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Eligible Costs

Appeal Brief Appeal Letter

Appeal Brief

DisasterFEMA-1604-DR
ApplicantCity of Ocean Springs
Appeal TypeSecond
PA ID#059-53520-00
PW ID#1055
Date Signed2012-05-15T04:00:00

Citation:          FEMA-1604-DR-MS; City of Ocean Springs

Cross -            Eligible Costs

Reference:

Summary:       Hurricane Katrina’s high winds and flood waters caused severe damage to 13 public parks located throughout the City of Ocean Springs (Applicant).  PW 1055 was prepared to document damages and associated repair costs.  FEMA reduced the repair costs by $10,200 and excessive engineering fees by $4,589 for work completed at the Vietnam Veterans Memorial (Memorial) as they were deemed ineligible following the final inspection.  

                        The Applicant appealed this determination on November 7, 2008, and provided additional documentation from their engineering firm substantiating that damages  to the Memorial were related to the disaster.  FEMA partially approved the appeal on June 10, 2009, for an additional $6,990 in eligible repair costs and $239 in A/E fees deemed reasonable costs. The total amount approved for the work completed at the Memorial totaled $10,998 for eligible work and $2,200 in A/E fees.

The Applicant submitted its second appeal on August 10, 2009, requesting funding in the amount of $7,560.  The Applicant reiterates its argument that A/E fees were inappropriately reduced and that the remaining $3,210 in repair costs for soil removal and caulking replacement were related to damages caused by the disaster and necessary to repair as they presented  a safety risk.  The Applicant provided additional documentation from their engineering firm stating that the repair work was necessary to restore the Memorial site to its original condition.  The calculation of the A/E fees based on reasonable costs amounts to $2,842, an increase of $642. The total amount of the partial approval is $3,852.  An overview of the costs and appeal activity is included in Table 1.       

Issue:              Are additional repair and A/E fees eligible costs?

Finding:           Partially.   

Rationale:       44 CFR §206.223 (a)(3) General Work Eligibility; Office of Management and Budget, OMB Circular A-87 Revised , Effective May 10, 2004

Appeal Letter

May 15, 2012

Robert Latham

Executive Director

Mississippi Emergency Management Agency

P.O. Box 5644

Pearl, Mississippi  39208-5644

Re:  Second Appeal – City of Ocean Springs, PA ID 059-53520-00, Eligible CostsFEMA-1604-DR-MS, Project Worksheet (PW) 1055

Dear Mr. Latham:

This is in response to the letter from your office dated October 1, 2009, which transmitted the referenced second appeal for the City of Ocean Springs (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of funding in the amount of $7,560 for the repair of the Vietnam Veterans Memorial (Memorial) in Ocean Springs.

Background

High winds and flooding from Hurricane Katrina in August 2005 caused damage to the Applicant’s public parks.  FEMA prepared PW 1055 to document damages and associated repair costs for thirteen of the Applicant’s parks.  Following final inspection, FEMA reduced the repair costs by $10,200 and architectural and engineering (A/E) fees by $4,589 for the Memorial park site as they were determined to be ineligible. 

First Appeal 

The Applicant appealed this determination on November 7, 2008, and provided additional documentation from their engineering firm substantiating that damage was related to the disaster.  FEMA partially approved the appeal on June 10, 2009, for an additional $6,990 in eligible repair costs and $239 in A/E fees determined to be reasonable. The total amount approved for the work completed at the Memorial was $10,998 for eligible work and $2,200 in A/E fees.  

Second Appeal

The Applicant submitted its second appeal on August 10, 2009, requesting additional funding in the amount of $7,560.   The Applicant reiterates its position that the remaining $3,210 in repair costs for caulking and the replacement of soil were related to damage caused by the disaster and that A/E fees were inappropriately reduced by $4,350.  The Applicant provided additional documentation from their engineering firm stating that the soil replacement and caulking repairs were necessary to restore the site to its original condition. 

Discussion

Pursuant to Title 44 Code of Federal Regulations (44 CFR) §206.223 (a) General, to be eligible for financial assistance, an item of work must be required as the result of the major disaster event. The Applicant provided additional documentation in the second appeal that the replacement of caulking and removal of soil was necessary as part of the repair of disaster related damage.  The repair costs of $3,210 are therefore eligible for Public Assistance funding, increasing the total eligible repair costs to $14,208.  

With regard to the A/E fees, Office of Management and Budget Circular A-87, C. Basic Guidelines, a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.  The Applicant claimed A/E fees of $6,500 for work performed at one site.  FEMA initially determined that these fees were disproportionately high relative to the total repair costs for the Memorial and allowed only 3 percent of the costs from all thirteen parks for construction inspection fee services.  FEMA has reviewed the documentation included in both first and second appeals, and determined that a reasonable allowance for A/E and construction inspection is 20% (17% for A/E and 3% for construction inspection) for the Memorial park site repair cost of $14,208.  Therefore, total allowance for these tasks is $2,842 ($14,208 x .20), an increase of $642 in soft costs.  The $6,500 A/E cost on a scope of repair totaling $14,208 represents 46% of overall repair costs and is not reasonable for the level of work performed.  Reasonable eligible costs, representing 20% of overall repairs costs, have been determined utilizing industry standards and allowable percentages in FEMA guidance.

Conclusion

I have reviewed the information submitted with the appeal and have determined that the Applicant’s second appeal should be partially granted in the amount of $3,852 (repair costs at $3,210 and A/E costs at $642).  By copy of this letter, I am informing the Regional Administrator of my determination in order for him to implement this decision.    

Please inform the Applicant of my decision.  This determination constitutes the final decision on this matter as set forth in 44 CFR §206.206, Appeals.

Sincerely,

/s/

 

Elizabeth A. Zimmerman

Deputy Associate Administrator

Office of Response and Recovery

cc:     Major P. May

Regional Administrator

FEMA Region IV