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Backfill Overtime Labor and Vehicle Costs

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

DisasterFEMA-942-DR-
ApplicantCalifornia Highway Patrol
Appeal TypeSecond
PA ID#000-92006
PW ID#16295, 19441
Date Signed2002-10-02T04:00:00

Citation:

FEMA-942-DR-CA; California Highway Patrol; DSRs 16295, 19441

Cross-reference:

Force Account Labor Costs

Summary:

FEMA prepared DSR 16295 for $3,427,606, to reimburse California Highway Patrol (CHP) 50% of the estimated costs for personnel, equipment, and contract services incurred as a result of the civil unrest in Los Angeles in 1992. DSR 16295 was supplemented with DSR 17469 for $ 3,970,043. Upon final inspection, FEMA applied a net adjustment, providing an additional $8,278 with DSR 39012.

An audit by the California State Controller’s Office (SCO) recommended deobligation of $549,715 for straight time backfill labor and vehicle mileage costs, stating that these costs would have been incurred by CHP regardless of the declared event. FEMA concurred with these findings and deobligated $549,715 with DSR 91768. In 1998, an audit by the Office of the Inspector General (OIG) recommended deobligation of $995,943 in overtime backfill labor costs and $162,923 for associated vehicle mileage costs. FEMA approved DSR 19441 and deobligated $1,158,866, reducing the total project funding to $5,697,346.

California’s Office of Emergency Services (OES) supported CHP’s first appeal and claimed that backfill overtime costs are eligible for federal disaster funding because they are the result of the disaster. OES cited a November 19, 1993, memorandum from Laurence W. Zensinger, which stated that “If the backup is a regular employee… who is working his normal shift, there is no extra cost. Only overtime is eligible.” In response to the first appeal, the Regional Director (RD) stated that the decision to deobligate the funds was consistent with statute and regulation pursuant to Title 44 Code of Federal Regulation (CFR) § 206.223(a)(1) and (2). The RD maintained that the 1993 memorandum was “a restatement of the policy that costs for salaries, which would be incurred whether or not the disaster occurred, are ineligible.” In the second appeal, OES and CHP reiterate that the November 19, 1993, memorandum explicitly states that overtime labor costs for backfill employees is eligible for reimbursement.

Issues:

Are the costs of overtime labor for backfill employees and the associated vehicle mileage costs eligible for reimbursement under FEMA-942-DR-CA?

Findings:

No, the 1993 memo on the eligibility of force account labor costs was not retroactive and does not apply to this disaster declared in 1992.

Rationale:

44 CFR § 206.223(a)(1) & (2)

Appeal Letter

October 2, 2002


Mr. D. A. Christian
Governor's Authorized Representative
Governor's Office of Emergency Services
P.O. Box 419023
Rancho Cordova, California 95741-9023

Re: Second Appeal – California Highway Patrol, PA-ID # 000-92006,Backfill Overtime Labor and Vehicle Costs, FEMA-942-DR-CA, DSRs 16295 & 19441
OES Log # 77681.3

Dear Mr. Christian:

This is in response to your January 11, 2002, letter transmitting the California Highway Patrol’s (CHP’s) above referenced second appeal to the Federal Emergency Management Agency (FEMA). CHP is requesting that FEMA prepare a Damage Survey Report (DSR) for $1,158,866 to reobligate costs associated with backfill overtime labor and vehicle use. FEMA previously deobligated this amount with DSR 19441, based on the findings of an Office of the Inspector General (OIG) audit.

As explained in the enclosed analysis, I have determined that the work associated with the backfill overtime labor is ineligible. Pursuant to Title 44 Code of Federal Regulations § 206.223, eligible work must be required as the direct result of the major disaster event and be located within a designated disaster area. The work performed by the backfill employees was not a direct result of the disaster, as the work would have been required regardless of the disaster, and the work was performed outside of the designated area. Therefore, I am denying the appeal.

Please inform CHP of this determination. My decision constitutes the final decision on this matter as set forth in 44 CFR § 206.206.

Sincerely,
/S/
John R. D'Araujo, Jr.
Assistant Director
Response and Recovery Directorate

Enclosure

cc: Karen E. Armes
Acting Regional Director
FEMA Region IX

Appeal Analysis

BACKGROUND

On May 2, 1992, the President declared FEMA-942-DR-CA in consequence of the civil unrest in Los Angeles. The California Highway Patrol (CHP) provided an immediate response to the disaster by extracting labor and equipment from throughout the state. CHP deployed those resources to Los Angeles to contain and control the civil unrest. In order to ensure an acceptable level of safety and service to the public in the areas from which those officers were drawn, CHP recalled all uniformed personnel from vacations, weekends, and scheduled days off to perform the regular duties of the deployed officers.

FEMA prepared DSR 16295 on May 21, 1992, to reimburse CHP $3,427,606 for 50% of the estimated costs incurred for personnel, equipment, and contract services. In October 1992, FEMA supplemented the reimbursement of CHP’s costs with DSR 17469 for $3,970,043. Upon final inspection, FEMA approved DSR 39012 for an additional $8,278 as a net adjustment for the project on April 24, 1995.

The California State Controller’s Office (SCO) selected the project for an audit in 1996. The SCO’s audit recommended deobligation of $549,715 for straight time backfill labor and vehicle mileage costs that would have been incurred by CHP regardless of the declared event. FEMA concurred with these findings and deobligated $549,715 with DSR 91768. Consequently, the Office of the Inspector General (OIG) selected the CHP for an audit of backfill labor and associated expenses. As a result of the OIG audit, which recommended deobligating $995,943 in overtime backfill labor costs and $162,923 for associated vehicle mileage costs, FEMA approved DSR 19441 for the deobligation of $1,158,866 reducing the total project funding to $5,697,346.

First Appeal
California’s Office of Emergency Services (OES) supported and transmitted CHP’s November 1, 2000, first appeal letter to FEMA on December 19, 2000. OES claimed that backfill overtime costs are eligible for federal disaster funding when incurred as a direct result of the declared event. Furthermore, OES cited a November 19, 1993, memorandum from Laurence W. Zensinger, Public Assistance Division Chief, regarding the eligibility of force account labor. The memo provided the guidance that “If the backup is a regular employee… who is working his normal shift, there is no extra cost. Only overtime is eligible.” OES claimed that reimbursing overtime backfill labor costs was established FEMA practice and claimed that FEMA was not applying it consistently.

In FEMA’s August 30, 2001, response to the first appeal, the Regional Director stated that the decisions to deobligate the funds, based on the audit recommendations, were in accordance with the Title 44 Code of Federal Regulation (CFR) § 206.223(a)(1) and (2), which requires that in order to be eligible for reimbursement work must: 1) Be required as the result of a major disaster event and 2) be located within a designated disaster area. The Regional Director went on to explain that the November 19, 1993, memorandum was “a restatement of the policy that costs for salaries, which would be incurred whether or not the disaster occurred, are ineligible.”

Second Appeal
In the January 11, 2002, letter transmitting the CHP’s November 19, 2001, second appeal letter, OES reiterated that the November 19, 1993, memorandum explicitly states that overtime labor costs for backfill employees are eligible for reimbursement. OES referred to the precedence of FEMA’s October 15, 2001, letter approving $2,459,475 in overtime labor cost for backfill employees of the California Department of Forestry and Fire Protection under FEMA-3140-EM-CA.

Second Appeal Conference Call
The CHP was given the opportunity to explain its claim on May 23, 2002, in a conference call between CHP, OES, FEMA Region IX and FEMA headquarters representatives. In the call, OES reasserted that reimbursement of overtime backfill labor costs was FEMA’s practice even before the November 19, 1993, memorandum and requested a time extension to research and submit precedent-setting examples of projects in which FEMA reimbursed overtime backfill labor costs in disasters prior to FEMA-942-DR-CA. FEMA headquarters established a 2-week extension. In a letter to FEMA dated June 18, 2002, OES stated that “all supporting documentation in support of the appeal was submitted on January 11, 2002, when OES transmitted the second appeal request to FEMA.”

DISCUSSION

For all disasters declared prior to October 14, 1993, the regular time salaries of force account labor performing eligible emergency work was eligible for reimbursement under FEMA’s Public Assistance Program. Beginning October 1, 1993, 44 CFR § 206.228(a)(4) states, “The straight- or regular-time salaries and benefits of a subgrantee’s permanently employed personnel are not eligible in calculating the cost of eligible work under sections 403 and 407 of the Stafford Act, 42 U.S.C. 5170b and 5173. For the performance of eligible permanent restoration under section 406 of the Act, 42 U.S.C. 5172, straight-time salaries and benefits of a subgrantee's permanently employed personnel are eligible.

This change in regulation was implemented because the straight-time salaries of force account labor performing emergency work would normally be budgeted for and those costs would be incurred whether or not the disaster occurred. Recognizing that a backup employee may be required to assume the normal duties of a regular employee sent to the field to perform disaster-related work, FEMA issued the November 19, 1993, memorandum to establish the criteria for the eligibility of those backfill labor costs for reimbursement.

In the conference call, OES claimed that FEMA reimbursed the overtime costs of backfill labor in disasters declared prior to October 1, 1993. However, as the OES letter of June 18, 2002 letter indicates, it is unable to provide a documented example to substantiate this claim. Neither the aforementioned regulation change nor the 1993 memorandum were retroactive and are therefore not relevant to FEMA-942-DR-CA, which was declared before October 4, 1993. For FEMA-942-DR-CA, the straight time of force account employees performing eligible emergency work was eligible for reimbursement. The work associate with backfill labor performed by CHP employees was not eligible because it was not required as the result of a major disaster event and it was not performed within a designated disaster area as required by 44 CFR § 206.223(a).

CONCLUSION

The claimed backfill labor and vehicle use costs are ineligible for federal disaster funding pursuant to 44 CFR § 206.223(a). The CHP’s second appeal is denied.