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Contract Services and Force Account Labor Costs

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

DisasterFEMA-1425-DR
ApplicantGuadalupe Blanco RIver Authority
Appeal TypeSecond
PA ID#000-U0169-00
PW ID#850
Date Signed2007-03-27T04:00:00

Citation:

FEMA-1425-DR-TX, Guadalupe Blanco River Authority, PW 850, Contract Services and Force Account Labor costs

Cross Reference:

Procurement, Force Account labor costs

Summary:

As a result of flooding (declared July 4, 2002) the Guadalupe Blanco River Authority sustained damage to the TP-4 dam spillway gates. The Applicant requested that the Lower Colorado River Authority (LCRA) assist with time-sensitive preliminary permanent repairs to the spillway gates. Later, the Applicant used force account labor to perform construction inspection and supervisory activities and to assist the private contractor with the final permanent repairs. The final version of the PW disallowed $24,985.29 in costs paid to LCRA because the Applicant did not follow proper procurement procedures, as well as $31,650.16 in force account labor costs because of a determination that the work was not disaster related. The Applicant filed a first appeal on November 15, 2005. FEMA denied the first appeal on the basis that the Applicant did not follow proper procurement procedures and that the Applicant did not adequately document the labor costs. On June 2, 2006, the Applicant filed a second appeal with FEMA.


Issues:

1. Are the emergency repair contract costs reasonable?
2. Are the force account labor costs claimed by the Applicant directly related to the performance of eligible work?

Findings:

1. Yes
2. Yes

Rationale:

44 CFR 13.36(d)(4)(i)(B), PA Guide FEMA 322 October, 1999, pg. 36, Foreman and Supervisors, and pg. 75, Engineering and Design Services

Appeal Letter

03/27/2007

Mr. Jack Colley
Governor’s Authorized Representative
Division of Emergency Management, Office of the Governor
P.O. Box 4087
Austin, TX 78773-0220

Re: Second Appeal-Guadalupe Blanco River Authority, PA ID# 000-U0169-00
Contract Services and Force Account Labor Costs, FEMA-1425-DR-TX, Project Worksheet (PW) 850

Dear Mr. Colley:

This is in response to your letter dated June 9, 2006, transmitting the Guadalupe Blanco River Authority’s (Applicant’s) second appeal, dated June 2, 2006, of Project Worksheet 850. The appeal disputes the basis on which the Department of Homeland Security’s Federal Emergency Management Agency (FEMA) denied assistance for certain contract services and force account labor costs in connection with the disaster.

As explained in the enclosed appeal analysis, the Applicant is eligible for reimbursement of costs for contract services supplied by Lower Colorado River Authority as well as force account costs incurred in support of permanent repairs to spill gates of Dam TP-4. Accordingly, by copy of this letter, I am requesting the Regional Director prepare and obligate a version of PW 850 in the amount of $56,635.90.

Please inform the Applicant of my decision. This determination constitutes the final decision on this matter pursuant to 44 CFR § 206.206.

Sincerely,

/s/

John R. D'Araujo, Jr.
Director of Recovery



Enclosure

cc:
William Peterson
Regional Director
FEMA Region VI

Appeal Analysis

BACKGROUND

As a result of severe storms and flooding (FEMA-1425-DR-TX, declared July 4, 2002) the Guadalupe-Blanco River Authority (Applicant) contracted for services for emergency repair of flood-damaged spillway gates. At a later date, they provided force account labor oversight and assistance to the contractor for permanent repair of the same spillway gates. The Applicant requested assistance from the Federal Emergency Management Agency (FEMA) for costs associated with this work, among other items.

The Applicant is a conservation and reclamation district established under the authority of the Texas State Constitution (Art 16, Sec 59) as a governmental agency, with responsibility for, among other things, a public power authority that operates, maintains, and repairs a number of hydro-electric power dams on the Guadalupe River in Comal, Guadalupe, and Gonzales Counties, Texas.

Lake Placid is located in Guadalupe County between Lake McQueeney and Meadow Lake. The pond area covers 248 acres with a storage capacity of 2,624 acre-feet. The lake is held back by the TP-4 dam, comprised of an overflow spillway section with two gates and a powerhouse. Most of the lake is shallow with maximum depths of 30-35 feet near the Applicant’s TP-4 dam. The spillway gates are roof weir (or bear trap) type gates.

The spillway gates were submerged by floodwaters on July 4, 2002, and remained so for several weeks. The flood damaged spillway gate #2 such that it could not be raised to its full operational position. After the floodwaters subsided, the entire lake drained through the damaged spillway gate #2. The first opportunity to inspect the gate and determine the extent of the damage did not occur until August 1, 2002.

The United States Army Corps of Engineers (USACE) performed an inspection of the spillway gates and determined that all gate sections sustained some degree of distortion, and portions of crest angles and some boards were washed away. Because the inspection was undertaken “in the dry” the observations could not be used to determine a permanent repair procedure. The inspector stated that the gates would need to be lifted against a reservoir for a thorough and lengthy inspection. This in-depth inspection would be used as a basis for developing a full repair scope of work. The USACE inspector further stated that a reasonable estimate for the cost of these initial repairs would be $32,000.

The lowered lake level posed several threats to improved property adjacent to the lake. The immediate upstream dam, McQueeney Dam, relies on the impounded water of Lake Placid to dissipate the effects of high river flow, protecting McQueeney Dam from erosion of the downstream outlet. Further, after the floodwaters subsided, the Applicant had approximately two weeks to make necessary repairs to the dam before USACE would discharge a large volume of water from the upstream Canyon Reservoir. This discharge would prevent further repair work and jeopardize vulnerable and damaged elements of the dams.

The Applicant called the Lower Colorado River Authority (LCRA) to help repair the roof weir gate. The LCRA, located about 50 miles away from the dam, had specialized experience with roof weir gates and a crew available to begin the repairs the day after the scope of work was determined (the Brazos River Authority has similar capabilities but was located over 300 miles away). No written agreement existed between the Applicant and the LCRA at the time of the disaster and prior to the onset of work. The LCRA charged only actual labor costs plus costs incurred to transport, house, and feed employees while on the job at this remote location. The LCRA did not collect a mobilization fee, accounting fee, overhead, or profit.

On September 24, 2003, a competitively bid contract to complete the permanent repairs was let to Holloman Construction, and work began on September 29, 2003. Work was completed on December 3, 2003. The Applicant used force account labor to provide technical advice and assistance to the contractor as well as to operate the gates while Holloman Construction was working on site.

FEMA prepared Project Worksheet (PW) 850 to reimburse various costs related to disaster damage of Dam TP-4. The PW was obligated in September 2002 with only nine percent of the work complete. Upon completion of the work, FEMA prepared version 1 of PW 850 to reimburse the Applicant for the actual costs of the repairs. This PW was written for a total of $348,107.65. An attachment to the PW listed an analysis of all the costs submitted by the Applicant with commentary by the FEMA Project Officer concerning eligibility. Of all costs determined to be ineligible, only the following are the subject of this appeal:

1. $24,985.29 for contract services payable to LCRA for emergency repair work to the spillway gates—denied because the Applicant did not go through correct contract bidding procedure as required by law;
2. $31,650.61 for force account labor costs used to monitor and oversee the contract for permanent repairs to spillway gates—denied because the project officer determined that the Applicant was not engaged in disaster related work since a fully qualified contractor was already engaged performing the eligible work.

First Appeal

In a letter dated November 15, 2005, the Applicant appealed FEMA’s denial of the above listed costs. FEMA responded to the appeal in a letter dated March 14, 2006. The two issues addressed under the appeal are discussed below.

Contract services for emergency repair work to the spillway gates

The Applicant asserted that the Code of Federal Regulations Title 44 (44 CFR) Part 13.36(d)(4)(i)(B) allows the use of noncompetitive proposals when a public exigency or emergency exists. The Applicant presented several facts to establish the emergency situation existed at the time of procurement, including threats to improved property (detailed in the Background section above) and a limited window of opportunity to complete the repairs prior to the planned flood releases from the upstream USACE Canyon Reservoir.

In its appeal response, FEMA stated that a competitive procurement was possible and should have been undertaken. The Brazos River Authority had similar capabilities as the Lower Colorado River Authority and should have been solicited for a bid to do the work to comply with 44 CFR 13.36(d)(1) which requires a “price or rate quotation … obtained from an adequate number of qualified sources.” Therefore, this portion of the appeal was denied.

Force account labor for inspection of permanent repair work

The Applicant stated that it needed to inspect the work as it was being performed and provide technical assistance to the contractor, because maintenance of the high hazard dam is ultimately its responsibility and because the work would be submerged when completed.

In the appeal response, FEMA determined that the work itself could be eligible but there was not enough supporting documentation to support the costs claimed and denied this portion of the appeal as well.

Second Appeal

On July 20, 2006, the Applicant submitted a second appeal of FEMA’s denial, providing additional information including invoices and supporting documentation from LCRA, excerpts of the contract with Holloman Construction in reference to force account labor and timesheets to support the force account claims, and daily logs that demonstrate a clear segregation of hours for contract support versus normal activity.

With respect to the contract services for the emergency spillway repairs, the Applicant argues several points: competition was not required due to the emergency conditions affecting the timing of th cION

The two points the Applicant raises in the second are discussed below.

Contract services for emergency repair work to the spillway gates

Part 13 of 44 CFR provides the uniform administrative requirements for grants and cooperative agreements to state and local governments. First, 44 CFR §13.36(b)(1) requires that Applicants use their own procurement procedures that reflect applicable State and local laws. The Applicant procured the services of LCRA to perform work on the TP-4 spillway gates in an expedited timeframe under various sections of Texas Government Code Chapter 791 “Interlocal Cooperation Contracts.”

LCRA performed the repairs under emergency conditions. The work needed to be performed prior to the scheduled release of large flood flows from the Canyon Reservoir to prevent additional damage to improved property and facilities adjacent to Lake Placid. Therefore, the work was performed under emergency conditions for purposes of applying procurement rules.

Second, 44 CFR §13.36(d)(4)(i)(B) allows Applicants to use non-competitive proposals in the face of an emergency. As noted above, the work was completed under emergency conditions and had to be completed in less than two weeks due to the scheduled flood releases from the upstream USACE Canyon Reservoir.

The Applicant’s incurred contract cost breaks down as follows: $18,638.72 for labor (seven employees worked 560.5 hours [average $33.25 per hour wages and benefits]); $586.27 for materials; and $5,760.30 employee expenses (lodging, food, and transportation [average $822.90 per employee for a period of performance from 8/1/02 to 8/12/02]). The total cost is approximately $7,000 less than the USACE estimate. It should be noted that the above costs do not include overhead expenses such as profit or administrative fees. The cost of contract services by LCRA is reasonable and the Applicant followed proper procurement procedures considering the emergency conditions; therefore, the costs are eligible.

Force account labor for inspection of permanent repair work

The Applicant was engaged in two distinct activities while the contractor performed the permanent repairs to the roof weir gates. In addition to assisting the contractor with repair work and spillway gate operation while the contractor performed the repairs, the Applicant performed project supervisory work. As stated on page 36 of the Public Assistance Guide, FEMA 322 dated October, 1999 (PA Guide), “labor for both foremen and supervisors may be eligible for work forces engaged in disaster-related field activities.” The Applicant provided a signed affidavit from the maintenance crew chief who states that the Applicant has an obligation to closely supervise the permanent repair work to the spillway gates. This type of work also falls under the broad classification of engineering and design services, specifically construction inspection work. The PA Guide (page 75) states these services are normally provided by architectural-engineering firms; however, the Applicant is not prohibited from performing these services with their own forces.

The Applicant provided additional documentation to support the force account labor effort on the TP-4 dam repair, and the supervisory effort was expended in support of disaster related repairs. Therefore, the work is eligible.

CONCLUSION

The information provided by the Applicant is sufficient to conclude that the Applicant’s claim for $24,985.29 of LCRA work to perform expedited preliminary repairs to the TP-4 roof weir gates is eligible. Likewise, $31,650.61 in force account labor used to monitor and oversee the contract for permanent repairs to spillway gates is sufficiently supported by Applicant documentation and is also eligible. Therefore, the appeal is granted.