Appeal Summary | Appeal Letter | Back
Second Appeal Summary
PA ID# 037-91025; Los Angeles County Deprtment of Health Services
DSR ID# DSR 98116 and 60503; San Fernando Health Center
Citation:FEMA-1008-DR-CA, Los Angeles County Department of health Services, Damage Survey Report (DSR) 98116 and 60503, San Fernando Health Center.Summary:
Following the Northridge earthquake on January 17, 1994, Los Angeles County Department of Health Services (Applicant) accepted a Public Assistance Grant Acceleration Program (GAP) offer in the amount of $1,785,334 to replace the San Fernando Health Center under DSR 98116 on September 14, 1999. FEMA, through subsequent funding adjustments and GAP underrun transfers, increased that amount to $4,118,945 under DSR 60503.
On February 6, 2007, the Applicant appealed FEMAs closeout decision to treat $42,835 in costs, $41,489 for Architecture and Engineering (A&E) construction administration services and $1,346 bid advertisement expenses as project management costs. The Applicant argued that FEMA mischaracterized the expenses as project management soft costs when instead the costs were directly related to construction design and engineering services (hard costs). Recharacterization of the costs would result in a $49,689 GAP cost overrun ($42,835 in hard costs plus $6,854, the 16 percent cent allowance for project management soft costs) that could be offset by underruns from another GAP project. To support its appeal, the Applicant submitted excerpts from the Instructional Guide for Cost Estimating Format (CEF) Guide,
excerpts from the A&E Services Agreement, a bid advertisement invoice, a copy of the Project Completion and Certification Report, and copies of the Project Closeout Reports. FEMA denied the appeal on July 27, 2007, because consistent with the GAP guidelines and the documentation submitted, the costs associated with construction administration services is a project management (soft) cost and not a hard cost.
On October 16, 2007, the Applicant filed its second appeal, reducing the requested amount to the $48,127 associated with the costs for construction administration. The Applicant maintained that the $41,489 in costs should not be categorized as project management soft costs, but treated as hard costs associated with the actual design and engineering of the project. Support documents included a breakdown of A&E service fees and excerpts from the A&E Services Agreement with the Applicant.Issues:
Is the $41,489 in construction administration services a hard cost and, therefore is the $48,127 eligible for offset with GAP underrun funds? Findings:
44 CFR §206.206 (a); Instructional Guide for Cost Estimating Format (CEF)