OIG Audit Findings

December 9, 2003

Mr. Gilbert Najera
Public Assistance Manager, South
Governor’s Office of Emergency Services
75 North Fair Oakes Avenue, 4th Floor
Pasadena, CA 91103

Analysis: RE: Second Appeal – California State University, Northridge, PA ID 000?92066, OIG Audit Findings, FEMA-1008-DR-CA, Damage Survey Reports 10901, 10902, 10903, 10904, 10905, 10906, 10907, 10908, 10909, 11591, 11592, 11593, 11594, and 11595

Dear Mr. Najera:

This letter is in response to the referenced second appeal transmitted by your letter dated May 16, 2003. California State University, Northridge (CSUN, Applicant) is requesting reinstatement of funds deobligated by FEMA in accordance with recommendations of the Office of the Inspector General’s (OIG) audit report relative to Damage Survey Reports (DSRs) 10901, 10902, 10903, 10904, 10905, 10906, 10907, 10908, 10909, 11591, 11592, 11593, 11594, and 11595.

As a result of the Northridge Earthquake on January 17, 1994, more than 100 CSUN buildings suffered extensive damage. FEMA prepared 470 DSRs to fund both emergency work and permanent work projects in the total amount of approximately $371 million. The OIG conducted General Audit W-07-02 and issued a recommendation to deobligate a total of $5,749,940 due to various code compliance issues. The primary basis for the recommendation was described in the OIG audit report as follows:
· CSUN claimed expenditures totaling $3,846,830 to install new fire sprinkler systems in buildings not so equipped prior to the Northridge Earthquake. These costs were ineligible because there were no codes or standards in effect at the time of the disaster or when the projects were approved requiring that such systems be installed.
·
· CSUN also claimed $1,903,110 in other code compliance upgrades for elements not damaged by the earthquake. These costs were found ineligible because code compliance upgrades apply only to the damaged elements of a building. The report cited numerous upgrades within various buildings.
·
The FEMA Regional Director concurred with the OIG recommendations and approved the deobligation of funds from the listed DSRs.

In a letter dated December 19, 2002, the Applicant requested that they be permitted to forego their first appeal to the Regional Director and to submit their second appeal directly to FEMA
Headquarters. The FEMA Public Assistance Officer granted this request in a letter dated January 15, 2003. The Applicant’s second appeal, transmitted and supported by your letter dated May 16, 2003, requests reconsideration of the OIG findings, asserting that the completed upgrades were allowed by FEMA’s adopted procedures or required by in-place codes.

Regarding the installation of the new fire sprinkler system, the Applicant concurs that there were no codes requiring retrofitting of sprinklers in repair or reconstruction projects where sprinklers were not required under the code in effect during the original construction. However, the Applicant asserts that FEMA’s adopted procedures for identifying triggers to determine applicable codes, as documented in the Memorandum of Understanding (MOU) between FEMA and the State, dated March 3, 1994, provide the authority to allow retrofitting of the fire sprinklers throughout the buildings.

Specifically, the MOU states that when the estimated cost of structural repair work is greater than 10 percent of the replacement cost of the facility, the damaged elements, as well as all critical ties, supported elements and supported elements associated with the damaged elements shall be repaired and/or brought into conformance with the structural requirements of the current applicable code. It is the Applicant’s assertion that the buildings in question meet the 10 percent criteria and, therefore, the building should be upgraded to provide the new sprinkler system. However, it is noted that the MOU applies only to the structural components of the building and associated structural repairs, as emphasized above. Repairs and upgrades associated with non-structural components, such as sprinkler systems, do not meet the provisions of the MOU. Accordingly, even if the building damages did meet the 10 percent criteria, retrofitting of the sprinklers are not authorized by the terms of the referenced MOU.

Relative to the code upgrades for building elements found by the OIG audit to not be damaged elements, the Applicant asserts that the codes in effect at the time of the disaster do require upgrades of the building components in question. However, based on a review of the building components and the codes asserted by the Applicant to apply, it is again concluded that the documentation does not support that certain building elements were damaged by the disaster so as to warrant code upgrades, or if they were damaged, to conclude that the repair methods and completed upgrades were mandated by the existing codes. Additionally the codes referenced by the Applicant do not require that upgrades be applied to non-damaged elements.

Accordingly, it is found that the installation of the sprinkler system and other building element upgrades do not meet the eligibility criteria required for funding within the Public Assistance Program as defined in Title 44 of the Code of Federal Regulations Section 206.226(b). It is noted that this determination is consistent with decisions made regarding similar requests by other applicants in this disaster.

Therefore, based on the analysis described above, I have determined that the documentation provided by the Applicant does not support their request to reinstate funding for the completed upgrades. The Applicant’s appeal is denied.

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

Sincerely,
/S/
Daniel A. Craig
Director
Recovery Division
Emergency Preparedness and Response

cc: Jeff Griffin
Regional Director
Region IX