Force Account Equipment Costs

Appeal Brief

Disaster	FEMA-1607-DR
Applicant	City of Lake Charles
Appeal Type	Second
PA ID#	019-41155-00
PW ID#	4399
Date Signed	2009-09-09T04:00:00

Citation:

FEMA-1607-DR-LA, City of Lake Charles, Force Account Equipment Costs, PW 4399

Cross-reference:

Eligible Costs, Emergency Protective Measures

Summary:

As a result of Hurricane Rita, thousands of residents were displaced and sought shelter at the Lake Charles Civic Center, a facility owned by the City of Lake Charles (Applicant). The Civic Center was converted into a shelter during the period September 24, 2005, to November 13, 2005. On
October 28, 2006, FEMA prepared PW 4399 to reimburse force account kitchen equipment usage in food preparation for evacuees for $28,897. The Regional Administrator determined that the scope of work was ineligible. The Regional Administrator cited that “the applicant owned the facility and did not incur any actual lease expenditures, nor any out of pocket expenses in the sheltering operation.” Additionally, when shelters are operated in government-owned facilities but managed by a volunteer agency, FEMA regulations allows, in such cases, only actual expenses incurred by the eligible applicant, such as supplies or cleanup labor. The state argues that considerable cost to the facility’s kitchen equipment during the sheltering operation was incurred in the form of accelerated usage and depreciation. Since the Civic Center is owned by the Applicant, there were no actual expenses incurred because the shelter facility was managed by the American Red Cross. Additionally, any expenses incurred in facility operation costs, such as power, water and telephone, could be eligible; this was brought to the Applicant’s attention however, none of these types of costs are included in the Applicant’s request.

Issues:

Is the cost for the use of the kitchen equipment (as force account equipment) eligible under FEMA guidelines?

Findings:

No. FEMA’s guidance clearly states that the costs are eligible only when an Applicant-owned facility is used for the provision of mass care and actual expenses are incurred.

Rationale:

Public Assistance Guide (FEMA 322, October 1999) page 48. Disaster Specific Guidance (DSG) 2, “Eligible Costs for Emergency Sheltering Declarations Hurricane Katrina & Rita,” dated September 9, 2005

Appeal Letter

September 9, 2009

Colonel Thomas Kirkpatrick
State Coordinating Officer
Governor’s Office of Homeland Security
and Emergency Preparedness
7667 Independence Blvd.

Baton Rouge, LA 70806

Re: Second Appeal–FEMA-1607-DR-LA, City of Lake Charles, 019-41155-00, Force Account Equipment Costs, Project Worksheet (PW) 4399

Dear Colonel Kirkpatrick:

This is in response to your letter dated February 28, 2008, which transmitted the referenced second appeal on behalf of the City of Lake Charles (Applicant). The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $28,897 in equipment costs related to the operation of a shelter at Lake Charles Civic Center.

On September 23, 2005, Hurricane Rita caused extensive damage resulting in the mandatory evacuation of several Louisiana parishes. The Applicant-owned Lake Charles Civic Center was used as a shelter during and following Hurricane Rita. The American Red Cross staffed the shelter from September 24, 2005, through November 13, 2005. On October 28, 2006, FEMA prepared PW 4399 to reimburse force account kitchen equipment usage in food preparation for evacuees for $28,897. The Applicant estimates the kitchen was used for 17 hours a day from 5:00 a.m. until 10:00 p.m. at an hourly rate of $33.33 (based on kitchen rental rate found on the internet), for a total of $28,897.

The Applicant submitted its first appeal on April 5, 2007. It cited 44 CFR § 206.228(a)(1), Allowable cost, Eligible direct costs – Applicant-owned equipment, which states that eligible direct costs include “reimbursement for ownership and operation costs of applicant-owned equipment used to perform eligible work.” It stated that the “expenditures were necessary emergency protective measures” and it is within FEMA’s authority to reimburse for the use of applicant-owned equipment. The Regional Administrator determined that the scope of work was ineligible as “the applicant owned the facility and did not incur any actual lease expenditures, nor any out of pocket expenses in the sheltering operations.” When shelters are operated in government-owned facilities but managed by a volunteer agency, FEMA regulations allow, in such cases, only actual expenses incurred by the eligible applicant, such as supplies or cleanup labor.
The Applicant filed a second appeal on January 30, 2008, reiterating the arguments from the first appeal. The Applicant in its appeal cites 44 CFR §206.225(a), Emergency work, General, and 44 CFR §206.228(a)(1), Allowable cost, Eligible direct costs – Applicant-owned equipment, as the rationale for reimbursement for ownership and operation costs. Specifically, the Applicant is claiming expenses related to the use of its refrigerators/freezers, ovens, food warmer carts, ice machines and coffee makers. It contends that “intensive use of such equipment would result in considerable deterioration and depreciation of these major appliances compared to reasonably expected normal use during the City’s regular business operations.”
Emergency Support Function #6 Annex to the National Response Plan defines mass care to include sheltering, feeding operations, emergency first aid, bulk distribution of emergency items, and collecting and providing information on victims to family members. FEMA guidance has been clear and consistent in terms of costs related to the provision of mass care. When voluntary agencies use Applicant-owned facilities to provide mass care, including feeding and sheltering, actual expenses incurred by the eligible Applicant may be reimbursed. In this case, the Applicant is not claiming actual expenses incurred, rather what amounts to a rental charge for the use of its kitchen facility. The kitchen and its appliances are an integral part of the facility and are necessary for the provision of feeding operations. “Equipment rates” for the use of the kitchen are not reimbursable.

I have reviewed the information submitted with the appeal and have determined that the 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 is the final decision on this matter pursuant to 44 CFR §206.206, Appeals.

Sincerely,
/s/
Elizabeth A. Zimmerman,
Assistant Administrator
Disaster Assistance Directorate

cc: Gary Jones
Acting Regional Administrator
FEMA Region VI

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