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Second Appeal Brief
PA ID# 071-99071-00; Henderson County
PW ID# Audit DD-11-22; Procurement Standards
Citation: FEMA-1771-DR-IL, Henderson County, Procurement Standards
Cross-Reference: Documentation, Reasonable Costs
Summary: Severe storms resulting in widespread flooding of the Mississippi River between June 1, 2008, and July 22, 2008, caused a 2,000-foot breach in the Henderson County (Applicant) levee flooding areas in Henderson County, the Village of Gulfport, and approximately 5 miles of U.S. Route 34. The Applicant entered into a sole-source, time and materials contract for all necessary emergency services to dewater the area and to restore county functions to normal. The contract did not have a clear, well-defined scope of work. Because the Applicant did not follow proper procurement procedures, FEMA based the eligibility of the final costs claimed by the Applicant on reasonable costs, supported by RS Means cost estimates that could be validated by supporting documentation. FEMA approved final funding for PWs 1523 (temporary levee) and 1524 (emergency dewatering) for $413,871 and $2,721,712 , respectively, while the Applicant claimed actual, incurred costs, totaling $831,267 for PW 1523 and $13,208,692 for PW 1524. The OIG conducted an audit of the grant funds provided to the Applicant. Finding A in the audit report questioned $3,645,431 provided under PWs 1523, 1524, and 1623, because the Applicant did not follow Federal procurement standards outlined in Title 44 of the Code of Federal Regulations (44 CFR) §13.36 for the two contracts discussed above and for a hazardous waste removal contract addressed under PW 1623. FEMA did not address procurement or the reasonableness of the costs for the hazardous waste removal contract in the PW. The FEMA Deputy Regional Administrator deobligated the costs questioned by the OIG under Finding A. The Applicant submitted a first appeal objecting to the deobligation of $3,645,431 asserting that deobligating the funding four years after the event violates “any standard of estoppel, fairness, and any other legal applicable standard.” The FEMA Deputy Regional Administrator denied the first appeal, stating that OMB Circular A-50 establishes the Regional Administrator’s authority and responsibility to implement corrective measures based on audit findings and recommendations. The Applicant’s second appeal, essentially reiterates its position put forward in the first appeal.
Issue: Is the funding questioned in Finding A of the audit report for reasonable costs incurred by the Applicant for eligible work performed?
Findings: Yes, for PWs 1523 and 1524. Regarding PW 1623, FEMA did not address the procurement in the PW, and the Applicant did not discuss PW 1623 in its appeal.
Rationale: 44 CFR § 13.36 Procurement; OMB A-87; FEMA 322 Public Assistance Guide (June 2007)