Audit Report E-21-95, Finding A

Appeal Brief Appeal Letter

Appeal Brief

DisasterFEMA-841-DR-
ApplicantVirgin Islands Water and Power Authority
Appeal TypeSecond
PA ID#000-92101
PW ID#83336,83369,49719,49943
Date Signed1999-06-17T04:00:00
Citation: FEMA-841-DR-VI, P.A. 000-92101, Virgin Islands Water and Power Authority, DSRs 83336, 83369, 49719, and 49943, Audit Report E-21-95, Finding A

Cross-reference: Time Limits, Appeals, Acquisition of Supplies

Summary: Hurricane Hugo caused severe damage to the U.S. Virgin Islands and the President declared it a major disaster on September 20, 1989. FEMA approved several Damage Survey Reports for the Virgin Islands Water and Power Authority (WAPA) to restore electrical power to the islands. The FEMA Office of Inspector General audited WAPA and issued a report on March 23, 1995, wherein it questioned $4,425,141 in excess cost. FEMA subsequently deobligated these funds. WAPA claims that the questioned costs consisted of its undocumented use of materials ($2,022,343) as well as surplus inventory ($2,402,344). Further, it proposes in its second appeal that FEMA allow WAPA to liquidate all materials at $0.05 on the dollar and return these funds to FEMA. In addition, FEMA would reimburse WAPA $290,000 for "post-completion inventory management costs." This would account for the expenditure of all FEMA funds. The Disaster Recovery Manager denied WAPA's first appeal on July 13, 1998, because FEMA received the appeal more than three years after the regulatory deadline for submitting appeals. The Governor's Authorized Representative submitted WAPA's second appeal to FEMA by letter dated November 12, 1998. 44 CFR 206.206 states that applicants must submit appeals to the grantee within 60 days after receipt of notice of the action being appealed. The grantee will forward the appeal to the Regional Director within 60 days of receipt from the applicant.

Issues: Were appeals submitted according to the appeal procedures detailed in 44 CFR 206.206?

Findings: No.

Rationale: 44 CFR 206.206

Appeal Letter

June 17, 1999

Nellon Bowry
Governor's Authorized Representative
The Virgin Islands Office of Management and Budget
#41 Norre Gade
Emancipation Garden Station, 2nd Floor
Charlotte Amalie, St. Thomas, Virgin Islands 00802

RE: Second Appeal - Virgin Islands Water and Power Authority, Audit Report E-21-95, Finding A, FEMA-841-DR-VI, DSRs 83336, 83369, 49719, 49943

Dear Mr. Bowry:

This is in response to the referenced second appeal, which you submitted to FEMA on November 12, 1998. The appeal pertains to $4,425,141 in questionable material costs.

Hurricane Hugo caused severe damage to the U.S. Virgin Islands and the President declared it a major disaster on September 20, 1989. FEMA approved several Damage Survey Reports for the Virgin Islands Water and Power Authority (WAPA) to restore electrical power to the islands. The FEMA Office of Inspector General audited WAPA and issued a report on March 23, 1995, wherein it questioned $4,425,141 in excess cost. FEMA subsequently deobligated these funds. WAPA claims that the questioned costs consisted of its undocumented use of materials ($2,022,343) as well as surplus inventory ($2,402,344). Further, it proposes in its second appeal that FEMA allow WAPA to liquidate all materials at $0.05 on the dollar and returns these funds to FEMA. In addition, FEMA would reimburse WAPA $290,000 for "post-completion inventory management costs." This would account for the expenditure of all FEMA funds.

The Disaster Recovery Manager denied WAPA's first appeal on July 13, 1998, because FEMA received the appeal more than three years after the regulatory deadline for submitting appeals. You transmitted WAPA's second appeal to FEMA by letter dated November 12, 1998. 44 CFR 206.206 states that applicants must submit appeals to the grantee within 60 days after receipt of notice of the action being appealed. The grantee will forward the appeal to the Regional Director within 60 days of receipt from the applicant. I have reviewed the record and can find no extenuating circumstances for the protracted delay in submitting the first appeal to FEMA. Therefore, I support the Disaster Recovery Manager's decision on the first appeal. Accordingly, I am denying the second appeal.

Please inform the applicant of my determination. 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: Jos? A. Bravo
Disaster Recovery Manager
FEMA-0841-DR-VI

Lynn Canton
Regional Director
FEMA Region II
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