Crematory Building

Appeal Brief Appeal Letter

Appeal Brief

DisasterFEMA-1008-DR
ApplicantLos Angeles County Department of Health Services
Appeal TypeSecond
PA ID#037-91025-00
PW ID#60597
Date Signed2009-08-13T04:00:00
Citation: FEMA-1008-DR-CA, Los Angeles County Department of Health Services, Crematory Building, DSR 60597

Cross-reference: Grant Acceleration Program

Summary: Following the Northridge earthquake on January 17, 1994, the Los Angeles County Department of Health Services (Applicant) accepted a Public Assistance Grant Acceleration Program (GAP) offer for $444,934 to repair the Crematory Building under DSR 02489. Final eligible costs were funded on Large Project Closeout DSR 60597 in the amount of $745,496. On April 19, 2007, the Applicant appealed FEMA’s closeout decision to treat $2,021 in costs for Architecture and Engineering (A&E) construction administration services as project management costs. The Applicant argued that FEMA mischaracterized the expenses as project management soft costs when instead the costs were directly related to construction design and engineering services (hard costs). Re-characterization of the costs would result in a $2,344 GAP cost overrun ($2,021 in hard costs plus $323, the 16 percent allowance for project management soft costs) that could be offset by under-runs from another GAP project. To support its appeal, the Applicant submitted excerpts from the Instructional Guide for Cost Estimating Format (CEF), excerpts from the A&E Services Agreement, a bid advertisement invoice, a copy of the Project Completion and Certification Report, and copies of the Project Closeout Reports. FEMA denied the first appeal on February 11, 2008, because, consistent with the GAP guidelines and the documentation submitted, the costs associated with construction administration services is a project management (soft) cost and not a hard cost. On April 14, 2008, the Applicant filed its second appeal. The Applicant maintained that the $2,021 in costs should not be categorized as project management soft costs, but treated as hard costs associated with the actual design and engineering of the project. Support documents included a breakdown of A&E service fees and excerpts from the A&E Services Agreement with the Applicant.

Issues: Is the $2,021 in construction administration services a hard cost therefore, allowing $2,344 as eligible to offset GAP under-run funds?
Findings: No.

Rationale: Instructional Guide for Cost Estimating Format (CEF)

Appeal Letter

August 13, 2009

Frank McCarton
Governor’s Authorized Representative
California Emergency Management Agency
Response and Recovery Division
3650 Schriever Avenue
Mather, California 95655

Re: Second Appeal–Los Angeles County Department of Health Services, PA ID 037-91025-00,
Crematory Building, FEMA-1008-DR-CA, Damage Survey Report (DSR) 60597

Dear Mr. McCarton:

This letter is in response to your letter dated June 11, 2008, which transmitted the referenced second appeal on behalf of Los Angeles County Department of Health Services (Applicant). The Applicant is requesting that the Department of Homeland Security’s Federal Emergency Management Agency (FEMA) reconsider its treatment of costs for construction administration for the Crematory Building as project management soft costs.Following the Northridge earthquake on January 17, 1994, the Applicant accepted a Public Assistance Grant Acceleration Program (GAP) offer for $444,934 to repair the Crematory Building, which was approved under DSR 02489. Final eligible costs were funded on Large Project Closeout DSR 60597 in the amount of $745,496.On April 19, 2007, the Applicant appealed FEMA’s closeout decision to deny its request to treat $2,021 in costs as hard costs for Architecture and Engineering (A&E) construction administration services. The Applicant argued that FEMA mischaracterized the $2,021 as project management soft costs when the costs were directly related to construction design and engineering services (hard costs). The total amount in dispute was $2,344 ($2,021 in hard costs plus $323, the 16 percent allowance for project management soft costs attributable to the increase in hard costs) that could be offset by under-runs from another eligible GAP project. The Deputy Regional Administrator denied the appeal on February 11, 2008, because pursuant to the Instructional Guide for Cost Estimating Format (CEF) and the documentation submitted, costs associated with construction administration and bid advertising were project management (soft) costs and not hard costs.The Applicant filed its second appeal on April 14, 2008. The Applicant maintained that the $2,021 in costs should not be categorized as project management (soft costs), but treated as eligible hard costs associated with the design and engineering of the project. The Applicant’s support documents included a copy of the Crematory’s project closeout worksheet and additional
excerpts from the A&E Services Agreement. The closeout worksheet lists categories of work with corresponding vendor names, job invoice numbers and service fees. However, the Applicant did not provide vendor invoices that identify the actual A&E (hard costs) services performed and the fees associated with those services to support its claim. The Applicant also cites guidance from the CEF Guide Part H.2, Architecture & Engineering Design Contact Costs, which states that certain expenses associated with A&E design contract costs may be classified as hard costs. The “certain” expenses include work on the actual design and engineering of a project, i.e., preparation of engineering calculations, architectural and/or engineering plans or drawings that are necessary to implement the eligible repairs. The Applicant failed to show that the A&E costs listed in its second appeal are the same A&E costs it cites from the CEF guide.I have reviewed all information submitted with the second appeal and have determined that questioned costs are appropriately characterized as project management soft costs pursuant to GAP guidelines and the documentation submitted. Therefore, I am denying the second appeal. Please inform the Applicant of my decision. This determination constitutes the final decision on this matter pursuant to 44 CFR §206.206, Appeals.

Sincerely,
/s/
Elizabeth A. Zimmerman
Assistant Administrator
Disaster Assistance Directorate

cc: Nancy Ward
Regional Administrator
FEMA Region IX
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