Appeal Brief | Appeal Letter | Back
Second Appeal Letter
PA ID# 143-52076-00; City of New Madrid
PW ID# 440; Ineligible Contract - Debris Removal
May 22, 2012
Paul D. Parmenter
Missouri Department of Public Safety
State Emergency Management Agency
2302 Militia Drive
P.O. Box 116
Jefferson City, Missouri 65102
Re: Second Appeal–City of New Madrid, PA ID 143-52076-00, Ineligible Contract - Debris Removal, FEMA-1822-DR-MO, Subgrant Application (PW) 440
Dear Mr. Parmenter:
This letter is in response to a letter from your office dated July 23, 2010, which transmitted the referenced second appeal on behalf of the City of New Madrid (Applicant). The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) decision to limit Public Assistance funding for debris removal. The Applicant seeks reimbursement totaling $103,792.
Between January 26 and January 28, 2009, a severe winter storm with high winds deposited ice throughout the City of New Madrid. The weight of the ice broke trees, tree limbs, damaged transmission lines and power poles that created city-wide power outages and widespread debris. The Applicant solicited bids by telephone from several contractors for debris removal along public rights-of way and awarded a unit price contract to M&M Tree Service (M&M) as it had submitted the lowest bid at $3.25 per cubic yard (CY). As the need for city-wide debris removal increased, the Applicant solicited additional bids over the telephone and awarded contracts to Scott’s Lawn Service and Turf Max Lawn Care as these companies proffered bids of $3.00 per cubic yard.
At the kickoff meeting the Applicant reported that it was using force account labor for its debris removal operations. The Applicant completed 100 percent of its disaster-related debris removal work, including burning of all debris, before FEMA could inspect the debris burn sites to estimate debris amounts. FEMA prepared PW 440 [Category A - Debris Removal] for $365,517 using Applicant submitted invoices from Scott’s Lawn Service for $99,630, Turf Max Lawn Care for $96,382, and M&M for $169,505. During project closeout, FEMA notified the Applicant that M&M’s costs were not eligible as the services were billed on a time-and-material basis rather than per cubic yard as the contract specified. FEMA asked the Applicant to provide documentation that detailed the scope of work and quantities of eligible disaster debris removed by M&M.
The Applicant provided documentation that included a copy of its unit cost contract with M&M and an Applicant-prepared debris removal analysis which documented 20,064 CY of debris removed by M&M. It should be noted that there is not a defined scope of work in the debris removal contract; it only specified a disaster-related debris removal rate of $3.25 per CY. Based on the debris quantity provided by the Applicant, FEMA calculated eligible M&M debris removal costs at $65,208 ($3.25x 20,064 CY). FEMA replaced the ineligible invoiced cost of $169,505 with the eligible cost of $65,208 and on September 1, 2009, obligated PW 440 for a total of $261,220.
The Applicant submitted a first appeal on September 29, 2009, which the State Emergency Management Agency (SEMA) forwarded to FEMA on November 3, 2009. The Applicant requested that FEMA reinstate M&M’s invoiced debris removal costs in the amount of $103,792. The Applicant stated that the $103,792 represented time-and-material services incurred for other emergency work performed by four M&M crews. The Applicant explained that the four M&M crews worked in conjunction with a contractor hired by the Applicant to repair damaged transmission lines (Power Line Consultants – PW 503- Category F: Utilities). The Applicant further explained that the M&M crews cut and removed trees and tree limbs from transmission lines to clear the way for the Power Line Consultants to repair the electrical lines.
In a letter dated April 22, 2010, the Regional Administrator denied the first appeal stating that the Applicant did not fully comply with Federal procurement regulations, Title 44 Code of Federal Regulations (44 CFR) §13.36, Procurement, when it contracted for M&M debris removal services. The Regional Administrator also stated that FEMA guidance limits the use of time-and materials contracts to 70 hours for debris removal operations and that M&M exceeded the maximum 70 hours, billing the Applicant for debris removal services from January 29 through February 17, 2009.
The Applicant submitted its second appeal on July 21, 2011, which SEMA transmitted to FEMA on July 23, 2011. The Applicant reiterates the same position it stated in the first appeal and requests that FEMA reimburse debris removal costs in the amount of $103,792. The second appeal does not include any new documentation.
Applicants who seek reimbursement under the Public Assistance Program must comply with the Federal procurement requirements contained in 44 CFR §13.36, Procurement. In accordance with 44 CFR §13.36(b)(2), Procurement, Procurement Standards, “… subgrantees will maintain a contract administration system which ensures that contractors perform in accordance with the terms, conditions, and specifications of their contracts…” Pursuant to 44 CFR §13.36(b)(9), Procurement, Procurement Standards, “…subgrantees will maintain records sufficient to detail the significant history of a procurement.”
Documentation is essential to establish the performance of eligible work by an applicant and its contractors, particularly when debris removal operations have not been properly monitored. In the absence of scope of work and cost documentation, FEMA used the debris quantities provided by the Applicant to calculate eligible costs for M&M services as specified in the contract. The Applicant did not provide any documentation to differentiate between the debris removal work described in the contract, the scope of work on PW 440, and the debris removal work it contends the M&M crews performed in conjunction with Power Line Consultants. In addition, FEMA Headquarters staff contacted the Applicant to again request support documentation for tasks preformed to clean wood debris from around power lines so emergency repairs could be performed by the contractor. The Applicant was not able to provide data that would support those activities. Furthermore, the contract signed by the Applicant on January 28, 2009, specified a unit cost for disaster-related debris removal; therefore, all costs should have been invoiced on that basis rather than on a time-and-materials basis.
I have reviewed the information submitted with the appeal and have determined that the Regional Administrator’s decision is consistent with Public Assistance regulations and policies. Accordingly, I am denying the Applicant’s 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: Beth Freeman
FEMA Region VII