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Citation:         FEMA-1771-DR-IL, Henderson County, Emergency Levee Repairs and Dewatering, Project Worksheet (PW) 1524 v2

Cross-

Reference:      Documentation; Reasonable Cost

Summary:       A 2,000 foot breach in the Henderson County levee occurred on July 17, 2008, flooding areas of Henderson County, the Village of Gulfport, and portions of U.S. Route 34.  The Applicant opted to enter into a sole-source, non-competitive, time and materials contract with a private contractor (JESCO) that billed the Applicant for dewatering services totaling over $29 million.  The U.S. Army Corp of Engineers (USACE) was subsequently mission assigned to continue the dewatering after the Applicant terminated the JESCO contract. 

                                FEMA requested that the Applicant provide a detailed Scope of Work (SOW) and cost estimates in order to prepare a project closeout PW using actual costs.  The contract did not have a clearly defined SOW and many of the costs submitted by JESCO were unreasonable and not supported by adequate documentation.  FEMA developed reasonable costs by using RS Means, USACE hydrological data, and local retail merchants’ prices, and approved $2,628,525 for the cost for the dewatering project.  The Applicant submitted additional documentation with final project costs totaling $13,208,692.  FEMA approved an additional $4,295,777 in PW 1524 v1.  Following a FEMA quality control review of the Applicant’s documentation, it was determined there was only adequate and verifiable documentation to support $2,721,712 in total eligible costs.  As a result, $4,202,591 was deobligated for costs not supported by documentation and PW 1524 v2 was obligated for $2,721,712.

In its first appeal dated October 1, 2010, the Applicant argues that the sole-source contract was valid and that labor and equipments rates were reasonable.  The Deputy Regional Administrator denied the first appeal on January 12, 2011, citing 44 CFR §13.42, Retention and access requirements for records, stating that the applicant must retain the proper support documentation that provides evidence that work was completed in accordance with those specified in the project worksheet, and that the Applicant did not submit any new information in support of its appeal.  The Applicant’s second appeal requests reimbursement of $25,890,305 in costs for emergency levee repairs and dewatering of flooded areas in Henderson County and the City of Gulfport

Issue:              Did the Applicant provide sufficient documentation to support its claim for reimbursement of actual costs incurred?

Finding:          No.

Rationale:      OMB Circular A-87 Section (C), (e) and (j) Basic Guidelines; OMB Circular A-87

                        Section (C)(2), Reasonable costs; 44 CFR §13.36, (b)(9), Procurement, 44 CFR

§13.22; DAP9525.12, Disposition of Equipment, Supplies and Salvageable Materials.