list the Applicant provided did highlight work site locations based on latitude and longitude coordinates and levee mile markers, but the sites were mainly limited to the Chowchilla Bypass—only one of numerous sites addressed in the PWs. Moreover, a “work performed” column contained vague work descriptions—such as “rip rap on landslide” and “geotextile & drain work”—that prevented FEMA from making a determination as to whether the work was required as the result of the disaster. The Applicant’s documentation also failed to provide other vital information, such as quantities, dimensions, costs incurred, and related invoices. In its first appeal, the Applicant provided similarly vague information. Exhibit A to its first appeal, provided in support of its claim under PW 824 for contract costs, listed additional work sites and coordinates, but again failed to provide adequate descriptions of work performed. Documentation supporting the Applicant’s claim under PW 858 similarly failed to provide sufficient detail to distinguish eligible and ineligible work.
In its second appeal, in response to FEMA’s conclusion that the documentation submitted failed to identify specific work and associated costs at each site, the Applicant simply re-submitted, as Exhibit 4, the spreadsheet constituting Exhibit A to its first appeal. This exhibit again provides coordinates for site locations and claimed contract costs but does not adequately describe the work performed to allow for a determination of eligibility. The exhibit simply includes a “Comment” column with descriptions such as “Start of drain 2” and “End of drain 2.” As to its force account costs, Applicant offered no additional documentation and rests on the labor and equipment documentation it provided in its first appeal. That documentation is also insufficient. Exhibit B, for example, lists hours worked by employees without describing the work performed or detailing the location of the work performed.
The lack of detail prevents FEMA from ensuring the eligibility of the work. For instance, some work was performed in Fresno County, which was not a declared county under FEMA-1646-DR-CA. The Applicant asserts that e-mail exchanges with a FEMA contractor that reviewed the Applicant’s first appeal shows that FEMA agreed to account for work performed in ineligible areas by reducing PW costs by a certain percentage. In fact, the idea of a percentage reduction merely was a proposal by an Applicant representative, which the FEMA contractor stated would be referenced when addressing changes to the Applicant’s claimed costs. FEMA never applied a percentage reduction, and PW 824 and 858 remained fully unobligated.
Documents provided by the Applicant also show that some work was performed on projects under the authority of the USACE and, therefore, not the Applicant’s responsibility. For example, a November 27, 2006, memorandum to the Applicant’s engineering division chief states that six USACE sites would be incorporated into the time-and-materials contract entered into by the Applicant. In addition, the BA provided by the applicant largely addressed permanent repairs to USACE funded projects, not emergency work projects under the responsibility of the Applicant. Without sufficient work and cost documentation, FEMA cannot differentiate between work performed that was the Applicant’s responsibility from work that was not. The Applicant similarly asserts that, in the e-mail correspondence with the FEMA contractor, this issue was resolved. Again, however, the contractor merely took the Applicant’s proposal under advisement. Specifically as to PW 824, the Applicant entered into a time-and-materials, sole-source contract with a contractor by “piggybacking” onto a pre-existing contract. Generally, time-and-materials contracts and “piggyback” contracts are discouraged by FEMA.[3] Under FEMA policy, time-and-materials contracts, if used, must include a ceiling price and should be limited for work that is necessary immediately after a disaster, not to exceed 70 hours.[4] Here, the contract did contain a ceiling price, but that ceiling was exceeded. In addition, work under the contract extended well beyond 70 hours. Even when an applicant fails to adhere to applicable contracting rules and policy, FEMA may reimburse the reasonable costs of eligible work performed. However, without sufficient documentation to enable FEMA to determine what work is eligible, FEMA is not in a position to determine an amount for reimbursement that could be considered reasonable. Conclusion
The Applicant has not provided sufficient documentation to enable FEMA to differentiate between eligible and ineligible work and determine the reasonableness of the costs for which the Applicant seeks reimbursement. Accordingly, the costs claimed by the Applicant for emergency protective measures documented in PWs 824 and 858.
[1] See 44 C.F.R. § 206.223(a).
[2] See 44 C.F.R. § 206.225(a)(3).
[3] See Recovery Fact Sheet 9580.212, Public Assistance Grant Contracting Frequently Asked Questions (FAQ), at 4 (FAQ #6).
Appeal Type: 2ndReport Type: PWAppeal Categories: EligibilityEmergency Protective MeasuresApplicant Name: Puerto Rico Department of HealthDisaster Number: 3306-EM-PRDSR: 73 and 74Date Signed: Tuesday, February 25, 2014PA ID: 000-U4OB-00Summary/Brief: Conclusion: Overtime labor costs in the amounts of $6,970.14 for PW 73 and $16,581.92 for PW 74 are eligible costs in accordance with the FEMA policies in effect at the time of the emergency. In addition, $206,105.11 in material and supply costs for PW 74 is eligible contingent upon the Applicant’s provision of adequate documentation to support the claimed costs. Summary Paragraph
DAP 9523.15, Eligible Costs Related to Evacuations & Sheltering (2007)Letter: February 25, 2014
Mr. Miguel A. Ríos TorresDirectorPuerto Rico Emergency Management AgencyPO Box 194140San Juan, PR00919-4140
Re: Second Appeal-Puerto Rico Department of Health PA ID 000-U4OB-00, Emergency Medical Care, FEMA-3306-EM-PR, Project Worksheets (PWs) 73 and 74
Dear Mr. Rios Torres:
This letter is in response to letters from your office dated June 25 and July 10, 2012, which transmitted the referenced second appeals on behalf of the Puerto Rico Department of Health (Applicant). The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $229,657 for labor, material, and supply costs associated with the medical treatment of disaster survivors.
Given the overlapping issues in these appeals, I have condensed my decision to one response. As explained in the attached analysis, I have determined that the overtime labor costs incurred through November 23, 2009 ($6,970.14 for PW 73 and $16,581.92 for PW 74) are eligible for reimbursement. In addition, the material and supply costs (PW 74) may be eligible if the Applicant is able to support them with sufficient documentation. Accordingly, I am approving the Applicant’s appeal of PW 73 and partially approving the Applicant’s appeal of PW 74. With respect to the material and supply costs claimed in PW 74, I am approving the costs under appeal contingent upon the Applicant providing additional documentation to FEMA Region II to substantiate the claim. Please inform the Applicant of my decision. This determination constitutes the final decision on this matter pursuant to 44 CFR §206.206, Appeals.
cc: Jerome Hatfield Regional Administrator FEMA Region IIAnalysis: Background
On October 23, 2009, an explosion at the CAPECO fuel storage facilities in Catario, Puerto Rico caused the Puerto Rican government to activate emergency protective measures. The Puerto Rico Department of Health’s (Applicant) initial assessment of the situation led it to conclude that there would be many injured workers at the CAPECO facility as well as injured civilians in the neighboring area. The Puerto Rico Emergency Management Agency (Grantee) activated the Health Department Interagency Coordinator. The Metropolitan Regional Emergency Operation Center and the Applicant coordinated the vaccination of evacuees and emergency personnel at shelters in Guaynabo and Catario, Puerto Rico. The Applicant also posted personnel in other Emergency Operations Centers (EOC), where they coordinated the vaccination of additional evacuees and emergency personnel. FEMA prepared Project Worksheet (PW) 73 for force account labor for the personnel that worked in the Metropolitan Regional EOC as well as materials used in the vaccination and treatment of the disaster survivors in this particular facility. Also, FEMA prepared PW 74 for force account labor for the personnel that worked in the shelters and other EOCs and materials used in the vaccination and medical care of the evacuees in these facilities. FEMA found the force account labor and material costs in PWs 73 and 74 ineligible because the documentation that the Applicant provided failed to support the costs claimed. Specifically, the Applicant did not document the work performed. Also, FEMA contended that several line items in PW 73 could not be included as materials and needed to be requested separately. Ultimately, FEMA denied all of the Applicant’s claimed costs in PWs 73 and 74.
The Applicant submitted its first appeals through the Grantee for PWs 73 and 74 onSeptember 27, 2010 and September 14, 2010, respectively. The Applicant requested $6,970 and $222, 687, respectively, in overtime labor costs for employees who worked in the shelters and EOCs and material and supply costs for their treatment of disaster survivors. In both appeals, the Applicant provided additional documentation to support overtime labor costs. The Applicant also submitted documentation to support some of the material and supply costs listed in PW 74.
In its first appeal decisions, dated March 23, 2011 (for PW 73) and March 29, 2011 (for PW 74), the FEMA Puerto Rico Disaster Recovery Manager (DRM) applied the 1999 FEMA Disaster Assistance Policy (DAP) 9525.4, Medical Care and Evacuations in denying the appeals. Though the DRM acknowledged receipt of supporting documentation with both first appeals, including a detailed list of work performed by employees, labor costs, and material receipts, it found the costs claimed to be ineligible according to the DAP 9525.4.
On June 25, 2012 and July 10, 2012, the Applicant submitted through the Grantee its second appeals for PWs 73 and 74, respectively. In its appeals, the Applicant asserts that both the $6,970 for labor costs claimed in PW 73 and $222,687 for labor, material, and supply claimed in PW 74 are eligible for FEMA funding in accordance with the DAP 9525.4 Medical Care and Evacuations. Further, the Applicant included detailed force account labor records and a copy of the 2008 DAP 9525.4 Medical Care and Evacuations, the policy in effect at the time of the emergency. Discussion
The 2008 Disaster Assistance Policy (DAP) 9525.4 Medical Care and Evacuations, which was in effect at the time of the emergency, delineates “the extraordinary emergency medical care and medical evacuation expenses that are eligible for reimbursement under the Category B, Emergency Protective Measures provision of the Federal Emergency Management Agency's (FEMA) Public Assistance (PA) Program following an emergency or major disaster declaration.”[1] In accordance with this policy, eligible emergency medical costs include, but are not limited to:
Overtime for regular full-time employees performing eligible work within 30 days from the time of the disaster or emergency.
Treatment and monitoring of disaster survivors requiring emergency medical care, including costs for:
Vaccinations for disaster survivors and emergency workers, including medical staff.DAP 9523.15 Eligible Costs Related to Evacuations & Sheltering was also in effect at the time of the emergency.[2] This policy, which identifies the expenses related to State and local emergency evacuation and sheltering activities that are eligible for reimbursement under the Category B, Emergency Protective Measures provisions of FEMA's PA Program, includes the following eligible costs:
Supplies and Commodities such as food and water. Supplies, including X-rays, laboratory and pathology services, and machine diagnostic tests for the period of time that the evacuee/shelteree is housed in congregate sheltering.In reviewing the first appeal decision and documentation, it is apparent that the DRM based the first appeal decision on DAP 9525.4 (1999), which listed medical treatment, including vaccinations, as ineligible costs and did not detail the eligibility of other items at issue in this appeal. Application of the 1999 DAP 9525.4 was in error. The 2008 DAP 9525.4 superseded the 1999 policy and should have been applied to this appeal as it was in effect at the time of the emergency, as was the 2007 DAP 9523.15. Pursuant to the 2007 and 2008 policies, the overtime labor, material, and supply costs claimed by the Applicant in its second appeal are eligible costs.
The Applicant provided sufficient documentation to support the overtime labor costs claimed in both PWs 73 and 74, including force account labor records and descriptions of the work that employees performed during the disaster. For PW 74, the Applicant included overtime costs incurred after the 30-day deadline for the emergency in its claim. As such, only overtime costs through November 23, 2009, totaling $16,581.92, are eligible. The eligible overtime labor cost for PW 73 is $6,970.14. The Applicant also requested reimbursement for materials and supplies in PW 74 but did not provide sufficient documentation, such as purchase orders and invoices, to support the costs claimed. As such, FEMA approves the material and supply costs contingent upon the Applicant’s ability to provide the FEMA Region II with sufficient documentation to support its claim. Conclusion
Overtime labor costs and the material and supply costs are eligible costs in accordance with the FEMA policies in effect at the time of the emergency. Thus, costs associated with providing emergency medical care at the EOCs and shelters are eligible. Overtime labor costs in the amount of $6,970.14 for PW 73 and $16,581.92 for PW 74 are eligible. The $206,105.11 in material and supply costs for PW 74 is eligible contingent upon the Applicant’s provision of adequate documentation to support the claimed costs to FEMA Region II.
[1] DAP 9525.4 (2008). [2] DAP 9523.15 (2007).
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