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Second Appeal Letter
PA ID# 103-70805; City of Slidell
PW ID# Project Worksheet 15530; Cleaning Storm Drains
Colonel Thomas Kirkpatrick (Retired)
State Coordinating Officer
Governors Office of Homeland Security
and Emergency Preparedness
415 North 15th Street
Baton Rouge, Louisiana 70802
Re: Second AppealCity of Slidell, PA ID 0103-70805-00, Cleaning Storm Drains
FEMA-1603-DR-LA, Project Worksheet (PW) 15530
Dear Colonel Kirkpatrick:
This letter is in response to your letter dated March 19, 2008, which transmitted the referenced second appeal on behalf of the City of Slidell (Applicant). The Applicant appealed the Department of Homeland Securitys Federal Emergency Management Agencys (FEMA) decision to deny the Applicants request for an additional $1,098,811 for cleaning the Applicants sanitary sewer system.
Hurricane Katrina severely damaged and deposited vast amounts of debris into the Applicants sanitary sewer system. In January 2006, the Applicant advertised a Request for Qualifications and requested Statements of Qualifications from three firms, including a then-existing contractor. Based on lack of interested and/or qualified firms, the Applicant selected Montgomery Watson Harza (MWH), its then-current contractor, to perform the work. The Applicant requested $2,045,997 from FEMA for the sewer cleaning work. FEMA reviewed the Applicants request and determined that the Applicant used a cost-plus-percentage-of-cost contract, which is prohibited by 44 CFR §13.36. In addition, FEMA determined that the costs were unreasonable. FEMA approved only $803,841 for the project. The Regional Administrator approved an additional $143,346 on first appeal. The Applicant submitted a second appeal on January 18, 2008, requesting an additional $1,098,810 to cover the total cost of the sewer-cleaning contract. The Applicant stated that the first appeal response did not address the legal discussion related to its contract, that FEMAs use of pre-disaster unit prices was inappropriate, and that FEMA used a limited and selective application of the Cost Estimate Format (CEF).
The Applicants contract with MWH states in pertinent part, The work shall be billed by quantities completed using the unit costs identified above and shall be invoiced at the approved Federal Year 2005 billing rates
including 10 percent profit on all costs. It further states, The not-to-exceed total compensation for the work is $2,556,081. The Applicant negotiated the contractors profit based on the total cost of the work that the contractor was to perform. Since the contract contained a cost ceiling, it is not considered a cost-plus-percentage-of-cost contract.
We have reviewed costs for similar work following Hurricane Katrina and the CEF factors used to develop FEMAs estimate and have determined that the Applicants contract costs are reasonable. Accordingly, the appeal is approved. By copy of this letter, I am requesting that the Regional Administrator take appropriate action to implement this determination.
Please inform the Applicant of my decision. This determination is the final decision on this matter pursuant to 44 CFR §206.206.
Carlos J. Castillo
Disaster Assistance Directorate
cc: William Peterson
FEMA Region VI
Louisiana Transitional Recovery Office