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Debris Removal
Appeal Brief
Appeal Letter
Appeal Analysis
Citation: FEMA-1604-DR-MS, Jones County (Applicant)
Cross-reference: Debris removal, Reasonable Costs
Summary: As a result of high winds and heavy rainfall from Hurricane Katrina in August 2005, FEMA prepared PWs 3005 and 9575 for debris removal operations on private property in Jones County (Applicant), and PWs 7684 and 9574 for debris removal operations on the public rights-of-way. The Applicant requested reimbursement of $28,748,972. Through first appeal, FEMA approved $22,973,915. The Applicant is requesting that FEMA reinstate $5,775,057 that was deobligated from the PWs for: (1) unreasonable cost associated with removal and disposal of loose vegetative debris, and unit cost for topsoil to backfill tree stump holes, (2) double billing of costs for disposal of leaners and hangers, and (3) charges for removal and disposal of leaning trees that could not be confirmed through a joint FEMA/Mississippi Emergency Management Agency (MEMA) validation process.
Issues: Has the Applicant submitted sufficient information to support its request for reinstatement of funds?
Findings: Yes, in part. The information supports reinstatement of $2,069,420.
Rationale: Stafford Act Sections 403(a)(3)(A) and 407; OMB Circular A-87, Cost Principles for State and Local Governments; FEMAs Response and Recovery Policy 9580.4, Fact Sheet: Debris Operations - Clarification
High winds and heavy rainfall from Hurricane Katrina in August 2005 produced extensive debris in Jones County, MS. The State requested direct Federal assistance for debris removal from Jones Countys (Applicants) public rights-of-way. FEMA directed the U.S. Army Corps of Engineers (USACE) to remove the debris from public rights-of-way in Jones County. USACE began removing debris on September 22, 2005, and completed its mission in December 2005. The Applicant contracted for debris removal from private property in November 2005 and from public property in January 2006 after USACE completed its mission. FEMA prepared PW 3005 in January 2006 for debris removal from private property; PW 7684 in April 2006 for debris removal from the public rights-of-way; and PWs 9574 and 9575 in July 2006 to cover work performed by the Applicant after June 30, 2006, the initial FEMA deadline for 100 percent federal funding for debris operations.
Subsequent to initial preparation of the PWs, FEMA identified several issues that impacted PW funding. In May 2007, FEMA conducted quality assurance reviews and prepared versions of the PWs to increase reimbursement for additional eligible costs that the Applicant incurred and to reduce reimbursements for the following reasons:
1. The Applicant contracted for removal and disposal of vegetative debris from public and private property at $27 per cubic yard. The Mississippi Emergency Management Agency (MEMA) established a Benchmark Price for this item of $19.95 per cubic yard for the disaster.
2. The Applicant contracted for topsoil to backfill stump holes on private property at $50 per cubic yard. FEMA used MEMAs Benchmark Price of $19.95 per cubic yard to reduce the amount obligated in PWs 3005 and 9575. No stump holes were backfilled on the public rights-of-way (PWs 7684 and 9574).
3.
4. MEMA conducted a review of the Applicants documentation and determined that the contractor charged the Applicant twice for disposing of leaning trees (leaners) and hanging branches (hangers). FEMA made appropriate reductions for the duplication in billing.
5.
6. FEMA and MEMA staff could not validate all work for which the Applicant sought reimbursement.
7.
The Applicant requested reimbursement of $28,748,972 for all four PWs. Following the reviews and revisions discussed above, FEMA obligated $21,613,717.
First Appeal
The law firm of Brunini, Grantham, Grower & Hewes submitted a first appeal on behalf of the Applicant to MEMA on September 7, 2007. MEMA forwarded the appeal to FEMA on October 3, 2007. The amount in dispute was $7,135,255.
FEMA performed a thorough review of the PWs and concluded that the deobligation of funds in some instances was not warranted. As a result, FEMA reinstated a total of $1,360,197 to the four PWs. While FEMA approved a small increase in the unit costs for debris removal and topsoil for backfill of tree stumps, FEMA maintained that the costs the Applicant requested were unreasonable. FEMA did not accept the Applicants argument of exigent circumstances to justify higher prices, since USACE had cleared roads sufficiently for access by emergency vehicles prior to the Applicants award of the contract for debris removal from private property.
Second Appeal
The Applicant submitted its second appeal to MEMA on January 4, 2008, and MEMA forwarded it to FEMA on January 18, 2008. Brunini, Grantham, Grower & Hewes, on behalf of the Applicant, essentially restated the arguments presented in the first appeal. The second appeal argued that,
1. The Applicants procurement of services complied with all applicable regulations. Therefore, its costs are reasonable.
2. The proposed de-obligation based on the validation process is not supported by FEMAs validation reports.
3. The contractor did not submit duplicate invoices for disposing of leaners and hangers.
The Applicant also argued that FEMA should not have deobligated the costs for leaners in PW 9575, because FEMA observed that the level of validation had become acceptable by the time the work associated with this PW was performed.
The amount in dispute is $5,775,057.
DISCUSSION:
Reasonable Costs
Applicants who request reimbursement for debris removal cost from FEMA must demonstrate that they followed competitive procurement procedures pursuant to 44 CFR §13.36. There were irregularities in the Applicants procurement process affecting competitive bidding requirements for the contract to remove debris from private property. Although the Applicants procurement process was not consistent with federal procurement standards outlined in 44 CFR §13.36, the $27 per cubic yard it requested is the same cost that FEMA reimbursed neighboring Wayne County for removing debris from private property. Therefore, we have determined that the Applicants requested cost for removing debris from private property is reasonable. FEMA will reinstate $2,355,943 ($2,344,202 for PW 3005 and $11,741 for PW 9575) for this activity.
The Applicant solicited bids for removing debris from public rights-of-way on December 20, 2005. It received two bids on January 3, 2006, and awarded a contract to Dunn for $27 per cubic yard. Federal procurement standards require applicants for Federal assistance to conduct procurement transactions in a manner that promotes full and open competition. Further, the federal standards require applicants to perform a price or cost analysis for every procurement action, especially when adequate competition is lacking. A cost analysis is used to determine the reasonableness of the proposed price. The Applicant did not perform a cost analysis to determine if $27 per cubic yard was reasonable. FEMA subsequently conducted a cost analysis and determined that $27 per cubic yard was not a reasonable cost for removing debris from public rights-of-way. The cost analysis revealed that $20 per cubic yard was reasonable for this activity. Therefore, the Applicants request for reimbursement of $27 per cubic yard to remove debris from public rights-of-way is denied.
Backfilling Stump Holes
The Applicant requested reimbursement of $50 per cubic yard for soil to fill the holes created when contractors removed tree stumps of eligible damaged trees. FEMA initially determined that the price was not reasonable and reduced the Applicants reimbursement to $20 per cubic yard. FEMA subsequently reviewed debris removal contracts for 16 applicants and determined that 12 contracts included the cost of fill material in the unit costs for removing the stumps. Four contracts included a separate unit price for removing stumps that ranged from $28 to $50, for an average of $40 per cubic yard. FEMA approved the average price of $40 per cubic yard on first appeal. We have reviewed all information submitted with the appeal and have determined that $50 per cubic yard is a reasonable price. Therefore, FEMA will reinstate $762,633 ($753,603 for PW 3005 and $9,030 for PW 9575) in eligible costs.
Leaners
The Applicant requested reimbursement of $4,481,635 to remove 15,196 dangerous leaning trees of various sizes from private property. FEMA conducted several validations to verify the number of leaning trees that the Applicant claimed. FEMA guidance allowed for 100 percent reimbursement of claimed costs if FEMA validated 75 percent of a selected sample of claimed trees. On first appeal, FEMA determined that it selected a 15.8 percent (2,394 of 15,196) sample to validate the number of leaning trees claimed. FEMA validated 53 percent of the sample. To maximize reimbursement to the Applicant, it appears that FEMA removed trees with diameters of 2-12 inches from the 41 with diameters greater than 12 inches. It denied $1,069,500 that the Applicant requested for removing 7,130 leaning trees with diameters of 2 to 12 inches.
We have reviewed all information submitted with the appeal and have determined that there was no compelling reason to remove the 2 to 12-inch diameter trees from the validation sample. By including these trees in the validation sample, FEMA was able to validate 53 percent of the sample. Accordingly, the Applicant is eligible to receive only 53 percent of cost claimed for this activity. This reduces the eligible amount for removing leaning trees from $3,442,845 approved in the first appeal to $2,393,689. Therefore, we will reduce the reimbursement for this activity by $1,049,156.
Double Billing
MEMAs Quality Assurance staff reviewed the Applicants documentation and determined that Dunn billed the Applicant twice for disposing of leaners and hangers in December 2005 and January 2006. Dunns unit cost to remove leaners and hangers included disposal. However, it appeared that Dunn also charged the Applicant $27 per cubic yard to pick up and dispose of the felled leaners and hangers. Based on MEMAs findings, FEMA disallowed $1,010,167 in debris removal costs.
In the first appeal, MEMA acknowledged as plausible the Applicants explanation that Dunn did not bill the Applicant twice for disposal of leaners and hangers. FEMA agreed with the Applicants arguments that the reduction should have been based on a unit cost of $19.95 per cubic yard instead of $27 per cubic yard, and that FEMA should not have applied a reduction for debris removed after February 2006. Therefore, FEMA reinstated $547,736. However, FEMA maintained that there were duplicate billings for the disposal of leaners and hangers prior to February 2006.
The Applicant reiterates in the second appeal that FEMA has no basis for de-obligating costs for duplicate billing and it should not rely of MEMAs initial analysis of the issue. MEMA stated that the Applicants explanation for what appeared to be a duplication of billing seemed plausible; however, it did not indicate that it performed another review of the documentation. MEMAs initial review of the Applicants documentation clearly indicated that there were duplicate billings. The Applicant did not submit any compelling documentation to show that the MEMAs initial analysis was incorrect. Therefore, there is no basis for reinstating the questioned costs.
CONCLUSION:
FEMA has determined that the Applicant is eligible to receive an additional $2,355,943 for debris removal from private property based on a rate of $27 per cubic yard and an additional $762,633 to reflect an increase in the unit costs for topsoil backfill of tree stump holes from $20 per cubic yard to $50 per cubic yard. However, FEMA has determined that the eligible cost for removing leaning trees from private property will be reduced by $1,049,156 because FEMA validated only 53 percent of claimed leaning trees on private property. Therefore, FEMA partially approves the appeal for $2,069,420.
Appeal Brief
| Disaster | FEMA-1604-DR |
| Applicant | Jones County |
| Appeal Type | Second |
| PA ID# | 067-99067-00 |
| PW ID# | Project Worksheets 3005, 7684, 9574, and 9575 |
| Date Signed | 2008-07-08T04:00:00 |
Appeal Letter
July 7, 2008
Mr. Thomas M. Mike Womack
Governors Authorized Representative
Mississippi Emergency Management Agency
P.O. Box 5644
Pearl, MS 39208-5644
Re: Second Appeal Jones County, PA ID 067-99067-00, Debris Removal,
FEMA-1604-DR-MS, Project Worksheets (PWs) 3005, 7684, 9574 and 9575
Dear Mr. Womack:
This is in response to your letter dated January 18, 2008, which transmitted the referenced second appeal on behalf of Jones County (Applicant). The Applicant is appealing the Department of Homeland Securitys Federal Emergency Management Agencys deobligation of $5,775,057 for unreasonable costs associated with removal and disposal of loose vegetative debris; unreasonable unit cost for topsoil to backfill tree stump holes; double billing of costs for disposal of leaners and hangers; and charges for removal and disposal of leaning trees.
As explained in the enclosed analysis, I have reviewed all information submitted with the appeal and have determined that the Applicant is eligible to receive an additional $2,069,420 for debris removal activities. Therefore, I am partially approving the appeal for $2,069,420. By copy of this letter, I request that the Regional Administrator take appropriate action to implement this determination.
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/
Carlos J. Castillo
Assistant Administrator
Disaster Assistance Directorate
Enclosure
cc: Major P. May
Regional Administrator
FEMA Region IV
Sid Melton
Director
Mississippi Transitional Recovery Office
Mr. Thomas M. Mike Womack
Governors Authorized Representative
Mississippi Emergency Management Agency
P.O. Box 5644
Pearl, MS 39208-5644
Re: Second Appeal Jones County, PA ID 067-99067-00, Debris Removal,
FEMA-1604-DR-MS, Project Worksheets (PWs) 3005, 7684, 9574 and 9575
Dear Mr. Womack:
This is in response to your letter dated January 18, 2008, which transmitted the referenced second appeal on behalf of Jones County (Applicant). The Applicant is appealing the Department of Homeland Securitys Federal Emergency Management Agencys deobligation of $5,775,057 for unreasonable costs associated with removal and disposal of loose vegetative debris; unreasonable unit cost for topsoil to backfill tree stump holes; double billing of costs for disposal of leaners and hangers; and charges for removal and disposal of leaning trees.
As explained in the enclosed analysis, I have reviewed all information submitted with the appeal and have determined that the Applicant is eligible to receive an additional $2,069,420 for debris removal activities. Therefore, I am partially approving the appeal for $2,069,420. By copy of this letter, I request that the Regional Administrator take appropriate action to implement this determination.
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/
Carlos J. Castillo
Assistant Administrator
Disaster Assistance Directorate
Enclosure
cc: Major P. May
Regional Administrator
FEMA Region IV
Sid Melton
Director
Mississippi Transitional Recovery Office
Appeal Analysis
BACKGROUND:High winds and heavy rainfall from Hurricane Katrina in August 2005 produced extensive debris in Jones County, MS. The State requested direct Federal assistance for debris removal from Jones Countys (Applicants) public rights-of-way. FEMA directed the U.S. Army Corps of Engineers (USACE) to remove the debris from public rights-of-way in Jones County. USACE began removing debris on September 22, 2005, and completed its mission in December 2005. The Applicant contracted for debris removal from private property in November 2005 and from public property in January 2006 after USACE completed its mission. FEMA prepared PW 3005 in January 2006 for debris removal from private property; PW 7684 in April 2006 for debris removal from the public rights-of-way; and PWs 9574 and 9575 in July 2006 to cover work performed by the Applicant after June 30, 2006, the initial FEMA deadline for 100 percent federal funding for debris operations.
Subsequent to initial preparation of the PWs, FEMA identified several issues that impacted PW funding. In May 2007, FEMA conducted quality assurance reviews and prepared versions of the PWs to increase reimbursement for additional eligible costs that the Applicant incurred and to reduce reimbursements for the following reasons:
1. The Applicant contracted for removal and disposal of vegetative debris from public and private property at $27 per cubic yard. The Mississippi Emergency Management Agency (MEMA) established a Benchmark Price for this item of $19.95 per cubic yard for the disaster.
2. The Applicant contracted for topsoil to backfill stump holes on private property at $50 per cubic yard. FEMA used MEMAs Benchmark Price of $19.95 per cubic yard to reduce the amount obligated in PWs 3005 and 9575. No stump holes were backfilled on the public rights-of-way (PWs 7684 and 9574).
3.
4. MEMA conducted a review of the Applicants documentation and determined that the contractor charged the Applicant twice for disposing of leaning trees (leaners) and hanging branches (hangers). FEMA made appropriate reductions for the duplication in billing.
5.
6. FEMA and MEMA staff could not validate all work for which the Applicant sought reimbursement.
7.
The Applicant requested reimbursement of $28,748,972 for all four PWs. Following the reviews and revisions discussed above, FEMA obligated $21,613,717.
First Appeal
The law firm of Brunini, Grantham, Grower & Hewes submitted a first appeal on behalf of the Applicant to MEMA on September 7, 2007. MEMA forwarded the appeal to FEMA on October 3, 2007. The amount in dispute was $7,135,255.
FEMA performed a thorough review of the PWs and concluded that the deobligation of funds in some instances was not warranted. As a result, FEMA reinstated a total of $1,360,197 to the four PWs. While FEMA approved a small increase in the unit costs for debris removal and topsoil for backfill of tree stumps, FEMA maintained that the costs the Applicant requested were unreasonable. FEMA did not accept the Applicants argument of exigent circumstances to justify higher prices, since USACE had cleared roads sufficiently for access by emergency vehicles prior to the Applicants award of the contract for debris removal from private property.
Second Appeal
The Applicant submitted its second appeal to MEMA on January 4, 2008, and MEMA forwarded it to FEMA on January 18, 2008. Brunini, Grantham, Grower & Hewes, on behalf of the Applicant, essentially restated the arguments presented in the first appeal. The second appeal argued that,
1. The Applicants procurement of services complied with all applicable regulations. Therefore, its costs are reasonable.
2. The proposed de-obligation based on the validation process is not supported by FEMAs validation reports.
3. The contractor did not submit duplicate invoices for disposing of leaners and hangers.
The Applicant also argued that FEMA should not have deobligated the costs for leaners in PW 9575, because FEMA observed that the level of validation had become acceptable by the time the work associated with this PW was performed.
The amount in dispute is $5,775,057.
DISCUSSION:
Reasonable Costs
Applicants who request reimbursement for debris removal cost from FEMA must demonstrate that they followed competitive procurement procedures pursuant to 44 CFR §13.36. There were irregularities in the Applicants procurement process affecting competitive bidding requirements for the contract to remove debris from private property. Although the Applicants procurement process was not consistent with federal procurement standards outlined in 44 CFR §13.36, the $27 per cubic yard it requested is the same cost that FEMA reimbursed neighboring Wayne County for removing debris from private property. Therefore, we have determined that the Applicants requested cost for removing debris from private property is reasonable. FEMA will reinstate $2,355,943 ($2,344,202 for PW 3005 and $11,741 for PW 9575) for this activity.
The Applicant solicited bids for removing debris from public rights-of-way on December 20, 2005. It received two bids on January 3, 2006, and awarded a contract to Dunn for $27 per cubic yard. Federal procurement standards require applicants for Federal assistance to conduct procurement transactions in a manner that promotes full and open competition. Further, the federal standards require applicants to perform a price or cost analysis for every procurement action, especially when adequate competition is lacking. A cost analysis is used to determine the reasonableness of the proposed price. The Applicant did not perform a cost analysis to determine if $27 per cubic yard was reasonable. FEMA subsequently conducted a cost analysis and determined that $27 per cubic yard was not a reasonable cost for removing debris from public rights-of-way. The cost analysis revealed that $20 per cubic yard was reasonable for this activity. Therefore, the Applicants request for reimbursement of $27 per cubic yard to remove debris from public rights-of-way is denied.
Backfilling Stump Holes
The Applicant requested reimbursement of $50 per cubic yard for soil to fill the holes created when contractors removed tree stumps of eligible damaged trees. FEMA initially determined that the price was not reasonable and reduced the Applicants reimbursement to $20 per cubic yard. FEMA subsequently reviewed debris removal contracts for 16 applicants and determined that 12 contracts included the cost of fill material in the unit costs for removing the stumps. Four contracts included a separate unit price for removing stumps that ranged from $28 to $50, for an average of $40 per cubic yard. FEMA approved the average price of $40 per cubic yard on first appeal. We have reviewed all information submitted with the appeal and have determined that $50 per cubic yard is a reasonable price. Therefore, FEMA will reinstate $762,633 ($753,603 for PW 3005 and $9,030 for PW 9575) in eligible costs.
Leaners
The Applicant requested reimbursement of $4,481,635 to remove 15,196 dangerous leaning trees of various sizes from private property. FEMA conducted several validations to verify the number of leaning trees that the Applicant claimed. FEMA guidance allowed for 100 percent reimbursement of claimed costs if FEMA validated 75 percent of a selected sample of claimed trees. On first appeal, FEMA determined that it selected a 15.8 percent (2,394 of 15,196) sample to validate the number of leaning trees claimed. FEMA validated 53 percent of the sample. To maximize reimbursement to the Applicant, it appears that FEMA removed trees with diameters of 2-12 inches from the 41 with diameters greater than 12 inches. It denied $1,069,500 that the Applicant requested for removing 7,130 leaning trees with diameters of 2 to 12 inches.
We have reviewed all information submitted with the appeal and have determined that there was no compelling reason to remove the 2 to 12-inch diameter trees from the validation sample. By including these trees in the validation sample, FEMA was able to validate 53 percent of the sample. Accordingly, the Applicant is eligible to receive only 53 percent of cost claimed for this activity. This reduces the eligible amount for removing leaning trees from $3,442,845 approved in the first appeal to $2,393,689. Therefore, we will reduce the reimbursement for this activity by $1,049,156.
Double Billing
MEMAs Quality Assurance staff reviewed the Applicants documentation and determined that Dunn billed the Applicant twice for disposing of leaners and hangers in December 2005 and January 2006. Dunns unit cost to remove leaners and hangers included disposal. However, it appeared that Dunn also charged the Applicant $27 per cubic yard to pick up and dispose of the felled leaners and hangers. Based on MEMAs findings, FEMA disallowed $1,010,167 in debris removal costs.
In the first appeal, MEMA acknowledged as plausible the Applicants explanation that Dunn did not bill the Applicant twice for disposal of leaners and hangers. FEMA agreed with the Applicants arguments that the reduction should have been based on a unit cost of $19.95 per cubic yard instead of $27 per cubic yard, and that FEMA should not have applied a reduction for debris removed after February 2006. Therefore, FEMA reinstated $547,736. However, FEMA maintained that there were duplicate billings for the disposal of leaners and hangers prior to February 2006.
The Applicant reiterates in the second appeal that FEMA has no basis for de-obligating costs for duplicate billing and it should not rely of MEMAs initial analysis of the issue. MEMA stated that the Applicants explanation for what appeared to be a duplication of billing seemed plausible; however, it did not indicate that it performed another review of the documentation. MEMAs initial review of the Applicants documentation clearly indicated that there were duplicate billings. The Applicant did not submit any compelling documentation to show that the MEMAs initial analysis was incorrect. Therefore, there is no basis for reinstating the questioned costs.
CONCLUSION:
FEMA has determined that the Applicant is eligible to receive an additional $2,355,943 for debris removal from private property based on a rate of $27 per cubic yard and an additional $762,633 to reflect an increase in the unit costs for topsoil backfill of tree stump holes from $20 per cubic yard to $50 per cubic yard. However, FEMA has determined that the eligible cost for removing leaning trees from private property will be reduced by $1,049,156 because FEMA validated only 53 percent of claimed leaning trees on private property. Therefore, FEMA partially approves the appeal for $2,069,420.