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Sewer Lift Station Repairs

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster1981-DR-ND
ApplicantCity of Minot
Appeal TypeSecond
PA ID#101-53380-00
PW ID#4694
Date Signed2014-01-07T00:00:00

CConclusion: The contracted electrical repair work was necessary to restore the City of Minot’s (Applicant) lift station and the Applicant’s bid cost was rrreasonable.  However, the Applicant failed to demonstrate that its hazard mitigation proposal was cost-effective and did not substantiate that the   cclaimed costs for engineering and design services were tied to the approved scope of work.

Summary Paragraph           

The Applicant’s Roosevelt Lift Station was damaged during a 2011 flood event.  FEMA prepared PW 4694 for $14,421 for the permanent repairs and a hazard mitigation proposal (HMP). The Applicant submitted a first appeal, stating that the funding approved was for emergency repair and did not include the cost of permanent repairs ($119,300).  The Applicant also requested $27,000 for the proposed HMP and $17,054 for engineering and design.  FEMA partially approved the appeal, providing an additional $25,820 for the estimated cost of permanent repair, the HMP, and engineering and design services, but denied the Applicant’s request for additional hazard mitigation funding because the Applicant did not break down the HMP lump-sum cost estimate.  The Applicant’s second appeal asserted that the plans provided to FEMA included a detailed description of the permanent electrical repairs and that the PW did not encompass all of the necessary repair work.  The Applicant also asserted that FEMA underestimated project costs; the HMP is cost effective and the bid cost appropriate; and that its design engineer evenly divided actual costs for work performed for multiple facilities at each impacted ones.

Authorities Discussed

  • FEMA Recovery Policy RP9526.1, Hazard Mitigation Funding Under Section 406 (Stafford Act)
  • Cost Estimating Format (CEF) for Large Projects Instructional Guide V2.1, September 2009

Headnotes

  • The contracted electrical repair work was necessary to restore the Roosevelt Lift Station and the bid cost was reasonable.
    • A technical specialist reviewed the documented damage description and the repair work detailed in the bid documents and determined that the electrical work detailed in the plans and specifications was necessary to repair the lift station and that the $119,300 bid cost for that work was reasonable.  Therefore, the electrical repair work is eligible and reasonable, actual costs to perform that work are eligible for funding.
  • Under FEMA Recovery Policy RP9526.1, Hazard Mitigation Funding Under Section 406 (Stafford Act), HMPs must be cost effective to be eligible.
    • The Applicant failed to provide a benefit-cost analysis supporting its claim the HMP was cost-effective.
  • Cost Estimating Format (CEF) for Large Projects Instructional Guide V2.1, September 2009.
    • CEF considers additional factors for services than just those covered by the Engineering and Design Services graph (Curves A and B) and is a more accurate method of estimating costs for such services than the graph alone.
    • The Applicant failed to demonstrate its claimed costs for engineering and design services were directly tied to the approved scope of work. 


 

Appeal Letter

January 7, 2014

Major General David Sprynczynatyk
Director
North Dakota Department of Emergency Services
PO Box 5511
Bismarck, North Dakota 58506-5511

Re:  Second Appeal – City of Minot, PA ID 101-53380-00, Sewer Lift Station Repairs, FEMA-1981-DR-ND, Project Worksheets (PW) 4694

Dear General Sprynczynatyk:

This is in response to your letter dated February 7, 2013, which transmitted the referenced second appeal on behalf of the City of Minot (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of a portion of the funding ($123,113) requested for repairs to the Roosevelt Lift Station.

As explained in the enclosed analysis, I have determined that the bid cost for the electrical repairs is reasonable, and the contracted electrical repair work for the Roosevelt Lift station was necessary to restore the facility.  Therefore, the electrical repair work as detailed in the plans and specifications and the costs to perform that work is eligible for funding.  In assessing the reasonableness of the actual costs presented at close out, FEMA will consider the bid cost of $119,300.  

With regard to the $27,000 Hazard Mitigation Proposal (HMP), the Applicant has not demonstrated it to be cost effective based on the submitted bid costs.  Consequently, it is not eligible for reimbursement.  Should the Applicant demonstrate at close out based on the actual costs of the repair and the HMP is cost effective, i.e. within the 15 percent allowed in accordance with FEMA Recovery Policy RP 9526.1, Hazard Mitigation Funding Under Section 406 (Stafford Act), then FEMA will reconsider its eligibility for reimbursement.

As to the Applicant’s request for $17,054 for the actual costs for engineering and design services, the amount claimed is reasonable based on the eligible work performed.  However, to be reimbursed the Applicant must provide documentation at project closeout that clearly demonstrates the claimed amount is directly related Roosevelt Lift Station repairs. 

Accordingly, I am partially approving this appeal. By copy of this letter, I am requesting the Regional Administrator take appropriate action to implement this determination.

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/

Deborah Ingram
Assistant Administrator
Recovery Directorate

Enclosure

cc: Doug Gore
     Acting Regional Administrator
     FEMA Region VIII

Appeal Analysis

Background

During the flooding event that occurred from February 14, 2011 to July 20, 2011, numerous sanitary sewer and storm water lift stations owned and operated by the City of Minot (Applicant) were inundated and damaged.  Specifically, the Roosevelt Lift Station was flooded to a depth of five feet, damaging a submersible sewage pump and the electrical feed line for it.  FEMA prepared Project Worksheet (PW) 4694 for $14,421 for the permanent repairs to the damaged pump and electrical components and a hazard mitigation proposal (HMP) to elevate the pump control panels by constructing an elevated platform.

First Appeal

The Applicant submitted a first appeal of the funding provided in PW 4694 stating that the funding approved was for emergency repair and did not include the $119,300 cost of permanent repairs. In its appeal, the Applicant also requested $27,000 for the proposed HMP and $17,054 for engineering and design services.   

On October 31, 2012, the FEMA Region VIII Regional Administrator partially approved the appeal providing an additional $25,820 for permanent repairs and engineering and design services.  The Regional Administrator first requested additional information regarding the Applicant’s bid process, the bids received, and a detailed description of the permanent repairs.  The Applicant did not provide all of the requested information.  FEMA reviewed the damage description in PW 4333, which FEMA prepared for emergency repairs to the Roosevelt Lift Station, and developed a cost estimate for repairs to documented damage to the lift station for $20,420.  Further, FEMA used its Engineering and Design Services of Average Complexity graph to estimate $5,400 for engineering and design services because the Applicant’s requested amount was based on a percentage of its overall engineering and design costs for all damaged lift station repairs.  FEMA denied the Applicant’s request for additional hazard mitigation funding because the Applicant provided no details on what equipment would be elevated and no breakdown of the lump sum cost estimate for the HMP.

Second Appeal

On December 3, 2012, the Applicant submitted a second appeal of the scope of work and funding provided in PW 4694.   The Applicant is requesting a total amount of $163,354 including the bid cost of $119,300 for electrical repairs, the bid cost of $27,000 for the HMP, and the actual cost of $17,054 for engineering and design services.  The Applicant asserts that the plans and specifications provided to FEMA include a detailed description of the permanent electrical repairs and that neither the scope of work of PW 4333 nor of PW 4694 encompassed all of the repair work necessary to restore the lift station.  Further, the Applicant, maintaining it procured the contract for the work properly and competitively, states that FEMA’s approach of using RS Means to develop the cost of the repairs that FEMA approved in PW 4694 underestimated the project costs.  The Applicant asserts it competitively bid the lump sum contract for the electrical work based on items detailed on the plans and specifications and therefore the eligible cost should be based on the bid cost for the detailed work.  While the contract is a lump sum contract for electrical work at multiple lift stations, the Applicant provided a breakdown of the bid cost by site.

Regarding the HMP, again the Applicant maintains that FEMA underestimated the cost to construct the platform and to raise the electrical equipment.  The Applicant is claiming $27,000 for this work based on the lump sum bid from its general contractor.  The Applicant states that constructing a platform is cost effective when comparing the cost of construction, $27,000, to the repair of the electrical components, $119,300.

With respect to engineering and design services, the Applicant objects to FEMA’s application of Curve B (average complexity) rather than Curve A (above average complexity) to the Engineering and Design Services graph in its Public Assistance Guide to estimate costs because FEMA’s policy describes pumping stations within Curve A activities.  The Applicant also asserts the cost curves do not include costs for biddings services and shop drawing reviews, which are services its design engineer performed.  Further, the Applicant defends its approach of using one engineering and design firm for all of its damaged lift stations as less expensive than procuring engineering and design services for each lift station.  It states that its design engineer divided costs for activities performed that impacted multiple facilities evenly against each impacted facility.

Discussion

Electrical Repairs

FEMA submitted the appeal documents to a technical specialist with expertise in electrical components of lift stations for review.  Based on review of the documented damage description and the repair work detailed in the bid documents, the specialist determined that the electrical work detailed in the plans and specifications was necessary to repair the lift station and that the $119,300 bid cost for that work was reasonable.  Therefore, the electrical repair work as detailed in the plans and specifications and the costs to perform that work is eligible for funding.  In assessing the reasonableness of the actual costs presented at close out, FEMA will consider the bid cost of $119,300. 

Hazard Mitigation Proposal

According to FEMA Recovery Policy RP9526.1, Hazard Mitigation Funding Under Section 406 (Stafford Act), to be eligible HMPs must be cost effective.  Cost effectiveness can be determined based on the following:

  1. Mitigation measures are cost effective if the cost is up to 15 percent of the total eligible cost of the eligible repair work;
  2. Mitigation measures listed in Appendix A are cost effective if the cost does not exceed 100 percent of the total eligible cost of the eligible repair work;
  3. Mitigation measures are cost effective if shown by the Grantee or subgrantee to be cost effective based on an acceptable benefit/cost analysis methodology.

The cost of the HMP ($27,000) is greater than 15 percent of the eligible repair cost ($119,300), and Appendix A includes elevating equipment or controls only in a pump station that is subject to damage from the 100- year flood.  The Roosevelt Lift Station is not located in the 100-year floodplain.  Lastly, neither the Grantee nor the Applicant provided a benefit/cost analysis of the HMP and have not shown the HMP to be cost-effective.

Engineering and Design Services

The Applicant requests $17,054 for engineering and design services for the Roosevelt Lift Station based on its total actual costs divided amongst all facilities addressed in its contract for engineering and design services.  While the Applicant has not provided documentation clearly supporting that the amount requested is directly related to the repair of the Roosevelt Lift Station, the amount claimed is reasonable based on FEMA’s approach for estimating costs for project management and design services as outlined in the Cost Estimating Format (CEF) for Large Projects Instructional Guide V2.1, September 2009.  The CEF includes factors for services in addition to those covered by the Engineering and Design Services graph (Curves A and B) and is a more accurate method of estimating costs for these services than the use of the graph alone.  Should the Applicant submit sufficient documentation at project closeout supporting that the cost claimed is directly related to the repair of the Roosevelt Lift Station, FEMA will provide the funding. 

Conclusion

The Applicant followed competitive procurement procedures for the repair of the Roosevelt Lift Station and the bid cost for the electrical repairs is reasonable.  Further, the documentation provided by the Applicant supports that the contracted electrical repair work for the Roosevelt Lift Station was necessary to restore the facility. Therefore, the electrical work as detailed in the plans and specifications is eligible for funding based on reasonable, actual costs claimed at project closeout.  Based on the criteria established in FEMA Recovery Policy RP9526.1, Hazard Mitigation Funding Under Section 406 (Stafford Act) and the submitted bid costs, the Applicant’s HMP is not cost-effective and, therefore, not eligible for reimbursement. If the Applicant can demonstrate at close out based on the actual costs of the repair and the HMP that it is cost effective, i.e. within the 15 percent allowance in accordance with the policy, FEMA will reconsider the HMP’s eligibility for reimbursement.  Finally, while the $17,054 claimed by the Applicant for engineering and design services is reasonable, the Applicant has not submitted sufficient documentation to support that the cost claimed is directly related to the repair of the Roosevelt Lift Station.  The Applicant must submit additional documentation at project closeout demonstrating the costs are directly related to the repair of the Roosevelt Lift Station to be reimbursed.