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Citation:         FEMA-1646-DR-CA, Spanish Flat Water District, Sewer Treatment Plant Effluent Pond, Project Worksheet (PW) 173

Cross-

Reference:      General Eligibility, Reasonable Cost, Hazard Mitigation 

Summary:      Due to heavy rain in April 2006, rapid runoff from surrounding hillsides damaged a portion of the levees for the Spanish Flat Water District sewer treatment plant effluent pond.  FEMA prepared a PW for $113,061 to repair the damage and included a Section 406 hazard mitigation proposal for $36,000 to install soldier piles in the levee to protect against future levee damage. During close-out, FEMA noted that the Applicant made significant changes to the scope of work at a total project cost of $352,839 and determined that the project was an Improved Project.  FEMA capped the funding.  FEMA also determined that the hazard mitigation scope of work, as approved, was not completed and de-obligated the funding.

In the first appeal, the Applicant appealed the Improved Project determination. FEMA Region IX concurred that the project was not an Improved Project and the scope of work had expanded due to geological site conditions and the need to excavate deeper than originally anticipated.  However, the Region determined that the Applicant had used a cost plus percentage contract for the expanded scope of work, and limited funding to only the portion of work completed under the fixed price contract, $81,786, plus other eligible costs of $35,449, for a total of $117,234.

                        In the second appeal, the Applicant is appealing the determination that they used a cost plus percentage contract and requests that FEMA reimburse them for the full cost of the contract work, $316,971, plus other eligible costs of $35,449, for a total of $352,839. They also maintain that they mitigated future damage by properly installing the levee, but without the use of soldier piles.

Issues:             1. Was a cost plus percentage contract used to complete the repair work?

                        2. Are the Applicant’s costs under the cost plus percentage contract reasonable?

                        3. Did the Applicant complete the approved hazard mitigation scope of work?

Finding:          1. Yes.

                        2. Yes.

                        3. No.

Rationale:       44 CFR §13.36(f)(4) Procurement. Contract cost and price; Disaster Assistance Policy DAP9526.1, Hazard Mitigation Funding Under Section 406 (Stafford Act) dated August 13, 1998.