PA ID# 113-12000-00; City of Cedar Rapids
PW ID# 1404; Direct Administrative Costs
Conclusion: The Applicant did not demonstrate that the costs incurred for contracted labor at $285 per hour were reasonable for grant administration work. Furthermore, the Applicant failed to provide sufficiently detailed and descriptive documentation to demonstrate that the previously funded contracted DAC tasks/activities, project management costs, and engineering costs are eligible or reasonable.
Heavy rainfall beginning in May 2008 resulted in severe flooding that caused extensive damage in the City of Cedar Rapids (Applicant). FEMA prepared PW 1404 for $733,605.28 for estimated costs to perform emergency and permanent work, as well as hazard mitigation, at the Morgan Creek lift station. Included in the project costs were $4,014.72 in Direct Administrative Costs (DAC). Subsequent to the development and obligation of PW 1404, the Applicant discovered that items of emergency work identified in PW 1404 were completed under PW 7305 – Site 9. As a result of the work performed in PW 7305, the lift station returned to its operational status and the estimated permanent work and hazard mitigation proposed in PW 1404 was deemed unnecessary. The Applicant requested closeout and provided the documentation to support its claims for the work performed in PW 1404. After the Iowa Homeland Security and Emergency Management Division (Grantee) reviewed the Applicant’s documentation of actual costs, FEMA closed out the PW and reduced the total eligible costs to $42,054.07 (de-obligation of $691,551.21) based on the Grantee’s recommendation. In addition, FEMA reduced the eligible DAC ($2,174.65) claimed by the Applicant’s contractor. The Applicant requested an additional $1,288.30 in DAC; however, FEMA determined that the submitted documentation did not support the eligibility of $1,288.30 in DAC associated with a consultant’s hourly rate that exceeded $155. In the first appeal, the Applicant asserted that the DAC was eligible for reimbursement. In the appeal response, the Regional Administrator noted that the Applicant did not justify the hourly rate above $155 and determined that the claim for $1,288.30 was ineligible. In the second appeal, the Applicant argues that the consultant’s project manager rate was appropriate by virtue of the time required to review and supervise its lower level employees, reasonable by the Applicant’s adherence to proper contract procurement protocols, and comparable to another consulting contractor’s rates employed by the Grantee.
Disaster Assistance Policy (DAP) 9525.9, Section 324 Management Costs and Direct Administrative Costs dated March 12, 2008.
Disaster Assistance Policy (DAP) 9525.9, Section 324 Management Costs and Direct Administrative Costs, Section VII(D)(1).
DAC include costs that can be tracked, charged and accounted for directly to a specific project, such as staff time to complete field inspection and preparation of a PW. Direct costs are limited to actual reasonable costs incurred for a specific project. Such costs will be considered project costs.