Facts: Following the Northridge Earthquake, FEMA and the Office of Emergency Services (OES) prepared DSR 73331 in the amount of $19,500 for the City of Santa Clarita for professional accounting services relating to the recovery process.
On October 20, 1994, OES submitted a request, on behalf of the City, for a supplement to DSR 73331 in the amount of $24,151, for an extension of accounting services, due to the escalation of disaster costs and the increase in the number of projects. FEMA informed OES on November 13, 1995, that the request was denied, as the above costs were covered under the subgrantee's administrative allowance and that DSR 73331, which was inadvertently approved by FEMA, would be deobligated. Accordingly, DSR 47937 was prepared for that purpose.
The City submitted its first appeal on January 29, 1996, and claimed that the work performed by the extra hire accountants was project specific and not of a general administrative nature. The Disaster Recovery Manager denied the first appeal on September 25, 1996, according to 44 CFR 206.228 (2)(ii), and Stafford Act section 406(f)(1).
The subgrantee, in their second appeal dated December 31, 1996, reiterated that the work performed by the extra hire accountants was project specific relating to permanent restoration and was not of a general administrative nature.
Issue: Does the work performed by the extra hire accountants covered by the administrative allowance already provided to the subgrantee?
Rationale: According to 44 CFR 206.228(a)(2)(ii) and section 406(f) of the Stafford Act, all grant administration expenses for a subgrantee that could be allowed under OMB Circular A-87 are replaced by an allowance based on a percentage of the cost of eligible projects.