Support Documentation

Appeal Brief

Between April 30, 2010 and May 18, 2010, severe rainstorms, tornadoes, and straight-line winds impacted Nashville-Davidson County.  The rainstorms caused the Cumberland River to overflow and submerge the truck loading building located at the Applicant’s Metropolitan Water Services Biosolids Facility. Floodwaters submerged the building, damaging electrical and mechanical components.  FEMA subsequently prepared Project Worksheet (PW) 5586 documenting necessary repairs to two desiccant dryers, a scale, recirculating pumps, and compressors.  In a June 3, 2011 letter, the Applicant submitted its first appeal requesting $97,462.94 and arguing that FEMA made numerous scope and cost estimate errors. More specifically, the Applicant argued that FEMA made errors in estimating the following costs: DAC, resident engineering costs, increased repair costs, and equipment replacement costs.  In a letter dated September 13, 2013, the FEMA Region IV Regional Administrator (RA) partially approved the appeal, granting increased repair costs but denying replacement costs, DAC, and resident engineering costs.  The RA based the denial of resident engineering costs on a lack of adequate documentation.  On November 5, 2013, the Applicant submitted a second appeal based solely on resident engineering costs. Upon FEMA’s subsequent request for additional information, the Applicant provided additional documents describing resident engineer’s services.

Authorities and Second Appeals

• Stafford Act § 406 (a)(1)(A), 42 U.S.C. § 5172.

• 44 C.F.R. § 13.22.

• OMB Circular A-87 Attachment A (C)(1)(j), 2 C.F.R. § 225 Appendix A (C)(1)(j)

• OMB Circular A-87 Attachment A (C)(1)(a), 2 C.F.R. Appendix A (C)(1)(a)

• PA Digest at 48.

• PA Guide, at 40, 59.

Headnotes

• OMB Circular A-87 provides that allowable costs must meet the cost principles of being necessary; allocable to Federal awards; and adequately documented.

  • The Applicant provided documentation to demonstrate that the resident engineering costs are necessary, allocable, and adequately documented for PW 5586.

• PA Digest, at 48, provides that “[s]pecial services[,] which are not required on every restoration project, include engineering surveys, soil investigations, services of a resident engineer, and feasibility studies. These services must be specifically described and must be shown to be necessary for completing the eligible scope of work.”

  • This project is part of 19 separate PWs associated with flood recovery efforts of a complex nature, and could require the use of resident engineering services.

Appeal Letter

Appeal Analysis

Background

Between April 30, 2010 and May 18, 2010, severe rainstorms, tornadoes, and straight-line winds impacted Nashville-Davidson County (Applicant).  The rainstorms caused the Cumberland River to overflow, and the resulting floodwaters damaged Applicant’s Central Waste Water Treatment Plant as well as the Applicant’s Metropolitan Water Services Biosolids Facility (Biosolids Facility).  A multi-building and multi-component facility, the Biosolids Facility processes solids generated at the Central Waste Water Treatment Plant as well as at the Applicant’s Whites Creek Waste Water Treatment Plant.      

At the time of the weather event, floodwaters of up to 24 inches submerged the truck loading building at the Biosolids Facility and damaged electrical and mechanical components.  FEMA subsequently prepared Project Worksheet (PW) 5586 documenting necessary repairs to two desiccant dryers, a scale, recirculating pumps, and compressors located in the truck loading building.  The PW did not document resident engineering costs and disallowed Direct Administrative costs (DAC) and certain increased repair expenses. 

First Appeal

The Applicant submitted a first appeal by letter dated June 3, 2011, arguing that FEMA made numerous scope and cost estimate errors and requesting a total reimbursement of $97,462.94 for DAC, resident engineering costs, and equipment replacement costs.  The Applicant sought additional DAC funding for costs it asserted were incurred in completing tasks associated with the PW and costs it would incur at project closeout.  The Applicant requested resident engineering funding for activities it asserted were necessary to complete the project.  Lastly, the Applicant argued for replacement costs pertaining to damaged equipment and stated that replacement would preserve warranties on the equipment. 

In a letter dated September 13, 2013, the FEMA Region IV Regional Administrator (RA) partially approved the first appeal.  The RA approved $23,525.54 for increased repair costs,[1] and $705.77 for additional construction management, but denied the request for DAC, arguing the activities claimed as DAC actually involved procurement and payment activities, making them project management costs not DAC.  The RA acknowledged the appropriateness of special engineering services for this project and concluded it met the “large and complex” requirement.  However, he denied the request stating the documents provided did not highlight specific tasks on daily reports, nor specific daily hours of the personnel attributed to oversight of the facility.

Second Appeal

In a November 5, 2013 second appeal letter, the Applicant requests only $30,682.00 in costs associated with resident engineering services.  The Grantee transmitted the appeal to FEMA on November 19, 2013.  The Applicant argues that the lack of adequate documentation resulted from FEMA’s delay in completing the PWs and decision to prepare individual PWs for each building at the facility. The Applicant indicated that it verified and supported each employee’s activities through daily timesheets.  Through its second appeal submission as well as a subsequent response to FEMA’s request for additional information, the Applicant provided more detailed summary sheets reflecting the work performed by resident engineers.

Discussion

Pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) § 406, FEMA is authorized to provide reimbursement for the associated expenses incurred by a local government during the repair, restoration, reconstruction, or replacement of a facility damaged as the result of a declared disaster.[2]  FEMA determines allowable costs in accordance with the Office of Management and Budget (OMB) cost principles.[3]  As a local government, the Applicant must follow the OMB Circular A-87[4] requirement that costs must be necessary for proper and efficient performance and administration of the Federal award.[5]  It also mandates that costs are adequately documented and allocable to the specific project completed with Public Assistance funds.[6]   Generally, costs that can be directly tied to the performance of eligible work are eligible for FEMA reimbursement.[7]  Further, FEMA policy provides that services of a resident engineer may be required for some projects, and that such services are estimated separately from standard engineering and design service costs.[8]

Adequately Documented and Allocable

As acknowledged earlier, FEMA does not dispute that this project meets the complexity requirement necessary to reimburse costs associated with resident engineering services.[9]  Consequently, the only issue presented in this appeal is whether the Applicant provided adequate documentation to show the costs are allocable to PW 5586.

Before FEMA can agree to reimburse resident engineering costs, any provided documentation must adequately show necessary work within the eligible scope of work.[10] Submitted with its second appeal, the Applicant has provided additional information associated with the daily activities performed by resident engineers.  Specifically, detailed time sheet reports clearly demonstrate hours worked on various parts of the facility, the date the work was performed, the number of hours worked, and the rate billed for the work performed.  These daily time sheet reports also show task codes that provide a description of resident engineering services performed, which include the following: evaluating damaged equipment; tagging-out equipment for inspection, repair, and startup; inspecting equipment for cause of malfunction; preparing scope of work for facility repairs; monitoring contractor and vendors repair work for compliance with scope of work; coordinating contractor work schedules; assisting with testing and re-commissioning of the facility; and monitoring the installation of repaired equipment. 

The information submitted in conjunction with the second appeal adequately documents resident engineering services performed on the components and equipment in question at the truck loading building.  Therefore, the costs are eligible for reimbursement.    

Conclusion

The Applicant provided adequate documentation to support the incurred costs associated with resident engineering services.  Accordingly, this appeal is granted contingent upon the Applicant’s ability to produce documents substantiating proper procurement.  Further, final costs must be reconciled during the closeout process.