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Second Appeal Analysis
PA ID# 015-99015-00; Brule County
PW ID# 847; Embankment Erosion
From March 10, 2010 to June 20, 2010, extensive flooding damaged infrastructure in several counties in South Dakota. The magnitude of the damage and the widespread impact of the flooding resulted in major disaster declaration FEMA-1915-DR-SD on May 13, 2010. Floodwater eroded the embankment of Boyer Bottom Road in three locations. On August 5, 2012, FEMA prepared PW 847 for the amount $44,270 to repair the three damaged embankments based on a quote the Brule County (Applicant) obtained from a local construction contractor. The Applicant procured the contractor’s services to complete the work. On November 2, 2010, FEMA conducted a site inspection, and found that grade work had been completed on the site. The inspection team noted that the road was marked with a sign that designated it as a minimal maintenance road. Further, the team discovered that adjacent hillsides showed evidence of past slope failures. As a result, FEMA determined that the entire area where the road is located is unstable and had been moving prior to the event. Per FEMA Recovery Policy 9524.2, Landslides and Slope Failures, dated May 23, 2006, a site is ineligible for funding if ground instability is not caused by the disaster. On November 18, 2010, the Project Officer notified the Applicant that the damage was ineligible and on January 14, 2011, FEMA informed the South Dakota Office of Emergency Management (Grantee) of the ineligibility of PW 847.
On January 4, 2011, the Applicant submitted a first appeal, which was forwarded to FEMA Region VIII by the Grantee on January 26, 2011. In the appeal, the Applicant contended that the minimum maintenance designation for the road was to slow traffic on the road, and that the road was maintained as regularly as other roads in the jurisdiction. In support of this claim, the Applicant submitted maintenance records for the road. The Applicant also asserted that irrigation equipment at the site had not been in use for over a decade, and therefore could not have contributed to the road damage. Finally, the Applicant submitted aerial photographs of the road to demonstrate the condition of the road prior to the disaster, and the areas impacted by flooding.
In an October 13, 2011, letter responding to the first appeal, the FEMA Region VIII Regional Administrator informed the Grantee that the PW was eligible and FEMA would fund reasonable costs associated with the work. The Regional Administrator determined there was no direct evidence of pre-existing slope instability at the three sites. Further, FEMA found that not only was the site regularly maintained, but the irrigation pipe could not have contributed to the damage. However, FEMA also found the Applicant had not competitively bid the project, nor solicited multiple quotes for the work, nor defined a scope of work for repairs, nor demonstrated that the invoiced cost were reasonable. As the Applicant did not demonstrate that they followed proper procurement procedures as required under Title 44 Code of Federal Regulations (44 CFR) §13.36, Procurement, FEMA determined the reasonable costs based on the estimated volume of eroded material and historical costs for unclassified fill. This resulted in a total estimated reasonable cost of $12,181 to repair the road.
The Applicant submitted a second appeal on January 19, 2012, which the Grantee transmitted to FEMA on February 15, 2012. In the second appeal, the Applicant reiterates its claim that the invoiced costs associated with PW 847 are eligible, and requests funding for the unreimbursed balance of $31,916. The Applicant contends that the process of procuring contracted services for the repair of Boyer Bottom Road was consistent with local and state laws which, for this type of project, require competitive bids only when the projected costs exceed $50,000. Additionally, the Applicant states that the FEMA Project Officer provided verbal assurances following the initial site inspection that the Applicant should proceed with the road repair based on the single quote. The Applicant argues that the verbal assurance, which the Applicant interpreted as tacit approval of the cost, was a reasonable determination given the uneven terrain and susceptibility of the area to flooding, and that the FEMA Regional Administrator’s proposed reasonable cost of $12,181 for “filling three holes” was inadequate to return the damaged road to pre-disaster condition.
FEMA recognizes the critical nature of repairing roads following a disaster. While the actions of the Applicant in securing the contract to perform emergency road repair may be legal under applicable local and state law, the procurement practice does not meet requirements for competition established in 44 CFR §13.36(b), Procurement, Procurement standards. In addition, there is no evidence in the record that indicates the Applicant took steps to act in accordance with the regulation on procurement by noncompetitive proposal. Without evidence to demonstrate that the Applicant followed minimum Federal procurement regulations, FEMA may limit reimbursement of costs to amounts determined to be reasonable for the eligible work pursuant to 44 CFR §13.43(a), Enforcement, Remedies for noncompliance.
What complicates the process of rendering an appropriate remedy for noncompliance is that the Applicant has not identified the scope of the work completed, nor demonstrated that the work was restricted to repair of the three damaged sites, nor substantiated that the requested costs were reasonable for the work necessary to repair the eroded embankment to pre-disaster condition. The submitted documentation includes an invoice consisting of lump sum amounts corresponding to each of the sites, and an itemized invoice of 264 hours of heavy equipment use, and a cover page stating that contractor “moved approximately 10,000 to 12,000 [cubic] yards” to repair the 2,290 cubic yards of material eroded from the embankment. However, the Applicant did not provide any information describing the work completed or demonstrating that the work was necessary and appropriate to repair the road. In the absence of this information, FEMA determined a reasonable cost for completing the repairs.
The Applicant’s process to procure the contract was inconsistent with minimum federal procurement regulations and the approved cost of $12,181, as calculated by the Regional Administrator to repair the three sites, represents a reasonable cost