Emergency Snow Removal Costs

Appeal Brief Appeal Letter

Appeal Brief

DisasterFEMA-1086-DR
ApplicantVirginia Department of Transportation
Appeal TypeSecond
PA ID#000-92003
PW ID#80177, 97527
Date Signed2001-05-08T04:00:00
Citation: Virginia Department of Transportation, P.A.I.D. #000-92003, Emergency Snow Removal Costs, FEMA-1086-DR-VA, DSRs 80177, 97527.

Cross-reference: Subject: Snow removal costs, required documentation, Office of Inspector General (OIG) Audit. FEMA Record: DSR 80177, 97527.

Summary: The Virginia Department of Transportation (VDOT) requested reimbursement for emergency snow removal costs for a January 1996 series of snowstorms. When the DSR was prepared, an estimate of what was expended was made and used as the basis for the DSR, even though VDOT was unable to produce the records to substantiate it. The DSR was approved, and VDOT was informed that auditable records would have to be produced later. An audit was conducted by the OIG, with a report issued on August 3, 1999 in which the OIG recommended that $4,565,408 be deobligated because of a lack of documentation, and because of evidence that a portion of the requested amount to be reimbursed was likely for ineligible work such as salt spreading, supervision, mobilization, and administration, and another portion was double-counted. VDOT agreed that $1,859,210 was ineligible, but appealed the disallowance of $2,706,198. The Virginia Department of Emergency Services (VDES) (later called Department of Emergency Management) supported the appeal in part and suggested that the eligible total should be "between $10,672,500 to $10,927,368." Region III conducted a detailed analysis of the appeal, and concluded that they concurred with the OIG Audit conclusions, and denied the appeal. In the second appeal, VDOT requested reimbursement of $2,706,198.

Issues: Are undocumented snow removal costs eligible for reimbursement?

Findings: No.

Rationale: 44 CFR Part 13; Memorandum: Snow Policy and County Designations dated
February 1, 1996.

Appeal Letter

May 8, 2001

Michael Cline
Governor's Authorized Representative
Virginia Department of Emergency Management
10501 Trait Court
Richmond, VA 23236

Re: Second Appeal; Virginia Department of Transportation, P.A.I.D. # 000-92003, Emergency Snow Removal Costs, FEMA-1086-DR-VA, DSRs 80177 & 97527

Dear Mr. Cline:

This is in response to your letter of October 20, 2000, forwarding the referenced appeal on behalf of the Virginia Department of Transportation (VDOT). In an audit report dated August 3, 1999, the FEMA Office of Inspector General (OIG) questioned $4,565,408 in claimed costs. VDOT agreed that $1,859,210 should be disallowed, but sought reinstatement of the remaining $2,706,198. You requested that FEMA set aside the OIG report and restore the questioned funding.

In January 1996, the president declared a major disaster for the Commonwealth of Virginia because of excessive amounts of snowfall (FEMA-1086-DR-VA). FEMA outlined declaration and eligibility criteria in a series of memoranda from January 11 to February 15, 1996. FEMA staff met with VDOT in June 1996 and wrote a damage survey report for $13,603,044 for eligible snow removal costs, based on documented and estimated costs. The FEMA OIG subsequently conducted an audit of the VDOT grant. In Report No. E-37-99 dated August 3, 1999, the OIG questioned $4,565,408 of the grant. The categories and amounts of questioned costs were: Unauthorized Activities - $2,951,850; Duplicate Charges - $1,018,100; Excessive Equipment Costs - $483,972; Ineligible Costs - $86,719; and Unsupported Costs - $24,767. Region III concurred with the OIG findings and recommendations.

VDOT submitted a first appeal to the Virginia Department of Emergency Management in a letter dated March 13, 2000. VDOT agreed with the OIG that $1,859,210 of the questioned costs was ineligible as follows: Unauthorized Activities - $309,813; Duplicate Charges - $1,018,100; Excessive Equipment Costs - $449,816; and, Ineligible Labor Costs - $81,481. However, it claimed that the remaining costs that the OIG questioned ($2,706,198) were eligible. In a letter dated April 5, 2000 to the Regional Director, FEMA Region III, you supported VDOT's first appeal. However, you recommended that $815,366 to $1,070,234 of the $2,706,198 should be eligible. The Regional Director denied the appeal in a letter dated July 21, 2000 because VDOT did not provide documentation to support its claim. VDOT submitted a second appeal in a letter dated September 19, 2000. You forwarded that appeal to the Regional Director in a letter dated October 20, 2000, wherein you asked that FEMA set aside the OIG findings, except for the double billing and areas VDOT and Virginia Department of Emergency Management mutually agreed as eligible in the first appeal.

The amount in question is $2,706,198. You stated that since FEMA Region III and VDOT agreed to a methodology for writing the DSR, FEMA should accept all claimed costs. The fact that VDOT and FEMA staff agreed to an approach to write the DSR in August 1996 when all costs were not documented is not in dispute. However, program staff does not have the authority to waive the requirement for applicants to document all claimed costs. All federal grants are subject to 44 CFR Part 13, which requires, in pertinent parts, that all accounting records be supported by source documents and that records be retained for three years after closeout of the grant. VDOT documented most of its claimed costs, however, it could not allocate some of the costs to eligible and ineligible activities. For example, VDOT claimed all truck and operator costs for trucks that were outfitted with plows and spreaders. However, it was not able to show when the trucks were plowing (eligible) and when they were spreading salt (ineligible). In these cases, the OIG allowed a percentage of these costs based on a survey of VDOT residences. You suggested that the allowable percentage should be higher. After reviewing the file, I have concluded that the OIG's approach and recommendations are reasonable. Therefore, I support the Regional Director's decision on the first appeal and deny this appeal.

FEMA works in partnership with states to assist communities in recovering from the devastating effects of disasters. It appears that some of the language in the first appeal response relative to VDOT's accounting system does not support our goal of building stronger partnerships with our states. I regret that this occurred.

Please inform VDOT of my determination, which is the final decision on this matter pursuant to 44 CFR 202.206.

Sincerely,
/S/
Lacy E. Suiter
Executive Associate Director
Response and Recovery Directorate

cc: Peter G. Cote
Acting Regional Director
FEMA Region III
Last updated