Deobligation based on Audit Report of System-wide costs
Appeal Brief
Appeal Letter
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 206.228(a), Stafford Act, 312, 44 CFR 13.20(b)(1).
Appeal Brief
| Disaster | FEMA-DR-1079 |
| Applicant | Snohomish County Public Utility District (PUD), |
| Appeal Type | Second |
| PA ID# | 061-91010 |
| PW ID# | DSRs 21223 and 21224 (DR-1079); DSRs 241 |
| Date Signed | 2001-07-20T04:00:00 |
Appeal Letter
July 20,2001
Ms. Donna J. Voss
Public Assistance Program
State of Washington Military Department
TA-20 Building 20
Camp Murray, WA 98430-5122
RE: Second Appeal: Snohomish County Public Utility District (PUD), P.A.I.D. #061-91010, FEMA-DR-1079-WA & 1159-WA, Deobligation based on Audit Report of System-wide costs, DSRs 21223 and 21224 (DR-1079); DSRs 24133 and 74310 (DR-1159). (Two appeals)
Dear Ms. Voss:
This letter is in response to your letters of February 26, 2001 forwarding the Second Appeals of Damage Survey Reports (DSRs) 21223 and 21224 (DR-1079), and DSRs 24133 and 74310 (DR-1159) submitted by the Snohomish County PUD to the State of Washington Military Department on January 2, 2001. A total of $623,092 for DR-1079 and $200,404 for DR-1159 had been identified as questionable costs in an Office of Inspector General (OIG) audit. The Regional Director subsequently requested that the subgrantee return the questioned funds. The subgrantee disagreed with the findings of the audit, and has appealed the Regional Director's decision. Since the Regional Director accepted the audit findings and requested that the subgrantee return the questioned costs, the appeal was considered a second appeal and sent to me for consideration.
In brief, the subgrantee's case consists of the following points. The total combined amount in question is in parentheses.
The Regional Director in FEMA Region X supports this adjustment. I have reviewed all information submitted with this appeal and agree with the OIG findings, except as described above. There is no basis for overturning the Regional Director's decision on this matter. Therefore, I am denying the appeal. By copy of this letter, I am asking the Regional Director to take appropriate action to implement my decision.
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
Assistant Director
Readiness, Response and Recovery Directorate
Enclosure
cc: Col. Ken Kasprisin
Regional Director
FEMA Region X
Ms. Donna J. Voss
Public Assistance Program
State of Washington Military Department
TA-20 Building 20
Camp Murray, WA 98430-5122
RE: Second Appeal: Snohomish County Public Utility District (PUD), P.A.I.D. #061-91010, FEMA-DR-1079-WA & 1159-WA, Deobligation based on Audit Report of System-wide costs, DSRs 21223 and 21224 (DR-1079); DSRs 24133 and 74310 (DR-1159). (Two appeals)
Dear Ms. Voss:
This letter is in response to your letters of February 26, 2001 forwarding the Second Appeals of Damage Survey Reports (DSRs) 21223 and 21224 (DR-1079), and DSRs 24133 and 74310 (DR-1159) submitted by the Snohomish County PUD to the State of Washington Military Department on January 2, 2001. A total of $623,092 for DR-1079 and $200,404 for DR-1159 had been identified as questionable costs in an Office of Inspector General (OIG) audit. The Regional Director subsequently requested that the subgrantee return the questioned funds. The subgrantee disagreed with the findings of the audit, and has appealed the Regional Director's decision. Since the Regional Director accepted the audit findings and requested that the subgrantee return the questioned costs, the appeal was considered a second appeal and sent to me for consideration.
In brief, the subgrantee's case consists of the following points. The total combined amount in question is in parentheses.
- ($664,416) The "blended rate" (the 36% benefits rate charged to FEMA for overtime work) is "reasonable" based on OMB Circular A-87, Attachment B(11)(b) because it is the rate paid by the District's customers and developers. Also, FEMA is "estopped" from challenging the 36% rate because it had approved the claim in the past. Now it is too late for the District to reclaim these costs from its customers and developers.
- ($64,817) The audit finding that the labor costs associated with maintaining vehicles are ineligible because of duplication of benefits (the rate charged for vehicle use is claimed by the auditors as including such costs) is without merit.
- ($51,454) The audit finding that the overstated equipment usage is incorrect, and that FEMA inspectors in 1997 had determined that the equipment charges were satisfactory.
- ($28,722) The audit finding on the failure to account for credit for the joint ownership of the transmission poles is incorrect.
- ($14,087) The audit finding that the failure to deduct for the value of the scrap materials is unfounded.
The Regional Director in FEMA Region X supports this adjustment. I have reviewed all information submitted with this appeal and agree with the OIG findings, except as described above. There is no basis for overturning the Regional Director's decision on this matter. Therefore, I am denying the appeal. By copy of this letter, I am asking the Regional Director to take appropriate action to implement my decision.
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
Assistant Director
Readiness, Response and Recovery Directorate
Enclosure
cc: Col. Ken Kasprisin
Regional Director
FEMA Region X
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