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Van Nuys Superior Court Building

Appeal Brief Appeal Letter

Appeal Brief

DisasterFEMA-1008-DR
ApplicantLos Angeles County Courts
Appeal TypeSecond
PA ID#037-91032-00
PW ID#DSR 60596
Date Signed2008-11-04T05:00:00
Citation: FEMA-1008-DR-CA, Los Angeles County Courts, Van Nuys Superior Court Building, Damage Survey Report (DSR) 60596

Cross-reference: Project Management Costs

Summary: Following the Northridge earthquake on January 17, 1994, Los Angeles County Courts (Applicant) accepted a Public Assistance Grant Acceleration Program (GAP) offer for $7,170,394 to repair its courthouse. Final eligible costs were funded on Large Project Closeout DSR 60596 for $9,204,245. On June 29, 2007, the Applicant appealed FEMA’s closeout decision to treat $197,108 in costs for Architecture and Engineering (A&E) construction administration services 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). Re-characterization of the costs would result in a $228,645 GAP cost overrun ($197,108 in hard costs plus $31,537, the 16 percent 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), 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 first appeal on January 29, 2008, 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 March 27, 2008, the Applicant filed its second appeal. The Applicant maintained that the $197,108 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 $197,108 in construction administration services a hard cost and, therefore the $228,645 is eligible for offset with GAP underrun funds?
Findings: No.

Rationale: 44 Code of Federal Regulations §206.206 (a); Instructional Guide for Cost Estimating Format (CEF)

Appeal Letter

November 4, 2008

Frank McCarton
Governor’s Authorized Representative
Governor’s Office of Emergency Services
Response and Recovery Division
3650 Schriever Avenue
Mather, California 95655

Re: Second Appeal–Los Angeles County Courts, PA ID 037-91032-00, Van Nuys Superior Court Building, FEMA-1008-DR-CA, Damage Survey Report (DSR) 60596

Dear Mr. McCarton:

This letter is in response to your letter dated June 3, 2008, which transmitted the referenced second appeal on behalf of Los Angeles County Courts (Applicant). The Applicant is requesting that the Department of Homeland Security’s Federal Emergency Management Agency (FEMA) reconsider its decision that costs for construction administration for the Van Nuys Superior Court Building (Courthouse) are- project management soft costs.Following the Northridge earthquake on January 17, 1994, the Applicant accepted a Grant Acceleration Program (GAP) offer for $7,170,394 to repair the Courthouse. Final eligible costs were funded on Large Project Closeout DSR 60596 for $9,204,245.On June 29, 2007, the Applicant appealed FEMA’s closeout decision to deny its request to treat $197,108 in costs as hard costs for Architecture and Engineering (A&E) construction administration services. The Applicant argued that FEMA mischaracterized the $197,108 as project management soft costs when the costs were directly related to construction design and engineering services (hard costs). The total amount in dispute was $228,645 ($197,108 in hard costs plus $31,537, the 16 percent allowance for project management soft costs attributable to the increase in hard costs) that could be offset by underruns from another eligible GAP project. The Deputy Regional Administrator denied the appeal on January 29, 2008, because pursuant to the Instructional Guide for Cost Estimating Format (CEF) and the documentation submitted, costs associated with construction administration and bid advertising were project management (soft) costs and not hard costs.The Applicant filed its second appeal on March 27, 2008. The Applicant maintained that the $197,108 in costs should not be categorized as project management (soft costs), but treated as eligible hard costs associated with the design and engineering of the project. The Applicant’s support documents included a copy of the Courthouse’s project closeout worksheet and additional excerpts from the A&E Services Agreement. The closeout worksheet lists categories
of work with corresponding vendor names, job invoice numbers and service fees. However, the Applicant did not provide vendor invoices that identify the actual A&E (hard costs) services performed and the fees associated with those services to support its claim.The Applicant also cites guidance from the CEF Guide Part H.2, Architecture & Engineering Design Contact Costs, which states that certain expenses associated with A&E design contract costs may be classified as hard costs. The “certain” expenses include work on the actual design and engineering of a project, i.e., preparation of engineering calculations, architectural and/or engineering plans or drawings that are necessary to implement the eligible repairs. The Applicant failed to show that the A&E costs listed in its second appeal are the same A&E costs it cites from the CEF guide. I have reviewed the information submitted with the appeal and have determined that the Deputy Regional Administrator’s decision in the first appeal is consistent with Public Assistance regulations and policy. Accordingly, I am denying the second appeal. Please inform the Applicant of my decision. This determination constitutes the final decision on this matter pursuant to 44 CFR §206.206.

Sincerely,
/s/
Carlos J. Castillo
Assistant Administrator
Disaster Assistance Directorate

cc: Karen Armes
Acting Regional Administrator
FEMA Region IX