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Second Appeal Letter
PA ID# 071-UBAAP-00; Downtown Development District
PW ID# 12490; OIG Audit Report
August 11, 2011
Disaster Recovery Division
Governor’s Office of Homeland Security and Emergency Preparedness
State of Louisiana
7667 Independence Boulevard
Baton Rouge, Louisiana 70806
Re: Second Appeal–Downtown Development District of New Orleans, PA ID 071-UBAAP-00, Office of Inspector General (OIG) Audit Report DD-09-09, FEMA-1603-DR-LA, Project Worksheet (PW) 12490
Dear Mr. DeBosier:
This letter is in response to a letter from your office dated November 19, 2010, which transmitted the referenced second appeal on behalf of the Downtown Development District of New Orleans (Applicant). The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) decision to de-obligate $149,020 based on the findings and recommendations of the Department of Homeland Security Office of Inspector General (OIG) Audit Report DD-09-09.
Prior to Hurricane Katrina, the Applicant maintained a contract for the cleaning and maintenance of sidewalks in the New Orleans downtown districts. Following Hurricane Katrina, the contract was re-scoped to include debris removal and cleanup. Project Worksheet (PW) 12490 was written for $306,775 for the removal of 1,860 cubic yards (CY) of debris from multiple sites within the Applicant’s district area.
The OIG Central Regional Office issued Audit Report DD-09-09 on May 29, 2009. The OIG determined that the Applicant did not comply with Federal regulations and guidelines and recommended de-obligation of $149,020 in debris removal costs that it found to be unreasonable. The Regional Administrator agreed with the OIG findings and on January 14, 2010, FEMA de-obligated $149,020 from PW 12490.
On June 2, 2010, the Applicant submitted its first appeal to the State, which was transmitted to FEMA on June 3, 2010. The Applicant stated that the OIG audit failed to recognize that the scope of work in PW 12490 consisted of two tasks, debris removal and street cleaning. The Applicant submitted invoices for the removal of 1,860 CY of debris for a total of $306,775 which equates to a rate of $165 per CY. The Regional Administrator denied the first appealagreeing with the OIG audit findings deeming the $165 per CY rate unreasonable. The calculation of the eligible debris removal cost of $157,755 was based on a rate of $85 per CY for similar Hurricane Katrina-related debris operations in Louisiana.
The Applicant submitted its second appeal on November 10, 2010, which was forwarded by the State on November 19, 2010. The Applicant stated that FEMA disregarded the $215,240 cost for 14,236 labor hours for cleaning sidewalks and streets. No additional documentation was submitted by the Applicant to support its claim.
The Applicant provided invoices accounting for the removal of 1,860 CY of debris. The OIG audit found the Applicant did not adhere to Federal procurement procedures for the work and that the cost of debris removal ($165 CY) was not reasonable. FEMA then determined a reasonable rate based on similar debris operations in Louisiana for this disaster. The $85 per CY rate utilized by FEMA included all costs for material, equipment, and labor necessary to complete the eligible scope of work, and thus accounted for the cost of street cleaning attributable to debris removal. The debris removal costs in excess of $85 per CY are considered unreasonable, and therefore, ineligible for Public Assistance funding.
I have reviewed the information submitted with this appeal and have determined that the Regional Administrator’s decision in the first appeal is consistent with Public Assistance program regulations and policies. Therefore, I am denying the second appeal.
Please inform the Applicant of my decision. This determination is the final decision on this matter pursuant to 44 CFR§206.206, Appeals.
cc: Tony Russell
FEMA Region VI