Bedford County

Appeal Brief Appeal Letter

Appeal Brief

DisasterFEMA-1093-DR
ApplicantPennsylvania Department of Transportation
Appeal TypeSecond
PA ID#000-92003
PW ID#40369
Date Signed1999-06-07T04:00:00
Citation: FEMA-1093-DR-PA, P.A. 000-92003, Pennsylvania Department of Transportation, DSR 40369, Engineering and Design Services

Cross-reference: Estimated vs. Actual Costs, Large Project Closeout, Category C

Summary: Flooding in January 1996 damaged SR 3013 in Bedford County, Pennsylvania. Damage Survey Report (DSR) 62210 was prepared to fund roadway and shoulder repair by the Pennsylvania Department of Transportation (PennDOT). Supplemental DSR 40369 increased the eligible amount from $65,246 to $97,159, including $2,830 for engineering and design services. PennDOT was expecting to receive $6,980 for these services but the amount was reduced because the project was simple and did not require design work. PennDOT submitted its first appeal on September 24, 1998. It claimed that a number of reviewers approved the higher amount (based on 7.4 percent of total project cost) and FEMA had arbitrarily reduced the amount to 3 percent of the total cost. FEMA denied this appeal on December 3, 1998, stating that no actual expenses for these services were submitted. For this reason, and because the project was simple, the 3 percent estimate was justified. On February 19, 1998, PennDOT submitted its second appeal. PennDOT did not submit new information, but argued that the project was covered by the Curve B estimating formula in public assistance policy guidance. It stated that services were not limited to inspection, but included design, and therefore, the 7.4 percent estimate was applicable. PennDOT did not submit actual expenses for engineering and design services.

Issues: Is PennDOT eligible for reimbursement of engineering and design services based on an estimate of 7.4 percent?

Findings: No.

Rationale: FEMA 286/September 1996, Public Assistance Guide, pages 57 and 58.

Appeal Letter

June 7, 1999

Charles F. Wynne
Governor's Authorized Representative
Pennsylvania Emergency Management Agency
Box 3321
Harrisburg, Pennsylvania 17105-3321

Re: Second Appeal - Pennsylvania Department of Transportation, SR 3013, FEMA-1093-DR-PA, DSR 40369

Dear Mr. Wynne:

This is in response to the referenced appeal submitted by your office on March 8, 1999. The Pennsylvania Department of Transportation (PennDOT) is asking for an additional $4,150 in funding to cover engineering and design services costs related to Damage Survey Report (DSR) 40369.

Flooding in January 1996 resulted in damages to SR 3013 in Bedford County, Pennsylvania. DSR 62210 obligated $65,246 to remove and replace damaged pavement, repair shoulder erosion, clean ditches and remove blockage from culverts. On May 29, 1998, supplemental DSR 40369 increased the eligible amount to $97,159. This amount included $2,830 for engineering and design services based on an estimate of 3 percent of the total project cost. During closeout procedures, an estimate of 7.4 percent was used and PennDOT expected to receive $6,980 for engineering and design services. The percentage was reduced because no design work was required and the job was not complex.
PennDOT submitted its first appeal on September 24, 1998, stating that FEMA arbitrarily reduced the engineering and design services fee. PennDOT claimed to have spent more money on engineering costs than claimed, as evidenced by a summary table. The table listed counties and the amount claimed for engineering and design costs for each vs. the actual amount incurred. PennDOT described the actions of design teams that "went out and reviewed this roadway," then calculated quantities needed and prepared contract documents. PennDOT concluded that FEMA reviewers ignored the work of six individuals without a "detailed or defined explanation."

On December 3, 1998, FEMA denied this appeal based on the fact that no actual costs were submitted. The response stated that the 3-percent estimate was justified because the engineering and design services described fell within the basic construction services outlined in public assistance policy guidance. In addition, the pavement and shoulder repairs were not complex and therefore, were not covered by the Curve B estimating formula. FEMA concluded that absent actual documented costs, 3 percent was a reasonable rate.

PennDOT submitted its second appeal in a letter dated February 19, 1998. It did not include any documented justification supporting its position. PennDOT argued that its engineering and design costs were covered by Curve B, which recognizes "roads and streets." It also quoted 44 CFR 206.203(c) in its entirety, drawing a distinction between large and small project funding. PennDOT concluded that activities performed by its team were not in the same category as debris removal (used as an example in public assistance policy guidance), and were not limited to inspection, but included design.

Public assistance policy guidance states that basic design and inspection services may be eligible for reimbursement. In order to estimate these costs when preparing a DSR, a percentage of the total construction cost is used. For basic construction inspection, no more than 3 percent of the estimated final cost is used for the DSR estimate. PennDOT has described the activities of contractors, which meet FEMA's definition of basic construction inspection services. Curve A and Curve B estimating formulas assist in estimating costs for more complex projects, ranging from bridges to power plants. While Curve B lists "roads and streets," it refers to the construction of roads and streets, not shoulder and pavement repair.

PennDOT is asking for 7.4 percent of the total contract cost for its estimated engineering and design services costs. The guidance provided in the FEMA policy manual suggests methods for estimating basic engineering costs, but states that only actual costs will be reimbursed. At a contract cost of $94,329, DSR 40329 is a large project. 44 CFR 206.203(c) states that for large projects, federal funding will equal the federal share of the actual eligible costs documented by a grantee.

PennDOT has not submitted documentation of actual costs for engineering and design services. The table it submitted lists engineering costs for a number of counties and compares actual costs to claimed costs. This table does not give a breakdown of costs per project, or separate disaster-related expenses from non-disaster-related expenses. Recognizing that PennDOT incurred some expense for design and inspection services, I have determined that 3 percent is a reasonable rate absent specific documentation of actual engineering expenses. For this reason, I am denying the appeal.

Please inform the applicant of my decision. In accordance with the appeal procedure governing appeal decisions made on or after May 8, 1998, my decision constitutes the final decision on this matter. The current appeal procedure was published as a final rule in the Federal Register on April 8, 1998. It amends 44 CFR 206.206, which constitutes the final level of appeal in accordance with 44 CFR 206.206(e).
Sincerely,

/S/

Lacy E. Suiter
Executive Associate Director
Response and Recovery Directorate

cc: Rita A. Calvan
Regional Director
FEMA Region III
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