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Alhambra Health Center
Appeal Brief
Appeal Letter
Citation: FEMA-1008-DR-CA, Los Angeles County Department of Health Services, Alhambra Health Center, DSR 60590
Cross-reference: Grant Acceleration Program
Summary: Following the Northridge earthquake on January 17, 1994, the Los Angeles County Department of Health Services (Applicant) accepted a Public Assistance Grant Acceleration Program (GAP) offer for $182,785 to repair the Alhambra Health Center. Final eligible costs were funded on Large Project Closeout DSR 60590 for $1,823,060. On April 4, 2007, the Applicant appealed FEMAs closeout decision to treat $49,195 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 $57,066 GAP cost overrun ($49,195 in hard costs plus $7,871, the 16 percent allowance for project management soft costs) that could be offset by under-runs 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 February 26, 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 April 17, 2008, the Applicant filed its second appeal. The Applicant maintained that the $49,195 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 $49,195 in construction administration services a hard cost therefore, allowing $57,066 as eligible to offset with GAP under-run funds?
Findings: No.
Rationale: Instructional Guide for Cost Estimating Format (CEF)
Appeal Brief
| Disaster | FEMA-1008-DR |
| Applicant | Los Angeles Department of Health Services Alahambra Health Services |
| Appeal Type | Second |
| PA ID# | 037-91025-00 |
| PW ID# | PW 60590 |
| Date Signed | 2009-08-13T04:00:00 |
Appeal Letter
August 13, 2009
Frank McCarton
Governors Authorized Representative
California Emergency Management Agency
Response and Recovery Division
3650 Schriever Avenue
Mather, California 95655
Re: Second AppealLos Angeles County Department of Health Services, PA ID 037-91025-00, Alhambra Health Center, FEMA-1008-DR-CA, Damage Survey Report (DSR) 60590
Dear Mr. McCarton:
This letter is in response to your letter that the FEMA Regional Administrator received on June 16, 2008, which transmitted the referenced second appeal on behalf of the Los Angeles County Department of Health Services (Applicant). The Applicant is requesting that the Department of Homeland Securitys Federal Emergency Management Agency (FEMA) reconsider its treatment of costs for construction administration for the Alhambra Health Center as project management soft costs.Following the Northridge earthquake on January 17, 1994, the Applicant accepted a Grant Acceleration Program (GAP) offer of $182,785 to repair the Alhambra Health Center plus $178,700 for relocation costs. The Applicant subsequently transferred $1,359,388 in GAP funds to the project. At closeout, the Applicant claimed $2,037,141. FEMA determined final eligible costs to be $1,823,060. The Deputy Regional Administrator approved an additional $12,320 on first appeal on February 26, 2008.
The Applicant submitted a second appeal on April 17, 2008. The Applicant argued that FEMA mischaracterized $49,195 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 $57,066 ($49,195 in hard costs plus $7,871, the 16 percent allowance for project management soft costs attributable to the increase in hard costs). The Applicant submitted a copy of the Alhambra Health Centers 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 approved GAP funding for the Alhambra Health Center contained a limit on project management costs (soft costs). In 1999, FEMA approved construction administration as a project management cost in the GAP settlement offer pursuant to the Northridge GAP Cost Estimating Format (CEF) Guide. In 2000, FEMA and Los Angeles County agreed to caps on the Countys claims for project management costs because FEMA determined that the Countys initial claims for project management costs were excessive. FEMA did not place caps on construction costs (hard costs). For the Alhambra Health Center project, the Applicant exceeded the approved project management costs and claimed construction administration costs as hard costs at closeout. However, the Applicant did not submit a description of the specific tasks that it performed under construction administration that would justify their treatment as hard costs. In absence of documentation that the construction administration costs were hard costs, it is appropriate, and consistent with the GAP CEF Guide, to treat these costs as project management costs. It is also appropriate to address these costs during closeout in the same manner they were treated in the GAP settlement offer. Therefore, FEMA considers the $49,195 in construction administration costs to be excess project management costs. These costs are not eligible for reimbursement.
I have reviewed all information submitted with the second appeal and have determined that questioned costs are appropriately characterized as project management soft costs pursuant to GAP guidelines and the documentation submitted. Therefore, 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, Appeals.
Sincerely,
/s/
Elizabeth A. Zimmerman
Assistant Administrator
Disaster Assistance Directorate
cc: Nancy Ward
Regional Administrator
FEMA Region IX
Frank McCarton
Governors Authorized Representative
California Emergency Management Agency
Response and Recovery Division
3650 Schriever Avenue
Mather, California 95655
Re: Second AppealLos Angeles County Department of Health Services, PA ID 037-91025-00, Alhambra Health Center, FEMA-1008-DR-CA, Damage Survey Report (DSR) 60590
Dear Mr. McCarton:
This letter is in response to your letter that the FEMA Regional Administrator received on June 16, 2008, which transmitted the referenced second appeal on behalf of the Los Angeles County Department of Health Services (Applicant). The Applicant is requesting that the Department of Homeland Securitys Federal Emergency Management Agency (FEMA) reconsider its treatment of costs for construction administration for the Alhambra Health Center as project management soft costs.Following the Northridge earthquake on January 17, 1994, the Applicant accepted a Grant Acceleration Program (GAP) offer of $182,785 to repair the Alhambra Health Center plus $178,700 for relocation costs. The Applicant subsequently transferred $1,359,388 in GAP funds to the project. At closeout, the Applicant claimed $2,037,141. FEMA determined final eligible costs to be $1,823,060. The Deputy Regional Administrator approved an additional $12,320 on first appeal on February 26, 2008.
The Applicant submitted a second appeal on April 17, 2008. The Applicant argued that FEMA mischaracterized $49,195 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 $57,066 ($49,195 in hard costs plus $7,871, the 16 percent allowance for project management soft costs attributable to the increase in hard costs). The Applicant submitted a copy of the Alhambra Health Centers 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 approved GAP funding for the Alhambra Health Center contained a limit on project management costs (soft costs). In 1999, FEMA approved construction administration as a project management cost in the GAP settlement offer pursuant to the Northridge GAP Cost Estimating Format (CEF) Guide. In 2000, FEMA and Los Angeles County agreed to caps on the Countys claims for project management costs because FEMA determined that the Countys initial claims for project management costs were excessive. FEMA did not place caps on construction costs (hard costs). For the Alhambra Health Center project, the Applicant exceeded the approved project management costs and claimed construction administration costs as hard costs at closeout. However, the Applicant did not submit a description of the specific tasks that it performed under construction administration that would justify their treatment as hard costs. In absence of documentation that the construction administration costs were hard costs, it is appropriate, and consistent with the GAP CEF Guide, to treat these costs as project management costs. It is also appropriate to address these costs during closeout in the same manner they were treated in the GAP settlement offer. Therefore, FEMA considers the $49,195 in construction administration costs to be excess project management costs. These costs are not eligible for reimbursement.
I have reviewed all information submitted with the second appeal and have determined that questioned costs are appropriately characterized as project management soft costs pursuant to GAP guidelines and the documentation submitted. Therefore, 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, Appeals.
Sincerely,
/s/
Elizabeth A. Zimmerman
Assistant Administrator
Disaster Assistance Directorate
cc: Nancy Ward
Regional Administrator
FEMA Region IX