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Second Appeal Summary
PA ID# 061-91010; Snohomish County Public Utility District (PUD),
DSR ID# DSRs 21223 and 21224 (DR-1079); DSRs 241; Deobligation based on Audit Report of System-wide costs
Citation: Snohomish County Public Utility District (PUD), P.A.I.D. #061-91010, FEMA-DR-1079-WA and 1159-WA, Deobligation based on Audit Report of System-wide costs, DSRs 21223 and 21224 (DR-1079); DSRs 24133 and 74310 (DR-1159).
Cross-reference: Subject: employee fringe benefits rate, overtime costs, FEMA equipment cost rates, FEMA Record: DSRs 21223 and 21224 (DR-1079); DSRs 24133 and 74310 (DR-1159).
Summary: The Snohomish County PUD incurred costs for repairing lines after two storms, and FEMA prepared DSRs, including closeout DSRs for these costs, which were then audited by the FEMA Office of Inspector General (OIG). The OIG found that certain costs were ineligible, primarily (1) the use of a blended fringe benefit rate of 36% for overtime hours, rather than the actual cost of benefits associated with the overtime hours only. Other questionable costs included (2) the charging separately for the cost of maintaining vehicles when the standard FEMA equipment rates were used which include such costs, (3) the overstatement of equipment usage hours, with some items adding up to more than 24 hours for certain days, (4) the failure to deduct for joint ownership of some transmission poles, and (5) the failure to credit for the value of scrap metal.
Issues: (1) Is a "blended fringe benefits rate" for overtime hours eligible for FEMA reimbursement? (2) Is FEMA "estopped" from changing what had already been approved and thus relied on? (3) Is the actual costs for equipment maintenance eligible when FEMA equipment rates are used? (4) If FEMA had reviewed the record keeping on the issue of the log of equipment usage, does that absolve the subgrantee from later back charges when discrepancies are discovered in audit? (5) Is the adjustment of the charges for the joint ownership of transmission poles and scrap metal salvage fair?
Findings: (1) The use of a "blended fringe benefits rate" for overtime hours fails to meet FEMA's eligibility requirements which demand that actual expenses be used. (2) On the question of "estoppel," the OIG is authorized to conduct financial audits of FEMA grants pursuant to the Inspector General Act of 1978. FEMA must respond to any OIG findings. Also, FEMA grants are based on actual costs incurred. (3) No. The FEMA equipment rates include the maintenance cost as a factor imbedded in the hourly rate. Thus paying for it as an actual cost in addition is a duplicative payment. (4) There is no basis to reimburse the subgrantee for more than 24 hours per day for use of a specific piece of equipment. (4&5) The shared costs for poles that are jointly owned with the subgrantee by an ineligible applicant, and the income to the subgrantee for the sale of scrap resulting from FEMA funded operations must be accounted for in the actual costs
Rationale: OMB A-87, 44 CFR