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Second Appeal Summary
PA ID# 000-92070; Nevada Division of Forestry
DSR ID# 84888, 19475; FEMA OIG Audit W-19-01
Citation: FEMA-1153-DR-NV; Nevada Division of Forestry (NDF);
DSRs 84888 and 19475
Cross-reference: Audit, Debris Removal
Summary: The NDF was granted $1.9 million in Public Assistance funding for debris removal during the period from December 20, 1996 through April 4, 1997. The NDF is requesting reconsideration of $236,120 in funding that was deobligated based on the Office of Inspector General (OIG) Report W-19-01, findings A and B, and consideration of additional costs of $38,882 in under-billed labor costs. The OIG issued audit report W-19-01 which found $256,949 in overall questionable costs related to DSR 84888. As it pertains to this appeal, finding A of the audit cited $192,987 in overstated inmate labor costs, and finding B of the audit cited $38,133 in overstated Force Account Labor costs. The NDF first appeal letter dated August 16, 2001, argued that the methodology for determining the minimum wage rates for inmate labor and average overtime rates was allowable under Office of Management and Budget (OMB) Circular A-87 regulations for reasonable, allowable, and allocable costs. FEMA denied the appeal on January 17, 2002, citing that the additional unsupported costs resulted in a surplus, and were ineligible under 44 CFR § 13.22 (2), and 206.223 (1). Subsequently, on April 23, 2002, the State submitted a second appeal based on a request from the NDF. On April 3, 2003, the region forwarded the NDF amended second appeal dated April 1, 2003. The amended second appeal claims that $192,987 of disallowed costs under finding A of the audit represented not only the actual cost of the inmate labor, but took into consideration all of the other costs associated with providing a ready, able outfitted workforce for responding to emergencies. Furthermore, the NDF determined that the true cost per hour of work for each inmate was actually $4.67 per hour, $.042 cents higher than the cost submitted to FEMA. The NDF proposes, that the disallowance of $197,987 for finding A be reversed and the proposed disallowance of $38,133 for finding B be offset against the under-billed costs of $38,882. NDF submits that their claim is allowable under 44 CFR § 13.20 (b)(5), Allowable Costs, and OMB Circular A-87 regulations of reasonable, allowable, and allocable costs.
Issues: Did the applicant submit documentation that supports its assertion that its cost rates were allowable, or reasonable and that it under-billed FEMA?
Rationale: 44 CFR § 13.20 (b)(1), Section 406 (a)(2)(b) of the Stafford Act, and 44 CFR § 206.223 (a)(1).