FEMA-DHS-OIG Audit Report DA-13-03

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

DisasterFEMA-1251-DR
ApplicantHarrison County
Appeal TypeSecond
PA ID#047-00000
PW ID#45685
Date Signed2005-02-18T05:00:00
Citation: FEMA-1251-DR-MS, Harrison County

Cross-reference: Emergency work, debris removal

Summary: On October 1, 1998, FEMA 1251-DR-MS was declared as a result of Hurricane Georges. Harrison County, Mississippi (County), requested reimbursement for removal and disposal of tree stumps countywide. FEMA prepared Damage Survey Report (DSR) 45685 for $2,018,775. FEMA’s Office of Inspector General (OIG) conducted an audit of the Public Assistance funds awarded to Harrison County to determine whether the County accounted for and expended FEMA funds according to Federal regulations and FEMA guidelines. The OIG’s Audit Report DA-13-03, determined that the County had paid its contractors $2,018,775 for reportedly extracting and removing 8,783 tree stumps. Depending on the size and location of the stumps, the contractors received $150 to $325 per stump. It was then determined that homeowners had extracted the tree stumps from their private property and placed them on the curb for pickup and disposal. The OIG audit determined that the tree stumps did not present a safety hazard and, since the contractors did not extract the stumps, their fees were excessive. The OIG audit recommended use of the FEMA schedule cost of $28 per stump, plus 20 percent for profit and overhead, as a reasonable cost for pickup and disposal of tree stumps. FEMA Region IV concurred and prepared Supplemental DSR 09475 in the amount of -$1,723,666 to deobligate the excess charges.

Harrison County submitted a first appeal by letter dated December 10, 2003. The State of Mississippi (Grantee) supports the County’s claim. FEMA Region IV denied the first appeal on April 8, 2004, based on the fact that the contractors did not actually engage in stump removal (extraction) but merely picked up and hauled tree stumps that had been placed on the public rights-of-way. Once placed at the curb, the stumps are debris and the cost of removal is reimbursed at the established per cubic yard rate.
Harrison County’s second appeal, dated May 25, 2004, objects to the OIG’s findings and the ruling of FEMA Regional Director. The Grantee recommends that the disallowed costs be ruled as eligible. FEMA review of bid specifications does not substantiate the County’s claim.

Issues: Should the County be reimbursed for the full cost of extraction and disposal of 8,783 tree stumps?

Findings: No. The bid prices received were consistent with the effort required for ground extraction of tree stumps. Since the stumps had been placed at the curb by landowners, the stumps are considered debris and the cost of removal is reimbursed at the established per cubic yard rate.

Appeal Letter

February 18, 2005

Mr. Robert R. Latham, Jr.

Director
Mississippi Emergency Management Agency
P.O. Box 4501
Jackson, MS 39296-4501

Re: Second Appeal – Harrison County, PA ID# 047-00000, FEMA-DHS-OIG Audit Report DA-13-03, FEMA-1251-DR-MS; Damage Survey Report (DSR) 45685

Dear Mr. Latham:

This is in response to your letter dated July 29, 2004, transmitting the above referenced second appeal on behalf of Harrison County (County) to the Federal Emergency Management Agency (FEMA). The County is requesting that the disallowed costs of $1,723,666.00, concerning tree stump removal be ruled as eligible.

As explained in the enclosed analysis, I have determined that the County has been reimbursed at a reasonable rate. Therefore, the appeal is denied.

Please inform the Applicant of my decision. My determination constitutes the final decision on this matter as set forth in 44 CFR § 206.206.

Sincerely,
/S/
Daniel A. Craig
Director
Recovery Division
Emergency Preparedness and Response

Enclosure

cc: Mary Lynne Miller
Acting Regional Director
FEMA Region IV

Appeal Analysis

On October 1, 1998, FEMA 1251-DR-MS was declared as a result of Hurricane Georges. Harrison County, Mississippi (County), requested reimbursement for removal and disposal of tree stumps countywide. FEMA prepared Damage Survey Report (DSR) 45685 for $2,018,775. FEMA’s Office of Inspector General (OIG) conducted an audit of the Public Assistance funds awarded to Harrison County to determine whether the County accounted for and expended FEMA funds according to Federal regulations and FEMA guidelines. The OIG’s Audit Report DA-13-03, determined that the County had paid its contractors $2,018,775 for reportedly extracting and removing 8,783 tree stumps. Depending on the size and location of the stumps, the contractors received $150 to $325 per stump. It was then determined that homeowners had extracted the tree stumps from their private property and placed them on the curb for pickup and disposal. The OIG audit determined that the tree stumps did not present a safety hazard and, since the contractors did not extract the stumps, their fees were excessive. The OIG audit recommended use of the FEMA schedule cost of $28 per stump, plus 20 percent for profit and overhead (total of $33.60), as a reasonable cost for pickup and disposal of tree stumps. FEMA concurred with the audit findings and prepared Supplemental DSR 09475 in the amount of -$1,723,666 to deobligate the excess charges.

First Appeal

Harrison County submitted a first appeal by letter dated December 10, 2003. The County objected to the OIG’s findings and the FEMA ruling that the fees paid for the removal of 8,783 tree stumps along the public rights-of-way were excessive. The County contends that it acted appropriately in paying the full contract price for stump removal. The County states the removal of the tree stumps was in accordance with the contract specifications; strict procedures were followed to insure compliance with contract specifications; and complete and accurate records were kept with regard to the removal of tree stumps. The State of Mississippi (Grantee) supports the County’s claim. FEMA denied the first appeal on April 8, 2004, based on the fact that the contractors did not actually engage in stump removal (extraction) but merely picked up and hauled tree stumps that had been placed on the public rights-of-way. Once placed at the curb, the stumps are considered debris and the cost of removal is reimbursed at the established per cubic yard rate.

Second Appeal

Harrison County’s second appeal, dated May 25, 2004, objects to the OIG’s findings and the FEMA ruling. The County states that it performed the task of removing the debris generated by Hurricane Georges in accordance with the contract specifications; strict procedures were followed to insure compliance with contracted specifications; and complete and accurate that records were kept with regard to the removal of tree stumps. The County contends that nowhere in the bid specification did it state or intimate that the stumps were to be extracted from the ground. The County claims the disallowance of $1,723,666 in the DHS-OIG Audit Report is erroneous and requests that FEMA reverse the deobligation. The Grantee recommends that the disallowed costs be ruled as eligible.

DISCUSSION

Pursuant to Title 44 Code of Federal Regulations §206.224, FEMA may reimburse costs associated with debris removal when the work: 1) eliminates immediate threats to life, public health, and safety; or 2) eliminates immediate threats of significant damage to improved public or private property; or 3) ensures the economic recovery of the affected community to the benefit of the community at large. The removal of disaster-related debris from public property, including public rights-of-way, is eligible for reimbursement under the disaster assistance program. Generally, the cost of removing hanging branches and broken limbs from disaster-damaged trees is eligible for reimbursement. For substantially damaged trees that are in imminent danger of falling, the removal of the tree, cut flush at the ground level is also eligible. Excavation and removal of stumps is eligible when the tree has uprooted, thereby creating a threat to public health and safety. When trees on private property are damaged during a disaster event and limbs or stumps are placed on public rights-of-way by adjacent landowners, FEMA may reimburse reasonable costs for the collection, transportation and disposal of the debris.
The main issue of dispute between the County and FEMA in this appeal is the rate at which the County should be reimbursed for tree stump removal. Reasonable cost is determined by the effort required of County forces or its contractor to remove the debris from the public rights-of-way. Therefore, the location where the tree originated becomes a key point in determining the reasonable cost for disposal. Excavation of uprooted tree stumps would generally require the use of digging equipment to extract the root ball and then backfilling the void. When vegetative debris is placed on the public rights-of-way by landowners, no excavation or backfill work is required.

The County claims its contract does not state or intimate that the stumps were to be extracted from the ground. Excerpts from the contractors bid proposal and sections from the County’s contract specifications pertaining to debris removal were included with the second appeal. FEMA review of bid specifications does not substantiate the County’s claim that the tree stumps were not intended by the bid specification to be extracted from the ground. Item 3.10 of the bid specifications required that “depressions and ruts in the ground caused by stump removal…” be backfilled by the contractor. Further, Item 3.7 of the bid specification required that the “remains of damaged standing trees within…the rights-of-way… be removed in their entirety.” Item 3.6 required that “stumps of damaged trees… be removed from the site if they are uprooted and present a hazard,” or otherwise “trimmed to … 2 inches above the adjacent ground” if they were not to be removed. Bid prices received were consistent with the effort required for ground extraction of tree stumps, not merely picking up and hauling debris from public rights-of-way.

As the OIG asserted, the County’s contractor was not entitled to the full contract price for stump removal because it did not actually engage in stump removal (extraction). For the limited effort of picking up and hauling tree stumps that had been placed on the public rights-of-way, OIG allowed the rate of $33.60 per stump, based on FEMA cost code, plus a 20 per cent margin for profit and overhead.

CONCLUSION

The appeal is denied. The County was reimbursed at a reasonable rate.
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