Cleaning Storm Drains

Appeal Brief Appeal Letter

Appeal Brief

DisasterFEMA-1603-DR
ApplicantCity of Slidell
Appeal TypeSecond
PA ID#103-70805
PW ID#Project Worksheet 15530
Date Signed2008-10-14T04:00:00
Citation: FEMA-1603-DR-LA, City of Slidell, Project Worksheet 15530

Cross-reference: Reasonable cost

Summary: The City of Slidell (Applicant) solicited contracts to remove disaster-related sediment from its sanitary sewer system. Only one responsible bidder, its then-current standby contractor, responded. The Applicant amended its then-existing contract to allow for the work. The Applicant requested reimbursement of $2,045,997 from FEMA. FEMA evaluated the reasonableness of cost because there was only one responsible bidder for the work and because the Applicant used a cost-plus-percentage-of-cost contract, which is prohibited by 44 CFR Part 13. FEMA determined that the costs were unreasonable and that the Applicant had not documented some of the claimed costs. FEMA initially approved $803,841. In response to the first appeal, the Regional Administrator approved and obligated an additional $143,346. The Applicant submitted a second appeal requesting and supporting the full amount of the claim.

Issues: Has the Applicant provided documentation to show that all of its claimed costs are reasonable?

Findings: Yes.

Rationale: 44 CFR §13.36

Appeal Letter

Colonel Thomas Kirkpatrick (Retired)
State Coordinating Officer
Governor’s Office of Homeland Security
and Emergency Preparedness
415 North 15th Street
Baton Rouge, Louisiana 70802

Re: Second Appeal–City 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 Security’s Federal Emergency Management Agency’s (FEMA) decision to deny the Applicant’s request for an additional $1,098,811 for cleaning the Applicant’s sanitary sewer system.
Hurricane Katrina severely damaged and deposited vast amounts of debris into the Applicant’s 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 Applicant’s 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 FEMA’s use of pre-disaster unit prices was inappropriate, and that FEMA used a limited and selective application of the Cost Estimate Format (CEF).
The Applicant’s 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 contractor’s 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 FEMA’s estimate and have determined that the Applicant’s 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.

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

cc: William Peterson
Regional Administrator
FEMA Region VI

Jim Stark
Director
Louisiana Transitional Recovery Office
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