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Second Appeal Analysis
PA ID# 047-99047-00; Harrison County
PW ID# Project Worksheet 5672 and 10548; Debris Removal
As a result of high winds and heavy rainfall from Hurricane Katrina in August 2005, FEMA prepared Project Worksheets (PWs) 5672 in February 2006, and 10548 in November 2006, for cutting and disposing of hazardous trees (leaners) and hazardous branches (hangers) in Harrison County. PW 5672 covered debris removal from public rights-of-way and PW 10548 covered debris removal from private property. Harrison County (Applicant) hired a private contractor to remove debris from the Applicant’s public rights-of-way and private property.
The Applicant prepared its contract using a separate single unit price for the removal of hangers, leaners, leaners requiring stump extraction, and damaged trees on private property. The Applicant invited, by telephone, six potential contractors to bid on the contract. Two contractors submitted proposals to the Applicant. The low bid was $48 to remove each hanger, $390 to cut each leaner flush with the ground, $450 to remove each leaner that required stump extraction and regrading, and a $550 fee to obtain a right-of-entry for each site for debris removal on private property. The Applicant renegotiated a price of $32 for each hanger, and the contractor agreed to waive the $550 right-of-entry fee. The Applicant requested reimbursement of $17,216,668 for debris removal operations on public rights-of-way and $5,261,906 for debris removal operations on private property.
FEMA prepared PW 5672 for $6,289,802 (half of the contracted costs at that time) due to issues with the contract costs and a lack of adequate debris monitoring. FEMA prepared PW 10548 for $5,224,650, disallowing $37,256 for missing invoices, duplicate charges, and accounting errors.
After preparing PW 5672, FEMA identified issues during a review of debris operations that impacted funding eligibility. These issues included work performed outside the public rights-of-way, removal of debris from roads outside the County and from U.S. Forest Service (USFS) roads, trees that had been cut but not removed, and invoicing errors. Consequently, in March 2006, FEMA initiated efforts to validate the debris removal work that had been performed by examining several roads within the County. Validation focused only on the leaners. The validation protocol stated that if FEMA validated 75 percent of the selected sample, FEMA would fund 100 percent of the requested amount. This first validation confirmed only 37.2 percent of the work for which the Applicant sought reimbursement. FEMA performed a second validation in June 2006, and validated less than 50 percent of the sample. FEMA prepared Version 1 of PW 5672 for $495,738 on May 31, 2006, based on the first validation, which increased the total obligated amount to $6,785,540. FEMA considered the total contract costs requested by the Applicant at that time, and deducted costs for work performed on roads that were not the legal responsibility of the Applicant, discrepancies with debris load tickets, and work claimed by the contractor that could not be substantiated by the validation process.
FEMA performed a final validation of leaners along public rights-of-way in March 2007 at the request of the Applicant and the Mississippi Emergency Management Agency (MEMA). All parties agreed that FEMA would fund only the actual percent of leaners validated during this third validation process. The Applicant, MEMA, and FEMA selected 96 roads along which they would validate the number of leaners the Applicant requested for reimbursement. The team validated 82.5 percent of the trees on 60 roads. However, the team validated only 37.6 percent of the trees requested for reimbursement on the other 36 roads. FEMA prepared Version 2 of PW 5672 for $1,329,940 on March 28, 2007, increasing the total amount obligated to $8,115,480. FEMA applied the 82.5 validation percentage to all public roads except to the 36 roads that were validated at 37.6 percent. FEMA determined that the $390 per tree leaner removal price was unreasonable, and applied unit prices for different size categories (for example, 2 to 12 inches in diameter, 13 to 23 inches in diameter, etc.) based on a MEMA reasonable cost study dated March 1, 2007, instead of using the $390 price that the Applicant requested. FEMA applied the results of the 82.5 percent validation performed on the Applicant’s rights-of-way to the debris removal work performed on private property for PW 10548. Based on this assumption, FEMA deobligated $2,761,889 in Version 1 of PW 10548, which reduced the total amount obligated to $2,462,761.
MEMA forwarded the Applicant’s first appeal to FEMA on August 31, 2007. The amount in dispute was $9,101,188 for PW 5672 and $2,761,889 for PW 10548.
The Applicant argued that the cost for flush cutting leaners was reasonable because it conducted a competitive procurement process that was consistent with the guidance contained in FEMA Recovery Policy 9580.4, Debris Operations – Clarification: Emergency Contracting vs. Emergency Work. The Applicant also disputed the benchmark prices that MEMA developed in its reasonable cost study report.
The Applicant also stated that the 82.5 percent validation results were sufficient to support 100 percent reimbursement pursuant to the original validation protocol. Further, it maintained that there was no basis for FEMA’s decision to apply the same adjustments to the costs incurred for debris removal from private property because private property was not part of the validation. Therefore, it requested that FEMA restore the funds deobligated from PW 10548.
FEMA responded to the Applicant’s first appeal on November 14, 2007. FEMA stated that the Applicant’s procurement procedure was sufficiently competitive, but the Applicant did not perform an independent cost or price analysis as required under 44 CFR §13.36. FEMA developed reasonable unit prices for the tree size categories identified during the validation process using the MEMA benchmark data with consideration given to a report prepared by CRA International, and used these prices to develop eligible costs based on results of the validation process. FEMA determined that total eligible costs for PW 5672 based on revised reasonable unit costs was $8,499,946. This included $742,950 for leaners that required stump removal, which had been reduced in Version 2 of PW 5672. FEMA reduced this amount by $1,795,414 for leaners that were removed from roads that were determined not to be the legal responsibility of the Applicant, and for other problems with project documents. FEMA also deducted the validated eligible costs of work performed on 36 roads that the Applicant’s monitor had requested to be withdrawn. The net amount approved for PW 5672 was $6,704,532, a net decrease of $1,410,948 from Version 2 of PW 5672.
FEMA revised PW 10548 using the results of a validation performed on private property in 2006, which confirmed 87.2 percent of the contractor’s invoiced costs. Since the validation results exceeded the 75 percent threshold in the validation protocol, FEMA funded 100 percent of the leaners invoiced by the contractor (6,447 trees). However, FEMA reduced the requested unit cost of $390 per leaner to a lower cost depending on the diameter of the tree. Consequently, FEMA increased the total amount obligated under PW 10548 to $4,600,100, an increase of $2,137,339 over the amount in Version 1.
The Applicant submitted a second appeal to MEMA on January 24, 2008, and a supplement to the appeal on February 13, 2008. MEMA forwarded the appeal to FEMA on February 21, 2008. The second appeal requests reimbursement of all contract unit prices and quantities invoiced. The Applicant asserts that: (1) the contract price was reasco) the contract price was reasonable because it was less than the price reimbursed by FEMA for comparable work performed in other jurisdictions in the State and in adjacent coastal counties under mission assignment from FEMA to the U.S. Army Corps of Engineers; (3) FEMA failed to follow FEMA policy guidance stating that a reasonable price is one based on average prices from similar work in the area; (4) the contract pricing structure was appropriate; (5) FEMA failed to apply FEMA policy for validation of work removing trees; (6) FEMA disallowed fully documented work due to mismarked tickets and streets; (7) FEMA failed to apply FEMA policy for validations in excess of 75 percent; (8) FEMA disallowed fully validated work based on non-existent “withdrawal” of work performed and invoiced; (9) FEMA disallowed the same work twice; (10) work performed on USFS roads is the responsibility of the Applicant and is eligible; and (11) FEMA incorrectly determined work performed on County roads to be outside the Applicant’s jurisdiction.
The Applicant also asserted that during the preparation of the second appeal that it discovered an additional $139,180 had been incurred in the debris operations on public rights-of-way (PW 5672) and an additional $68,312 had been incurred in the debris operations on private property (PW 10548). Therefore, the Applicant is requesting a total project amount of $17,355,848 for PW 5672 and $5,292,962 for PW #10548, or a total of $22,648,540. Consequently, the total amounts in dispute are $10,651,316 for PW 5672 and $692,862 for PW 10548, or a total of $11,343,998.
The additional amounts of $139,180 for debris operations on public rights-of-way and $68,312 for debris operations on private property will not be addressed in the appeal process because the work associated with these costs has not been included in the PWs and has not been disallowed by FEMA. These costs should be considered at project closeout upon submission of proper supporting documentation and review for eligibility consistent with the determinations made in this appeal. Consequently, for the purpose of this appeal the total amounts in dispute are $10,512,136 for PW 5672 and $624,550 for PW 10548, or a total of $11,136,686.
The Director of the Public Assistance Division and staff met with members of the Harrison County Board of Supervisors and the Director of MEMA on June 12, 2008, in Washington, D.C., to discuss the appeal. FEMA considered the information the Applicant presented during that meeting in the evaluation of the appeal.
FEMA’s response to each issue that the Applicant raises in second appeal is presented below.
Issue # 1: Were the Applicant’s procurement procedures conducted in accordance with 44 CFR §13.36 and FEMA policy?
Yes. The Applicant’s procurement procedures complied with the requirements in 44 CFR §13.36(d)(3) and FEMA Recovery Policy 9580.4, Debris Operations—Clarification: Emergency Contracting vs. Emergency Work.
Issue # 2: Were contract prices, particularly the $390 per tree for flush-cutting leaners, the Applicant paid reasonable?
Yes. The Applicant’s contract prices were comparable to work performed in other jurisdictions in the state and under mission assignment from FEMA to the U.S. Army Corps of Engineers (USACE).
Issue # 3: Are the Applicant’s contract prices consistent with FEMA policy guidance?
Yes. FEMA has determined that the Applicant’s contract prices are reasonable and were established through competitive bid and procedures that complied with FEMA regulation and policy. FEMA will reimburse the Applicant for these contract costs based on eligible work performed.
Issue # 4: Is the Applicant’s contract pricing structure appropriate?
Yes. FEMA has determined that the contract pricing structure that was established through competitive bid and in compliance with FEMA regulation and policy was appropriate and achieved reasonable costs.
Issue # 5: Did FEMA appropriately apply a validation protocol to determine an eligible scope of work performed?
The Applicant argues that FEMA should apply the validation protocol established for the disaster which credits applicants with 100 percent of the work claimed when FEMA validates 75 percent or more of the work. The Applicant argues that this protocol and the results from the March 2007 validation should apply to the 60 roads where 82.5 percent of the work was validated, and that FEMA should reinstate reimbursement for 36.7 percent of the work validated on 36 other roads during the same validation. FEMA agrees with the Applicant that the validation protocol for the disaster should be applied consistently for all applicants (that is, reimburse for 100 percent of costs when validation is 75 percent or higher). To maintain consistency with validations performed and applied to determine disaster assistance in other areas of the State, FEMA will apply the aggregated percentage of all work validated on the 96 public roads during the March 2007 validation to determine the amount eligible for reimbursement.
The March 2007 validation was the final joint validation conducted by representatives from FEMA, MEMA and the Applicant. A hard drive of data containing pictures and GPS coordinate of over 38,000 stumps that the Applicant’s monitor had collected during the summer of 2006 was provided to FEMA prior to the validation. Information in this hard drive was used to help identify 60 primary roads included the validation, as well as correlate the appropriate load tickets to the associated roads, stumps, and GPS coordinates, and was used as the basis for this validation. According to this validation, 82.5 percent of work was validated on the 60 primary public roads (11,414 leaners validated out of 13,835 leaners invoiced by the Applicant), and 37.6 percent of the work was validated on the other 36 roads (3,263 leaners out of 8,678 leaners invoiced). On the 96 rights-of-way roads sampled under this validation, 14,677 leaners were validated out of the 22,513 leaners invoiced—a validation rate of 65.2 percent. This validation rate does not meet the 75 percent threshold which would enable the Applicant to be credited with 100 percent of the work as the protocol for the disaster stipulates. Accordingly, FEMA will reimburse the Applicant for the validated leaner removal work performed for 65.2 percent of the leaners invoiced on the rights-of-way at the unit cost of $390 per leaner under PW 5672. The table below provides a summary of the information used to determine the validation percentage.
March 2007 Validation
Validated Roads Leaners Invoiced Leaners Validated Validation Percentage
60 13,835 11,414 82.5%
36 8,678 3,263 37.6%
Total 96 22,513 14,677 65.2%
Issue # 6: Did FEMA disallow fully documented work due to mismarked tickets/streets?
In the summer of 2006, the Applicant’s contract monitor conducted a validation survey in which it took photographs and GPS coordinates of over 38,000 stumps on the rights-of-way and claimed a 98 percent validation rate. The Applicant provided FEMA with a hard drive of this documentation and asserts that FEMA has not taken this information into consideration. FEMA Regional staff had reviewed the data contained in the hard drive prior to the 2007 validation but arrived at different eligibility determinations than the Applicant’s contractors who compiled the data. Per guidance available in 44 CFR §206.202(h)(i)(1) “(FEMA) must approve a scope of eligible work and an itemized cost estimate before funding a project.” Ihe jve, the results from the March 2007 validation will be applied to the reasonable costs of the Applicant’s contract to determine eligible project funding.
Issue # 7: Did FEMA fail to apply FEMA policy for validations in excess of 75 percent?
On the 96 rights-of-way roads sampled in the March 2007 validation, 14,677 leaners were validated out of the 22,513 leaners invoiced—a validation rate of 65.2 percent. This validation rate does not meet the 75 percent threshold which enables the Applicant to be credited with 100 percent of the work as the protocol for the disaster stipulates. Accordingly, FEMA will reimburse the Applicant for the validated leaner removal work performed for 65.2 percent of the leaners invoiced on the Applicant’s rights-of-way.
Issue # 8: Did FEMA improperly reduce eligible costs of validated work on 36 roads on the first appeal decision?
The Applicant argues that the first appeal decision denies all eligibility of work on 36 roads where 37.6 percent of work was validated during the March 2007 validation based on a miscommunication and non-existent “withdrawal” request. The Applicant requests that the validated work should be reinstated. After a review of all documentation, FEMA will reimburse the Applicant for 65.2 percent of leaners claimed on these roads.
Issue # 9: Did FEMA’s first appeal mistakenly disallow the same work twice due to corrected billing errors, as well as unsigned load tickets?
FEMA reduced funding in the first appeal for accounting errors in the Applicant’s invoices, including duplicate billing for removal and disposal of leaners. The Applicant asserts that these were errors in the contract monitor’s “unreconciled spreadsheet” that did not appear on the contractor’s invoices. The Applicant asserts that these errors have been reconciled but does not provide any documentation to support this assertion. However, all final billing reconciliations that can be provided during project closeout will be considered in the final eligibility determination.
FEMA also reduced funding in the first appeal due to unsigned load tickets and information missing on 22 load tickets. FEMA has reexamined the debris load tickets for signatures necessary to confirm the validity of the work claimed and has determined that only three load tickets were missing information or signatures required for validation. These load tickets include ticket number 4 where inadequate information was provided and tickets number 43 and number 44 where the truck number was not included in the Applicant’s documentation. These three debris load tickets claim the removal of 82 hangers, 408 leaners, and 11 leaners with stumps. The work claimed on these three load tickets is thus determined to be ineligible. FEMA will reinstate funding associated with the 22 load tickets except numbers 4, 43, and 44. Therefore, $166,940 for PW 5672 remains ineligible.
Issue # 10: Does the Applicant have legal responsibility to maintain nine roads, including Carson Road, on USFS land?
Yes. The Applicant submitted documentation in the form of the Applicant’s adoption of one such road as part of its “perpetual maintenance” system, invoices for road maintenance on other roads, and county documents obtaining easements on several USFS roads. Based on the documentation submitted, the Applicant has demonstrated that it has legal responsibility to maintain the roads in question. FEMA will reimburse the costs associated with the removal of leaners and hangers on these roads that had previously been determined to be ineligible.
Issue # 11: Did the Applicant perform work outside of its jurisdiction?
A review of roads initially determined to be located outside the Applicant’s jurisdiction reveals that two of the three roads are located in the County and debris removal from those roads is eligible. However, Standard-Dedeaux Road is located wholly within Hancock County; therefore, work claimed on this road—including the removal of 126 hangers, 14 leaners, and 2 leaners with stumps along this road—is ineligible work. These deductions amount to a total of $10,392.
FEMA has determined that the requested price of $390 to flush cut each leaner, regardless of size, is eligible. To maintain consistency with validations performed and applied to determine disaster assistance in other areas of the State of Mississippi, FEMA has aggregated the validation percentage from the 96 right-of-way roads to determine that the Applicant is eligible for a reimbursement for 65.2 percent of the leaner removal work invoiced on the rights-of-way. Included in this reimbursement is the reinstatement of eligible leaner work performed on 36 roads that were validated during the March 2007 validation survey. FEMA has determined that it is the Applicant’s legal responsibility to maintain nine roads, including Carson Road, on USFS land, and will reimburse the costs associated with the removal of leaners and hangers on these roads that had previously been determined to be ineligible. FEMA has also determined that work performed on roads previously determined to be outside the county’s jurisdiction, with the exception of work performed on Standard-Dedeaux Road, is eligible for reimbursement at the prevailing validation rate. Reductions have also been made for missing information on three load tickets in the amount of $166,694. FEMA’s assessment of the second appeal of PW 5672 results in a total eligible project amount of $11,976,602.
FEMA has also determined that the contract unit price of $390 per leaner cut flush to the ground on private property for PW 10548 is reasonable. Accordingly, PW 10548 is eligible for the full project amount of $5,224,650.
The tables below provide breakdowns of eligible project costs and reductions.
PW #5672 (Right of Way) - 2nd Appeal Determination
Item Quantity Unit Price Total
Hangers - original billing 60,149 $32 $1,924,768
Leaners - original billing 37,305 $390 $14,548,950
Leaners with Stumps - original billing 1,651 $450 $742,950
Reduction for 65.2 percent validation (24,323/37,305 leaners validated) -12,982 $390 ($5,062,980)
Reduction for ineligible work performed on Standard-Dedeaux Rd (126 hangers, 14 leaners, 2 stumps deemed ineligible) ($10,392)
Reduction for missing information on three load tickets (#4, 43, 44) (82 hangers, 408 leaners, 11 leaners with stumps) ($166,694)
Total Eligible Project Cost $11,976,602
PW #10548 (Right of Entry) - 2nd Appeal Determination
Item Quantity Unit Price Total
Hangers - original billing 49,935 $32 $1,597,920
Leaners - original billing 6,447 $390 $2,514,330
Leaners with Stumps - original billing 2,472 $450 $1,112,400
Total Eligible Project Cost $5,224,650