Montevina Pipeline Connection
Appeal Brief
Appeal Letter
Appeal Analysis
Citation: FEMA-845-DR-CA, PA 087-90114, Big Redwood Park Water and Improvement Association, DSRs 04919, 06186, 83762, 06121, 83696, Montevina Pipeline Connection
Cross-reference: Project Delay Costs, Price Increases, Interest Charges, Improved Project
Summary: The Loma Prieta earthquake damaged the water supply of the residents served by the Big Redwood Park Water and Improvement Association (applicant). After determining that repairing the wells and surface water supply was not feasible, the applicant decided to connect to the existing Montevina Pipeline. FEMA approved DSR 06186 for $1,152,745 for this purpose. In 1993, the applicant requested supplemental funding and FEMA approved DSR 06121 for $319,385 to fund some of the requested additional costs. According to the applicant, the completion of the pipeline project was delayed for years for various reasons. In March of 1995, the applicant requested additional funding for construction delays and telemetry and pump station modifications. FEMA did not approve funding for the construction delays or telemetry upgrades, and prepared DSR 83696 for $5,200 to fund only the costs for a geotechnical study and a permit. The applicant appealed FEMA's decision in July 1997. FEMA addressed this appeal and the Project Completion and Certification Report in a letter dated September 30, 1999. FEMA approved eligible costs of $442,152 associated with telemetry and pump upgrades and project management, but it did not fund costs related to project delays. In its second appeal, the applicant requests additional funding for $127,352 for delay costs, interest charges, price increases, and other damages. The applicant is also requesting a small project overrun.
Issues: 1) Are costs associated with project delays eligible?
2) Should FEMA consider the small project overrun?
Findings: 1) No. Costs must be directly related to the performance of eligible work. The reasons for the delays are not acceptable for considering additional eligible costs.
2) No. The request for an overrun has exceeded the time limit for submitting an appeal.
Rationale: 44 CFR 206.204(d)(e), 44 CFR 206.223.
Big Redwood Park Water and Improvement Association (applicant) is a private non-profit water supplier located in the Santa Cruz mountains of California. The water source for the communities in this area typically consisted of a combination of wells, springs, and seasonal creek diversions. On October 17, 1989, the Loma Prieta earthquake impacted this area, which cut off the potable water supply to the applicant's customers. The earthquake damaged the groundwater wells beyond repair and the surface water supply was insufficient in meeting the communities needs.
To address its customers' need for water after the earthquake, the applicant connected to the Montevina pipeline. The first segment of the pipeline was built by another water company, Redwood Mutual Water Company. The second segment was constructed by Gillette Mutual Water Company. The third and fourth segments were constructed under one construction contract to serve the applicant, and two other water companies, Villa Del Monte Mutual Water Company (Villa) and Mountain Summit. Mountain Summit is not an eligible applicant.
FEMA prepared Damage Survey Report (DSR) 06186 to fund the applicant's connection to the Montevina Pipeline, modify pump stations, add storage tanks, install a water line with appurtenances, obtain permits and easements, and provide engineering and construction management. The DSR was approved on April 16, 1992, based on the scope of work and cost estimates from an engineering report prepared by Bissell and Karn. Some costs were reduced to reflect a cost-share with the other eligible applicant, Villa. In addition, the American Red Cross (ARC) donated $100,000 to the project. The final approved estimate was $1,252,745, less $100,000 from the ARC, for a total of $1,152,745.
In August 1993, the applicant requested a supplemental DSR for the project. By this time, the ARC rescinded the majority of its funding leaving the applicant with $25,563. However, the ARC required that the funding be used for work that was not funded by FEMA. FEMA approved the additional costs for the work that was completed in accordance with the eligible scope of work of DSR 06186. Some costs were decreased based on updated information. The adjusted approved estimate was $1,472,129. The previously approved amount of $1,152,745 was subtracted and supplemental DSR 06121 was approved for $319,385 on September 7, 1993. The DSR narrative states that the project was still in the construction phase at this point and that some of the requested construction costs were not adequately substantiated. The majority of the pipeline, water tanks and appurtenances had been installed, but the applicant and Villa were in the process of redesigning the pump stations. The redesign effort was not approved by FEMA. FEMA did not fund the unsubstantiated construction costs or pump redesign costs in DSR 06121.
The applicant requested another supplement in March 1995 for modifications to the project telemetry and pump stations, project management costs, permit costs, and additional construction costs. The applicant's request totaled an additional $234,687. FEMA determined that the requested telemetry and pump changes were improvements to the approved project. In addition, FEMA determined that the size of the pipeline was increased beyond the approved scope of work to provide service to an ineligible water company (Mountain Summit). For these reasons, FEMA determined that the applicant performed an "improved project."
The applicant also requested expenses related to contract delays. FEMA found the reasons for delays were unsubstantiated. Finally, the applicant requested project management costs payable to Robert Hansen, the applicant's project manager. The work appeared to be grant management activities, which is covered by the administrative allowance. FEMA did allow for project management at a rate of 3 percent of total eligible costs. In addition, FEMA approved $1,300 for a geotechnical study and $3,900 for a permit. Therefore, FEMA approved supplemental DSR 83696 for $5,200 bringing the total approved funding to $1,477,330. Based on the supplemental cost information provided, FEMA estimated that the total eligible costs for the approved scope of work was $1,295,683. However, FEMA did not de-obligate the difference of $181,647 to give the applicant the opportunity to provide additional information for consideration of these additional costs and to support its claim that this was not an "improved project." FEMA notified the applicant of this determination by a letter dated September 23, 1996.
The applicant supplied additional information by a letter dated November 8, 1996. FEMA determined that the information provided by the applicant did not contain any new evidence to support its claims or alter previous determinations on the eligibility of work. Thus, FEMA prepared DSR 83762 on January 22, 1997 to de-obligate $181,647. At that time, the total approved funding was $1,295,683.
FIRST APPEAL
The applicant submitted its first appeal on July 7, 1997, requesting an additional $363,192. Again, the majority of claimed expenses related to telemetry and pump changes, contract delays and project management costs. It claimed that the scope of work for the project had not changed since the project was approved and therefore, it was not an improved project. It stated that telemetry and pump upgrades were required by health regulations, that project delay costs should be considered eligible cost overruns, and that project management costs of 10 to 15 percent of the total project cost are reasonable. Finally, the applicant asked for a time extension to complete the project.
After receiving the first appeal, FEMA and the applicant agreed that FEMA would provide a response at the time of project closeout. Thus, FEMA's first appeal response was put on hold until the applicant submitted its Project Completion and Certification Report in September 1999. At that time, the applicant increased its supplemental funding claim to $575,769 raising the total claimed cost to $1,871,452.
On September 30, 1999, FEMA partially approved the applicant's appeal. FEMA determined that the telemetry and pump upgrades were required for the connection to the pipeline and, therefore, were eligible items. It also found that costs related to project delays were not eligible because they do not constitute overruns, in accordance with 44 CFR 206.204(e). Finally, the eligible rate of project management costs was increased from 3 to 8 percent of the total eligible project costs. FEMA approved a total of $1,737,835 for the project and prepared DSR 04919 for $442,152 on September 24, 1999 (total approved project cost minus the previously approved amount). FEMA also granted a time extension to December 31, 1999.
SECOND APPEAL
The applicant submitted its second appeal on December 27, 1999. The applicant provided supplementary information for the second appeal by a letter dated February 7, 2000. We will summarize the applicant's claims, though all issues raised in its appeal were considered in making our determination. The main issues raised in this appeal are contractor and engineering delay costs, price increases, interest charges on delayed retention payments, telemetry repairs, designation of project as an improved project, FEMA's approved project completion date, and FEMA's disapproval of a cost overrun for seven small projects. The applicant is requesting a total of $127,352 in additional funding.
The applicant separated its contractor delay costs into two categories, the first totaling $37,500. The requested costs result from the applicant's share of a negotiated settlement of $37,500 with the applicant's contractor McGuire and Hester/EMSCO. thht of entry agreements with Redwood Mutual Water Company (Redwood) and Gillette Water Company, delayed adoption of telemetry standards, and lack of access to Redwood facilities due to litigation that did not involve the applicant. It characterizes the resulting cost increases as cost overruns, which it asserts are eligible in accordance with 44 CFR 206.204(e). It claims that because FEMA partially approved the first appeal in 1999, price increases and other charges associated with the newly eligible aspects of the project should be eligible as well.
The second set of delay charges total $37,428. The applicant cites the same reasons as above for the delay charges. These costs are related to five contract change orders for mobilization, facilities inspection, and price increases. McGuire and Hester/EMSCO incurred $12,500 in mobilization costs to begin work after the five-year delay from 1993 to 1998. Another change order for $12,500 was paid for inspecting the pump stations and pipeline facilities that were installed prior to 1993. The final $12,428 is related to price increases that occurred over the period between 1997 and 1998 while the construction work was on hold.
The applicant is also requesting $5,715 in price increases incurred by the contractor McGuire and Hester/EMSCO from 1993 to 1995. In addition, the applicant is requesting $33,001 for interest payments made to the contractor for delayed contract retention payments from 1993 to 1996. The applicant agreed to pay the contractor an interest rate of eleven percent per annum on the delayed retention payment of $171,153. Again, the applicant asserts that these costs were incurred due to the delays described previously.
The applicant also claims $11,848 for engineering costs paid to Frietas and Frietas. Frietas and Frietas took over the engineering and construction management aspects of this project in 1996. The charges comprise of $1,350 for startup, $575 for a site visit, and $9,923 for additional construction management costs. According to the applicant, the $9,923 was added to the contract due to delays caused by Pacific Gas and Electric, Redwood, telemetry and pump changes, increases to scope of work, and preparation of technical descriptions of project easements.
The applicant is also requesting reimbursement for $1,860 worth of telemetry repairs that were necessary due to damage caused by the County of Santa Cruz. The applicant states that the County damaged the telemetry cable for the pipeline while performing road repairs following the 1995 FEMA-1046-DR-CA disaster.
The applicant is appealing FEMA's decision to deny cost overruns on seven small projects. The total overrun is $17,701 for DSRs 34216, 38997, 83694, 34538, 34585, 38996, and 83695. FEMA did not consider the small project overruns, because the applicant's P-4 Completion and Certification report stated that the last small project completion date is March 3, 1994. The appeal date of December 27, 1999, exceeded the applicant's time limit to submit an appeal for a cost overrun. The applicant asserts that the final completion date for the small projects is effective as of the September 24, 1999, submittal of the P-4 report.
Finally, there are three issues the applicant raises that have no monetary bearing in this appeal. The first is an objection to certain FEMA personnel reviewing this appeal. The second is the designation of the pipeline project as an improved project. The applicant is unsure why this project is classed as an improved project, given that FEMA approved the costs of pump upgrades and telemetry changes. The applicant also asks for an extension of its project completion date (presently December 31, 1999) to six months following FEMA's response to the second appeal.
DISCUSSION
The majority of the applicant's claim for additional project funding, $125,492, is related to project delays, for example, start-up costs, price increases, settlement claims, and interest charges. These additional costs claimed by the applicant were not incurred during the performance of eligible work. Rather, the costs are due to delays in the construction of the project. The causes of these delays do not warrant FEMA's consideration of additional funding for the project.
The applicant did not provide any information to support its claim that the litigation between Redwood Mutual and Pacific Underground prohibited the applicant from obtaining access to Redwood Mutual's facilities. In fact, it is noted in DSR 83696 that a representative of Redwood Mutual stated that the only requirement to obtain access to the facilities was that the applicant's contractor should provide ten days notice to the court. Regarding the right of entry to Gillette's facilities, the applicant did not provide an explanation why it could not access Gillette's pipeline.
The applicant also cites delays caused by Pacific Gas and Electric, Redwood Mutual, and the completion of telemetry and pumping upgrades. More specifically, the applicant states that Pacific Gas and Electric delayed the processing of an application for electrical service to a pump station. Redwood Mutual caused a delay by not accepting a proposed by-pass pump station system. These are not acceptable reasons for additional eligible costs. It is the applicant's responsibility to work with any outside entities to ensure that the project is completed in a timely manner. The applicant should have anticipated these additional project requirements and planned accordingly. The applicant has not cited any measures that it took to avoid these delays. The telemetry and pump upgrades should have been completed in a timely manner. Based on the information provided, the revised telemetry plans were completed in 1993. Therefore, it does not appear that the upgraded telemetry and pump design contributed to the delays from 1994 to 1998.
Furthermore, the completion of a project must not be contingent upon recovery of costs from the federal government. Bad weather and FEMA approval of funding are unacceptable as reasons for delay, as is the applicant's inability to obtain access to other facilities. Finally, FEMA cannot fund interest charges, in accordance with Office of Management and Budget (OMB) Circular No. A-122, Attachment B, Paragraph 23. For the reasons described, the costs associated with start-up, re-inspection, price increases, interest charges, and contract retention after years of not working on the project are not eligible items. In summary, the applicant did not provide sufficient justification for the years of delays for FEMA to consider funding for any of the additional requested costs.
The applicant also requests funding for a cost overrun on seven small projects. The applicant requests that FEMA consider the date that its P-4 Completion and Certification report was filed, September 24, 1999, as the small project completion date. However, the applicant indicated on its report that the completion date for the projects was March 3, 1994. The request for consideration of the overrun was made more than five years after the completion of the last small project. This exceeds the time limit of 60-days to submit an appeal for a small project overrun as stated at 44 CFR 206.204(e)(2).
The damage to the telemetry system was caused by work performed by Santa Cruz County in response to the 1995 FEMA-1046-DR-CA. The damage was not caused by the earthquake disaster and is not related to this appeal. Therefore, FEMA will not consider this issue in this appeal.
In terms of the non-monetary aspects of the pipeline project appeal, the applicant objects to certain FEMA personnel reviewing its appeals. It should be noted that FEMA headquarters staff independently reviews all second appeals and the Executive Associate Direlicas not an improved project. FEMA made the "improved project" designation, because the pipeline segments funded by FEMA provide service to both ineligible and eligible entities. This is a moot point, however, because the telemetry and pump upgrades costs, which were initially denied due to the "improved project" designation, were approved following the first appeal. The improved project status of this project has no monetary bearing on this appeal.
Finally, the applicant asks for a time extension for this project. FEMA will not approve a time extension for "unanticipated matters [that] may require additional time to complete." Time extension requests must provide justification for the delay and an anticipated completion date. The applicant has not provided this information, and furthermore has stated that construction on the project was complete by December 31, 1999.
CONCLUSION
Based on the information presented, I have found that no additional costs are eligible for FEMA funding. Therefore, the appeal is denied.
Appeal Brief
| Disaster | FEMA-845-DR- |
| Applicant | BIG REDWOOD PARK WATER AND IMPROVEMENT ASSOCIATION |
| Appeal Type | Second |
| PA ID# | 085-90112 |
| PW ID# | 04919, 06186, 83762, 06121, 83696 |
| Date Signed | 2001-04-30T04:00:00 |
2) Should FEMA consider the small project overrun?
2) No. The request for an overrun has exceeded the time limit for submitting an appeal.
Appeal Letter
April 30, 2001
D.A. Christian
Governor's Authorized Representative
Governor's Office of Emergency Services
Post Office Box 419023
Rancho Cordova, California 95741-9023
Re: Second Appeal - Big Redwood Park Water and Improvement Association, Montevina Pipeline Connection, FEMA-845-DR-CA, DSRs 04919, 06186, 83762, 06121, 83696
Dear Mr. Christian:
This is in response to the referenced second appeal forwarded by your office on March 3, 2000, with an addendum on May 30, 2000. The Big Redwood Park Water and Improvement Association (applicant) is requesting an additional $127,352 for the Montevina Pipeline Project.
As explained in the enclosed analysis, I have reviewed the documentation submitted and found no reason to overturn the first appeal response. The main issues raised in this appeal are contractor delay and price increase costs, the designation of the project as an improved project, and a small project overrun. Despite lengthy appeals, the applicant has failed to sufficiently support the eligibility of its claimed work and costs. Therefore, I am denying this appeal.
Please inform the applicant of this determination. My decision constitutes the final decision on this matter as set forth in 44 CFR 206.206.
Sincerely,
/S/
Lacy E. Suiter
Executive Associate Director
Response and Recovery Directorate
Enclosure
cc: Karen E. Armes
Acting Regional DirectorFEMA Region IX
D.A. Christian
Governor's Authorized Representative
Governor's Office of Emergency Services
Post Office Box 419023
Rancho Cordova, California 95741-9023
Re: Second Appeal - Big Redwood Park Water and Improvement Association, Montevina Pipeline Connection, FEMA-845-DR-CA, DSRs 04919, 06186, 83762, 06121, 83696
Dear Mr. Christian:
This is in response to the referenced second appeal forwarded by your office on March 3, 2000, with an addendum on May 30, 2000. The Big Redwood Park Water and Improvement Association (applicant) is requesting an additional $127,352 for the Montevina Pipeline Project.
As explained in the enclosed analysis, I have reviewed the documentation submitted and found no reason to overturn the first appeal response. The main issues raised in this appeal are contractor delay and price increase costs, the designation of the project as an improved project, and a small project overrun. Despite lengthy appeals, the applicant has failed to sufficiently support the eligibility of its claimed work and costs. Therefore, I am denying this appeal.
Please inform the applicant of this determination. My decision constitutes the final decision on this matter as set forth in 44 CFR 206.206.
Sincerely,
/S/
Lacy E. Suiter
Executive Associate Director
Response and Recovery Directorate
Enclosure
cc: Karen E. Armes
Acting Regional DirectorFEMA Region IX
Appeal Analysis
BACKGROUNDBig Redwood Park Water and Improvement Association (applicant) is a private non-profit water supplier located in the Santa Cruz mountains of California. The water source for the communities in this area typically consisted of a combination of wells, springs, and seasonal creek diversions. On October 17, 1989, the Loma Prieta earthquake impacted this area, which cut off the potable water supply to the applicant's customers. The earthquake damaged the groundwater wells beyond repair and the surface water supply was insufficient in meeting the communities needs.
To address its customers' need for water after the earthquake, the applicant connected to the Montevina pipeline. The first segment of the pipeline was built by another water company, Redwood Mutual Water Company. The second segment was constructed by Gillette Mutual Water Company. The third and fourth segments were constructed under one construction contract to serve the applicant, and two other water companies, Villa Del Monte Mutual Water Company (Villa) and Mountain Summit. Mountain Summit is not an eligible applicant.
FEMA prepared Damage Survey Report (DSR) 06186 to fund the applicant's connection to the Montevina Pipeline, modify pump stations, add storage tanks, install a water line with appurtenances, obtain permits and easements, and provide engineering and construction management. The DSR was approved on April 16, 1992, based on the scope of work and cost estimates from an engineering report prepared by Bissell and Karn. Some costs were reduced to reflect a cost-share with the other eligible applicant, Villa. In addition, the American Red Cross (ARC) donated $100,000 to the project. The final approved estimate was $1,252,745, less $100,000 from the ARC, for a total of $1,152,745.
In August 1993, the applicant requested a supplemental DSR for the project. By this time, the ARC rescinded the majority of its funding leaving the applicant with $25,563. However, the ARC required that the funding be used for work that was not funded by FEMA. FEMA approved the additional costs for the work that was completed in accordance with the eligible scope of work of DSR 06186. Some costs were decreased based on updated information. The adjusted approved estimate was $1,472,129. The previously approved amount of $1,152,745 was subtracted and supplemental DSR 06121 was approved for $319,385 on September 7, 1993. The DSR narrative states that the project was still in the construction phase at this point and that some of the requested construction costs were not adequately substantiated. The majority of the pipeline, water tanks and appurtenances had been installed, but the applicant and Villa were in the process of redesigning the pump stations. The redesign effort was not approved by FEMA. FEMA did not fund the unsubstantiated construction costs or pump redesign costs in DSR 06121.
The applicant requested another supplement in March 1995 for modifications to the project telemetry and pump stations, project management costs, permit costs, and additional construction costs. The applicant's request totaled an additional $234,687. FEMA determined that the requested telemetry and pump changes were improvements to the approved project. In addition, FEMA determined that the size of the pipeline was increased beyond the approved scope of work to provide service to an ineligible water company (Mountain Summit). For these reasons, FEMA determined that the applicant performed an "improved project."
The applicant also requested expenses related to contract delays. FEMA found the reasons for delays were unsubstantiated. Finally, the applicant requested project management costs payable to Robert Hansen, the applicant's project manager. The work appeared to be grant management activities, which is covered by the administrative allowance. FEMA did allow for project management at a rate of 3 percent of total eligible costs. In addition, FEMA approved $1,300 for a geotechnical study and $3,900 for a permit. Therefore, FEMA approved supplemental DSR 83696 for $5,200 bringing the total approved funding to $1,477,330. Based on the supplemental cost information provided, FEMA estimated that the total eligible costs for the approved scope of work was $1,295,683. However, FEMA did not de-obligate the difference of $181,647 to give the applicant the opportunity to provide additional information for consideration of these additional costs and to support its claim that this was not an "improved project." FEMA notified the applicant of this determination by a letter dated September 23, 1996.
The applicant supplied additional information by a letter dated November 8, 1996. FEMA determined that the information provided by the applicant did not contain any new evidence to support its claims or alter previous determinations on the eligibility of work. Thus, FEMA prepared DSR 83762 on January 22, 1997 to de-obligate $181,647. At that time, the total approved funding was $1,295,683.
FIRST APPEAL
The applicant submitted its first appeal on July 7, 1997, requesting an additional $363,192. Again, the majority of claimed expenses related to telemetry and pump changes, contract delays and project management costs. It claimed that the scope of work for the project had not changed since the project was approved and therefore, it was not an improved project. It stated that telemetry and pump upgrades were required by health regulations, that project delay costs should be considered eligible cost overruns, and that project management costs of 10 to 15 percent of the total project cost are reasonable. Finally, the applicant asked for a time extension to complete the project.
After receiving the first appeal, FEMA and the applicant agreed that FEMA would provide a response at the time of project closeout. Thus, FEMA's first appeal response was put on hold until the applicant submitted its Project Completion and Certification Report in September 1999. At that time, the applicant increased its supplemental funding claim to $575,769 raising the total claimed cost to $1,871,452.
On September 30, 1999, FEMA partially approved the applicant's appeal. FEMA determined that the telemetry and pump upgrades were required for the connection to the pipeline and, therefore, were eligible items. It also found that costs related to project delays were not eligible because they do not constitute overruns, in accordance with 44 CFR 206.204(e). Finally, the eligible rate of project management costs was increased from 3 to 8 percent of the total eligible project costs. FEMA approved a total of $1,737,835 for the project and prepared DSR 04919 for $442,152 on September 24, 1999 (total approved project cost minus the previously approved amount). FEMA also granted a time extension to December 31, 1999.
SECOND APPEAL
The applicant submitted its second appeal on December 27, 1999. The applicant provided supplementary information for the second appeal by a letter dated February 7, 2000. We will summarize the applicant's claims, though all issues raised in its appeal were considered in making our determination. The main issues raised in this appeal are contractor and engineering delay costs, price increases, interest charges on delayed retention payments, telemetry repairs, designation of project as an improved project, FEMA's approved project completion date, and FEMA's disapproval of a cost overrun for seven small projects. The applicant is requesting a total of $127,352 in additional funding.
The applicant separated its contractor delay costs into two categories, the first totaling $37,500. The requested costs result from the applicant's share of a negotiated settlement of $37,500 with the applicant's contractor McGuire and Hester/EMSCO. thht of entry agreements with Redwood Mutual Water Company (Redwood) and Gillette Water Company, delayed adoption of telemetry standards, and lack of access to Redwood facilities due to litigation that did not involve the applicant. It characterizes the resulting cost increases as cost overruns, which it asserts are eligible in accordance with 44 CFR 206.204(e). It claims that because FEMA partially approved the first appeal in 1999, price increases and other charges associated with the newly eligible aspects of the project should be eligible as well.
The second set of delay charges total $37,428. The applicant cites the same reasons as above for the delay charges. These costs are related to five contract change orders for mobilization, facilities inspection, and price increases. McGuire and Hester/EMSCO incurred $12,500 in mobilization costs to begin work after the five-year delay from 1993 to 1998. Another change order for $12,500 was paid for inspecting the pump stations and pipeline facilities that were installed prior to 1993. The final $12,428 is related to price increases that occurred over the period between 1997 and 1998 while the construction work was on hold.
The applicant is also requesting $5,715 in price increases incurred by the contractor McGuire and Hester/EMSCO from 1993 to 1995. In addition, the applicant is requesting $33,001 for interest payments made to the contractor for delayed contract retention payments from 1993 to 1996. The applicant agreed to pay the contractor an interest rate of eleven percent per annum on the delayed retention payment of $171,153. Again, the applicant asserts that these costs were incurred due to the delays described previously.
The applicant also claims $11,848 for engineering costs paid to Frietas and Frietas. Frietas and Frietas took over the engineering and construction management aspects of this project in 1996. The charges comprise of $1,350 for startup, $575 for a site visit, and $9,923 for additional construction management costs. According to the applicant, the $9,923 was added to the contract due to delays caused by Pacific Gas and Electric, Redwood, telemetry and pump changes, increases to scope of work, and preparation of technical descriptions of project easements.
The applicant is also requesting reimbursement for $1,860 worth of telemetry repairs that were necessary due to damage caused by the County of Santa Cruz. The applicant states that the County damaged the telemetry cable for the pipeline while performing road repairs following the 1995 FEMA-1046-DR-CA disaster.
The applicant is appealing FEMA's decision to deny cost overruns on seven small projects. The total overrun is $17,701 for DSRs 34216, 38997, 83694, 34538, 34585, 38996, and 83695. FEMA did not consider the small project overruns, because the applicant's P-4 Completion and Certification report stated that the last small project completion date is March 3, 1994. The appeal date of December 27, 1999, exceeded the applicant's time limit to submit an appeal for a cost overrun. The applicant asserts that the final completion date for the small projects is effective as of the September 24, 1999, submittal of the P-4 report.
Finally, there are three issues the applicant raises that have no monetary bearing in this appeal. The first is an objection to certain FEMA personnel reviewing this appeal. The second is the designation of the pipeline project as an improved project. The applicant is unsure why this project is classed as an improved project, given that FEMA approved the costs of pump upgrades and telemetry changes. The applicant also asks for an extension of its project completion date (presently December 31, 1999) to six months following FEMA's response to the second appeal.
DISCUSSION
The majority of the applicant's claim for additional project funding, $125,492, is related to project delays, for example, start-up costs, price increases, settlement claims, and interest charges. These additional costs claimed by the applicant were not incurred during the performance of eligible work. Rather, the costs are due to delays in the construction of the project. The causes of these delays do not warrant FEMA's consideration of additional funding for the project.
The applicant did not provide any information to support its claim that the litigation between Redwood Mutual and Pacific Underground prohibited the applicant from obtaining access to Redwood Mutual's facilities. In fact, it is noted in DSR 83696 that a representative of Redwood Mutual stated that the only requirement to obtain access to the facilities was that the applicant's contractor should provide ten days notice to the court. Regarding the right of entry to Gillette's facilities, the applicant did not provide an explanation why it could not access Gillette's pipeline.
The applicant also cites delays caused by Pacific Gas and Electric, Redwood Mutual, and the completion of telemetry and pumping upgrades. More specifically, the applicant states that Pacific Gas and Electric delayed the processing of an application for electrical service to a pump station. Redwood Mutual caused a delay by not accepting a proposed by-pass pump station system. These are not acceptable reasons for additional eligible costs. It is the applicant's responsibility to work with any outside entities to ensure that the project is completed in a timely manner. The applicant should have anticipated these additional project requirements and planned accordingly. The applicant has not cited any measures that it took to avoid these delays. The telemetry and pump upgrades should have been completed in a timely manner. Based on the information provided, the revised telemetry plans were completed in 1993. Therefore, it does not appear that the upgraded telemetry and pump design contributed to the delays from 1994 to 1998.
Furthermore, the completion of a project must not be contingent upon recovery of costs from the federal government. Bad weather and FEMA approval of funding are unacceptable as reasons for delay, as is the applicant's inability to obtain access to other facilities. Finally, FEMA cannot fund interest charges, in accordance with Office of Management and Budget (OMB) Circular No. A-122, Attachment B, Paragraph 23. For the reasons described, the costs associated with start-up, re-inspection, price increases, interest charges, and contract retention after years of not working on the project are not eligible items. In summary, the applicant did not provide sufficient justification for the years of delays for FEMA to consider funding for any of the additional requested costs.
The applicant also requests funding for a cost overrun on seven small projects. The applicant requests that FEMA consider the date that its P-4 Completion and Certification report was filed, September 24, 1999, as the small project completion date. However, the applicant indicated on its report that the completion date for the projects was March 3, 1994. The request for consideration of the overrun was made more than five years after the completion of the last small project. This exceeds the time limit of 60-days to submit an appeal for a small project overrun as stated at 44 CFR 206.204(e)(2).
The damage to the telemetry system was caused by work performed by Santa Cruz County in response to the 1995 FEMA-1046-DR-CA. The damage was not caused by the earthquake disaster and is not related to this appeal. Therefore, FEMA will not consider this issue in this appeal.
In terms of the non-monetary aspects of the pipeline project appeal, the applicant objects to certain FEMA personnel reviewing its appeals. It should be noted that FEMA headquarters staff independently reviews all second appeals and the Executive Associate Direlicas not an improved project. FEMA made the "improved project" designation, because the pipeline segments funded by FEMA provide service to both ineligible and eligible entities. This is a moot point, however, because the telemetry and pump upgrades costs, which were initially denied due to the "improved project" designation, were approved following the first appeal. The improved project status of this project has no monetary bearing on this appeal.
Finally, the applicant asks for a time extension for this project. FEMA will not approve a time extension for "unanticipated matters [that] may require additional time to complete." Time extension requests must provide justification for the delay and an anticipated completion date. The applicant has not provided this information, and furthermore has stated that construction on the project was complete by December 31, 1999.
CONCLUSION
Based on the information presented, I have found that no additional costs are eligible for FEMA funding. Therefore, the appeal is denied.
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