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Second Appeal Letter
PA ID# 045-30850-00; City of Greenville
PW ID# 244; OIG Audit Report DA-10-17
October 28, 2013
South Carolina Emergency Management Division
2779 Fish Hatchery Road
West Columbia, South Carolina 29172
Re: Second Appeal–City of Greenville, PA ID 045-30850-00, OIG Audit Report DA-10-17, FEMA-1625-DR-SC, Project Worksheet (PW) 244
Dear Mr. Stenson:
This letter is in response to a September 20, 2012, letter from your office which transmitted the referenced second appeal on behalf of the City of Greenville (Applicant). The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $82,615 in debris removal costs based on the findings of an audit by the Department of Homeland Security’s Office of the Inspector General (OIG).
In December 2005, a severe winter storm resulted in 20,090 tons of vegetative debris on the grounds of the Applicant’s facilities and rights of way. Based on the Applicant’s claimed debris removal costs, FEMA prepared PW 244 in the amount of $1,295,589 for the emergency work and awarded the federal share on June 13, 2006. FEMA increased the total cost estimate to $2,256,465 by awarding an additional $960,876 with Version 1 of PW 244 on December 28, 2006.
On August 24, 2010, the OIG issued the results of an audit of the Applicant’s disaster related costs with Audit Report Number DA-10-17. The audit report identified five areas of concern related to an unapplied credit, a payment of duplicate costs, math errors, resulting in overpayment, force account labor and mutual aid agreements, and recommended that FEMA disallow $98,774 in previously awarded funding. The FEMA Region IV Regional Administrator concurred with three of the OIG’s recommendations and de-obligated $82,615 for the unapplied credit ($74,655), the duplicate costs ($4,724), and math errors ($3,236) with Version 3 of PW 244 on February 15, 2012.
The Applicant submitted a first appeal on April 30, 2012, requesting reconsideration of the denial of debris removal costs and reinstatement of the de-obligated funding. The Applicant stated that it had relied on FEMA to review the eligibility of the claimed costs and make the necessary adjustments to the PW’s cost estimate for the unapplied credit, invoice overpayment and math errors. Further, the Applicant stated that the recovery process was complicated by the fact that its “staff was overwhelmed with managing the ice storm and sheltering Katrina survivors and that the various FEMA staffing changes throughout the process increased the margin of error and difficulty.”
The FEMA Regional Administrator denied the Applicant’s first appeal with a letter dated July 6, 2012, stating that the Applicant’s appeal did not directly dispute the OIG’s findings or FEMA’s denial of funding, but instead requested “due consideration and forgiveness”. The Regional Administrator noted that pursuant to Title 44 Code of Federal Regulations (44 CFR) §206.203(c)(1), Federal grant assistance, Project funding—Large projects, funding for large projects shall equal the Federal share of the actual eligible costs documented by a grantee. Additionally, 44 CFR §13.52(a) Collection of amounts due requires that, “any funds paid to a grantee in excess of the amount to which the grantee is finally determined to be entitled under the terms of the award constitutes a debt to the Federal Government.” As the claimed costs exceeded the actual eligible amount, the Regional Administrator determined that FEMA properly de-obligated the overpayment.
The State of South Carolina (Grantee) submitted a second appeal on the Applicant’s behalf on September 20, 2012. The appeal reiterates the arguments presented in first appeal with no additional documentation provided. The Applicant requests reconsideration of the de-obligation of funding related to the unapplied credit, duplicate costs, and math errors.
The OIG, authorized by the Inspector General Act of 1978, as amended, conducted an audit of the Applicant’s application for federal disaster assistance under FEMA-1625-DR-SC. The finding of Audit Report DA-10-17 with which FEMA concurred are as follows:
The Audit Report identified $74,655 in debris removal costs as ineligible. According to the OIG, both the Greater Greenville Sanitation Commission and FEMA reimbursed the Applicant for debris removal costs in Greenville County. The OIG determined that the costs represented a duplication of benefits pursuant to Office of Management and Budget (OMB) Circular A-87, Section (C)(4), which states that costs claimed under a federal award must be reduced by applicable credits and “[t]o the extent that such credits accruing to or received by the government unit relate to allowable costs, they shall be credited to the Federal award as either a cost reduction or cash refund, as appropriate.” The Applicant’s appeal does not assert that these costs are eligible, rather that it believes FEMA staff was aware of the duplication and should have made the appropriate reduction to the PW prior to award. The Applicant claims that it relied on the assistance and expertise of FEMA field staff to review its documentation and process the PW.
Pursuant to Section 312(a) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act Duplication of Benefits, “…no such person, business concern, or other entity will receive such assistance with respect to any part of such loss as to which he has received financial assistance under any other program or from insurance or any other source.” Accordingly, the Applicant is not eligible for FEMA assistance for debris removal costs which were also reimbursed by the Greater Greenville Sanitation Commission.
The OIG identified in the documentation for PW 244, a duplicate invoice for $3,885 and a duplicate claim for force account labor overtime in the amount of $839. The Applicant concurred with the OIG’s finding on both items. The Applicant stated that it was notified by FEMA that a duplicate invoice was discovered at final inspection. The Applicant thought FEMA had reconciled the duplicate payments. FEMA noted the duplication in the final inspection, but never made the adjustment to the PW cost total. In this case, the duplicate payment of the invoice and force account labor overtime resulted in an overpayment to the Applicant. Therefore, FEMA is required to reduce the Applicant’s debt by de-obligating the amount of the duplicate payment.
The City mistakenly used an hourly rate of $31.00 instead of $3.10 for force account equipment resulting in an overpayment in the amount of $3,236. The Applicant concurred with the OIG finding.
I acknowledge the Applicant’s statement that these were “errors or omissions through no person’s fault or desire to defraud” and regret any contribution that FEMA staff turnover may have played in exacerbating the errors. However, the errors did result in an overpayment to the Applicant in the amount of $83,441 that FEMA is obligated to recoup.
I have reviewed the information submitted with the appeal and have determined that the Regional Administrator’s decision in the first appeal is consistent with Public Assistance regulations and policy. Accordingly, 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: Major P. May
FEMA Region IV