Small Porject Overrun

Appeal Brief Appeal Letter

Appeal Brief

DisasterFEMA-1491-DR
ApplicantPrince George Electric Cooperative
Appeal TypeSecond
PA ID#000-U95KB-00
PW ID#177, 384, 465, 468, 494 and 556
Date Signed2001-12-21T05:00:00
Citation: FEMA-1491-DR-VA, Prince George Electric Cooperative (Applicant)

Cross Net Small Project Overrun
Reference:

Summary: Following Hurricane Isabel, FEMA worked with the Applicant and prepared several PWs to reimburse the Applicant for eligible costs for emergency protective measures and debris removal. FEMA and an Applicant representative visited each site along the Applicant’s rights-of-way and estimated the level of effort and costs required to remove downs trees and hanging limbs from the rights-of-way at various sites in each county. FEMA subsequently prepared PWs for debris removal in each of the affected counties based on the level of effort required to remove disaster-related debris in each county: PW 465 for $6,205 in Dinwiddle County; PW 468 for $22,535 in Sussex County; PW 494 for $23,842 in Prince George County and PW 556 for $46,164 in Surry. The four PWs totaled $170,411. Since the estimate cost of each PW was less that the $57,500, FEMA considered them to be small projects. The Applicant incurred cost in excess of the estimated amount for each PW and requested an additional $364,022 from FEMA through the “small project netting” process. FEMA reviewed the scope of work in each PW and the documentation the Applicant submitted and determined that the Applicant performed work beyond the scope of work described in the PWs. Therefore, FEMA denied the Applicant’s request. The Acting Regional Director agreed with this determination and denied the Applicant’s first appeal in a letter dated August 24, 2006.

Issues: Is the Applicant’s second appeal for a net small project overrun eligible?

Findings: No.

Rationale: 44 CFR §206.203; 44 CFR §206.204; and 44 CFR §206.205

Appeal Letter

December 21, 2007

Michael M. Cline
State Coordinator
Virginia Department of Emergency Management
10501 Trade Court
Richmond, Virginia 23236-3712

Re: Second Appeal – Prince George Electric Cooperative, PA ID 000-U95KB-00
Small Project Overrun, FEMA-1491-DR-VA
Project Worksheets (PWs) 177, 384, 465, 468, 494, and 556

Dear Mr. Cline:
This is in response to your letter dated February 12, 2007, which transmitted the referenced second appeal on behalf of the Prince George Electric Cooperative (Applicant). The Applicant is appealing the Federal Emergency Management Agency’s (FEMA) decision to deny its request for $364,022. This amount represents a net overrun of all of the Applicant’s small projects.

Following Hurricane Isabel, FEMA worked with the Applicant and prepared several PWs to reimburse the Applicant for eligible costs for emergency protective measures and debris removal. FEMA and an Applicant representative visited each site along the Applicant’s rights-of-way and estimated the level of effort and costs required to remove downed trees and hanging limbs from the rights-of-way at various sites in each county. FEMA subsequently prepared PWs for debris removal in each of the affected counties based on the level of effort required to remove disaster-related debris in each county: PW 465 for $6,205 in Dinwiddle County; PW 468 for $22,535 in Sussex County; PW 494 for $23,842 in Prince George County and PW 556 for $46,164 in Surry. The four PWs totaled $170,411. Since the estimated cost of each PW was less than $57,500, FEMA considered them to be small projects. As such, FEMA authorized the State to provide the grants to the applicant based on the estimated costs rather than on a reimbursement basis.

The Applicant incurred costs in excess of the estimated amount for each PW and requested an additional $364,022 from FEMA through the “small project netting” process. Specifically, the Applicant requested an additional $20,106 for PW 465, a 320% increase over the PW estimate; $73,080 for PW 468, a 263% increase over the PW estimate; $54,060 for PW 494, a 226% increase over the PW estimate; and $217,573 for PW 556, a 470% increase over the PW estimate. The Applicant submitted documentation to show that it incurred additional costs for removing debris from its rights-of-way. FEMA reviewed the scope of work in each PW and
the documentation the Applicant submitted and determined that the Applicant performed work beyond the scope of work described in the PWs. Therefore, FEMA denied the Applicant’s request. The Acting Regional Director agreed with this determination and denied the Applicant’s first appeal in a letter dated August 24, 2006.

The Applicant submitted a second appeal to the State in a letter dated December 6, 2006. The Applicant disagreed with the Acting Regional Director’s decision on the first appeal for the following reasons: (1) FEMA failed to properly characterize the PWs into appropriate “small” and “large” projects; (2) FEMA failed to follow proper FEMA internal procedures for accounting for cost overruns and in estimating small project costs; (3) FEMA improperly characterized debris as routine maintenance; and (4) FEMA did not properly address issues raised in the first appeal.

The Applicant argued that FEMA should have characterized each PW as a large project because the actual costs exceed the estimated cost in each case. FEMA defines “small projects” in 44 CFR §206.203, Federal grant assistance. 44 CFR §206.205, Payment of claims states that the final payment of the Federal share of small projects will be made upon approval of the project worksheet. FEMA does not consider cost overruns for individual small projects because these grants are made based on estimates. FEMA will consider “net cost overruns” for all of an applicant’s small projects, provided the applicant completed the approved scope of work for each project. Applicants cannot use the “small project netting” process for small projects that exceed the approved scopes of work.

If an applicant believes that the scope of work for a small project is not correct, it must notify FEMA through the State immediately. In this case, the Applicant did not notify FEMA until the work was completed. The scopes of work for the PWs defined the levels of effort and costs to remove debris from several sites in each county. FEMA and the Applicant’s representative agreed that the levels of effort described in the PWs were adequate to remove all disaster-related debris from the right-of-way that posed threat to life and property. The Applicant exceeded the level of effort and cost of each PW by an average of 320%. Therefore, we conclude that efforts beyond those described in the PWs were to remove non-disaster-related debris.

We have reviewed all information submitted with the appeal and have determined that the Acting Regional Director’s decision on the first appeal is consistent with program regulations and policies. Therefore, I am denying the appeal.

Please inform the Applicant of my determination. This determination is the final decision on this matter pursuant to 44 CFR §206.206.

Sincerely,
/s/
Carlos J. Castillo
Assistant Administrator
Disaster Assistance Directorate

cc Jonathan Sarubbi
Regional Administrator
FEMA Region III
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