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Subgrantee Closeout

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

DisasterFEMA-845-DR-
ApplicantCalifornia Department of Industrial Relations
Appeal TypeSecond
PA ID#000-92027
PW ID#60202
Date Signed1999-05-05T04:00:00
Citation: Appeal Brief; Second Appeal; Subgrantee Closeout; FEMA-845-DR-CA; PA #000-92027

Cross Reference: DSR 60202; Temporary Relocation; 525 Golden Gate Avenue Office Building; Category E

Summary: As a result of the 845-DR disaster event, the local offices of the State Department of Industrial Relations (subgrantee) located at 525 Golden Gate Avenue sustained considerable damage. After the disaster, the subgrantee relocated its operations to four temporary offices. Approximately two years later, the subgrantee moved from their temporary locations into new permanent offices at 455 Golden Gate Avenue. Damage Survey Reports (DSRs) 93855/20926 were prepared to fund actual and estimated costs associated with these moves. By letter dated February 12, 1998, FEMA requested that the subgrantee submit documentation in support of its total actual claimed costs by February 22, 1998 to enable FEMA to complete the programmatic closeout of the subgrantee's application for this disaster. The subgrantee provided to FEMA adequate documentation for some of its claim on March 6, 1998, but FEMA denied its $288,000 claim for computer cabling work citing the absence of sufficient supporting documentation. There was also continuing disagreement between FEMA and the subgrantee concerning whether the established document submittal deadline had been extended by FEMA. This decision was upheld in the first appeal response. In the second appeal, the subgrantee contends that FEMA extended the submittal deadline to March 9, 1998, and that the supporting documentation provided is sufficient to support its claim for funding for computer cabling work.

Issues:
  1. Was the supporting documentation submitted in a timely manner?
  2. Is the subgrantee's documentation sufficient to support its $288,000 claim for funding for computer cabling work?
Findings:
  1. The subgrantee has established to FEMA's satisfaction that its submittal of documentation was made within an acceptable timeframe.
  2. The subgrantee has not provided adequate documentation to support its claim for funding for computer cabling work.
Rationale: Title 44 of the Code of Federal Regulations, Sections 206.228, 13.20 and 13.22, Office of Management and Budget (OMB) Circular A-87.

Appeal Letter

May 5, 1999

Nancy Ward
Governor's Authorized Representative
Governor's Office of Emergency Services
Post Office Box 419023
Rancho Cordova, CA 95741-9023

Dear Ms Ward:

This is in response to your letter dated January 13, 1999, to the Federal Emergency Management Agency (FEMA) forwarding a second appeal of Damage Survey Report (DSR) 60202 under FEMA-845-DR-CA on behalf of the California Department of Industrial Relations (subgrantee). The subgrantee is requesting $288,000 for data cabling work related to the relocation of its former offices at 525 Golden Gate Avenue in San Francisco.

As discussed more fully in the enclosed Second Appeal Analysis, the documentation submitted by the subgrantee does not provide information sufficient for FEMA to directly tie the claimed costs to the performance of eligible work. Additionally, the documentation does not sufficiently establish that the costs claimed for data cabling work are allowable under 44 CFR 206.228 and, by reference therein, 44 CFR 13.22. Therefore, the second appeal is denied.

Please inform the subgrantee of my determination. In accordance with the appeal procedure governing appeal decisions made on or after May 8, 1998, my decision constitutes the final decision on this matter. The current appeal procedure was published as a final rule in the Federal Register on April 8, 1998. It amends 44 CFR 206.206.
Sincerely,

/S/

Lacy E. Suiter
Executive Associate Director
Response and Recovery Directorate

Enclosure

cc: Martha Whetstone
Regional Director
FEMA Region IX

Appeal Analysis

BACKGROUND
As a result of the 845-DR disaster event, the building at 525 Golden Gate Avenue sustained considerable damage. At the time of the disaster event, this building contained the local offices of the State Department of Industrial Relations. After the disaster, the subgrantee relocated its operations to four temporary offices. Approximately two years later, the subgrantee moved from its temporary locations into new permanent offices at 455 Golden Gate Avenue. Damage Survey Reports (DSRs) 93855/20926 were prepared to fund actual and estimated costs associated with these moves.

To support the subgrantee's claimed costs on its Project Completion and Certification Report (P.4 Report), FEMA Region IX staff first contacted the subgrantee in September 1997 and requested supporting documentation for claimed costs that had not previously been documented. Because informal efforts to obtain necessary documentation proved unsuccessful, FEMA established in its letter dated February 12, 1998, a 10-day deadline of February 22, 1998, for the receipt of appropriate documentation. On March 11, 1998, the subgrantee submitted to FEMA documentation it felt supported its claim for $288,000 for computer cabling work. FEMA, at this time, determined that the subgrantee had failed to provide adequate documentation in a timely manner and FEMA, therefore, denied the subgrantee's claim for computer cabling work.

First Appeal
By letter dated May 21, 1998, the subgrantee appealed FEMA's denial of its claim for the computer cabling costs. As set forth in the appeal transmittal letter from the Governor's Office of Emergency Services (OES) dated July 14, 1998, the subgrantee was unable to obtain the documentation quicker because it had been archived by the State Comptroller's Office. The subgrantee asserted that this delay constituted extenuating circumstances beyond its control. In its first appeal, the subgrantee also asserted that the actual submittal deadline had been extended by FEMA to March 9, 1998. The first appeal did not address FEMA's determination that the subgrantee had not submitted sufficient documentation to support its claim for $288,000 for computer cabling work.

FEMA found that the first appeal did not provide sufficient information or documentation to support the subgrantee's claim for the computer cabling work nor had the subgrantee submitted documentation within the prescribed deadline. Therefore, the appeal was denied.

Second Appeal
The subgrantee submitted a second appeal dated December 2, 1998. In its second appeal, the subgrantee states that FEMA Region IX staff extended the deadline to March 9, 1998. In addition, the subgrantee states that it believes it "provided all documentation requested" by FEMA.


DISCUSSION
The first issue of the second appeal concerns whether FEMA extended the documentation submittal deadline. The subgrantee's claim for computer cabling work was first denied by FEMA because the related documentation was not submitted to FEMA until March 11, 1998 - beyond the asserted deadline of February 22, 1998. This decision was upheld in the first appeal response though this response also made clear that the claim was also denied because the documentation submitted did not sufficiently support the subgrantee's claim.

In its second appeal, the subgrantee states that a representative of the Region IX Disaster Closeout Center (DCC) extended the deadline to March 9, 1998. A copy of a memorandum dated March 6, 1998, from a representative of the Region IX DCC was included with the subgrantee's second appeal.

FEMA agrees that the FEMA memorandum of March 6, 1998, extended the submittal deadline to March 9, 1998. Though the subgrantee's submittal was made on March 11, 1999, FEMA agrees that the two-day delay was reasonable because the records were older than California law requires be retained and the subgrantee, therefore, had to obtain back-up from the archives of another state agency, the State Comptroller's Office. Thus, FEMA agrees that the documentation submitted was done so within an acceptable time frame.

The second issue of the second appeal concerns the sufficiency or appropriateness of the documentation submitted by the subgrantee in support of its claim for funding for computer cabling work. The subgrantee states that it believes it has complied with FEMA's requests and provided adequate supporting documentation.

According to OES's letter of July 14, 1998, the computer cabling work was performed by the Office of the State Architect - Direct Construction Unit (OSA) and that payment therefore was included in two electronic fund transfers from the subgrantee. On March 11, 1998, the subgrantee submitted to FEMA a copy of its interdepartmental memorandum to the OSA dated November 27, 1991, discussing the transfers and requesting that the OSA authorize completion of the project and prepare the necessary fund transfer documents for the final amount of $288,000. The March 11, 1998 submittal also included a copy of the page entry for the amount of $288,000 from the State Controllers Office Agency Reconciliation Report and a copy of the Public Works Project Authorization and Transfer Request for the office relocation work. The subgrantee included copies of these same records with its first and second appeals.

As a general rule, large project funding is based on actual reasonable costs that can be directly tied to the performance of eligible work. As set forth in 44 CFR 206.228, policies for determining whether costs are allowable are set forth in the 44 CFR part 13 (the "Common Rule") - more specifically, in 44 CFR 13.22. Federal regulation 44 CFR 13.22, in turn, provides that for State governments allowable costs are determined pursuant to cost principles set forth in Office of Management and Budget (OMB) Circular A-87. The documentation provided by the subgrantee does not satisfy a number of guidelines set forth in OMB Circular A-87. For example, subsection C.1.a. states that to be allowable, costs must be necessary and reasonable for proper and efficient performance and administration of federal grants. The documentation submitted by the subgrantee in support of its claim does not in any way describe the work items performed in return for the $288,000 transfer thus making it impossible for FEMA to determine whether the costs are necessary and/or reasonable. Further, subsection G of OMB Circular A-87 defines allowable costs provided by one agency to another within the same governmental unit (interagency services) as is the case with the OSA's provision of services to the subgrantee. This subsection provides that costs may include allowable direct costs plus a pro rata share of indirect costs or, in lieu thereof, a standard allowance equal to ten percent (10%) of the direct salary and wage cost (excluding overtime, shift premiums and fringe benefits). The documentation provided by the subgrantee does not provide information sufficient for FEMA to determine whether the OSA costs charged to the subgrantee conform to subsection G of OMB Circular A-87. Finally, subsection C.1. of OMB Circular A-87 requires that to be allowable, costs must be adequately documented. Additionally, 44 CFR 13.20(b)(2) requires that subgrantees maintain records that adequately identify the source and application of federal grant funds and 44 CFR 13.20(b)(6) provides that these accounting records must be supported by source documentation.

The documents submitted by the subgrantee indicate only that it authorized and paid $288,000 for work related to its office relocation; however, none of the documents identify the components or tasks that made up that work. Our review of the subgrantee's submitted documentation indicates that it is not possible to tel work items were included that may or may not be eligible for FEMA funding; or whether the costs charged by the OSA for which reimbursement is sought by the subgrantee are allowable under OMB Circular A-87.

We also note that the subgrantee's interdepartmental memorandum to the OSA dated November 27, 1991 iterates that the scope of the overall project entails painting, electrical outlet relocation and removal, computer network wiring and rewiring the raised-floor computer room. In this memo the subgrantee states that that the final payment of $288,000 includes a project contingency amount for "unforeseen work that may arise" and goes on to state that it expects any monies remaining in the work order would be returned. We do not believe that this memo supports the subgrantee's position that the $288,000 was only for one component of work that is, in its entirety, eligible for FEMA funding.

Because the subgrantee has failed to provide documentation that allows FEMA to tie the claimed costs for computer cabling work to the performance of eligible work or that supports the allowability of the costs claimed, these expenses cannot be reimbursed by FEMA.

CONCLUSION
Although the subgrantee established that it submitted documentation to FEMA within an acceptable time frame, it has not provided sufficient documentation to support that the costs claimed were incurred in the course of performing the approved scope of eligible work nor does the documentation submitted support the allowability of the costs claimed under 44 CFR 206.228 and, by reference, under 44 CFR 13.22 and OMB Circular A-87. Accordingly, the second appeal is denied.