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Lincoln Park Tennis Court Building
Appeal Brief
Appeal Letter
Citation: Appeal Analysis; Second Appeal; City of Santa Monica; California;
FEMA-1008-DR-CA, PA 037-70000
Cross Reference: DSR 74085; Engineering and Design Costs; Lincoln Park Tennis Court Building
Facts:Following the Northridge Earthquake, FEMA prepared DSR 74085 for
$7,860 for the City of Santa Monica to fund earthquake-related repairs to the Lincoln Park Tennis Court Building. This amount included $566 for engineering and design services. During review, FEMA determined that the costs of engineering and design services were ineligible because the scope of eligible work does not warrant these services. Subsequently, DSR 74085 was approved for $7,294 to cover eligible repair and construction inspection costs. In the first appeal, the City claimed that the project required a formal bidding process and construction management, that FEMA reinstated similar costs as a result of a prior appeal, and that Mr. Krimm's January 19, 1996, letter states that engineering and design and bid preparation costs are eligible. The DRM denied the first appeal because the scope of work of DSR 74085 consists of minor repairs of cracks in tile and drywall and other miscellaneous repairs, which do not justify the need for any engineering and design services, with the exception of construction inspection. In the second appeal, the subgrantee repeats the same arguments of the first appeal.
Issue:
Appeal Brief
Disaster | FEMA-1008-DR |
Applicant | City of Santa Monica |
Appeal Type | Second |
PA ID# | 037-70000 |
PW ID# | 74085 |
Date Signed | 1999-04-27T04:00:00 |
FEMA-1008-DR-CA, PA 037-70000
Cross Reference: DSR 74085; Engineering and Design Costs; Lincoln Park Tennis Court Building
Facts:Following the Northridge Earthquake, FEMA prepared DSR 74085 for
$7,860 for the City of Santa Monica to fund earthquake-related repairs to the Lincoln Park Tennis Court Building. This amount included $566 for engineering and design services. During review, FEMA determined that the costs of engineering and design services were ineligible because the scope of eligible work does not warrant these services. Subsequently, DSR 74085 was approved for $7,294 to cover eligible repair and construction inspection costs. In the first appeal, the City claimed that the project required a formal bidding process and construction management, that FEMA reinstated similar costs as a result of a prior appeal, and that Mr. Krimm's January 19, 1996, letter states that engineering and design and bid preparation costs are eligible. The DRM denied the first appeal because the scope of work of DSR 74085 consists of minor repairs of cracks in tile and drywall and other miscellaneous repairs, which do not justify the need for any engineering and design services, with the exception of construction inspection. In the second appeal, the subgrantee repeats the same arguments of the first appeal.
Issue:
- Does the nature of the work necessary to repair the disaster-related damage identified in DSR 74085 warrant engineering and design services?
- Is the preparation of requests for proposals and construction documents, and contractor supervision eligible for public assistance funding?
- No. The costs associated with those services are subject to evaluation for their reasonableness in relation to the work. The DRM believes that the costs are not reasonable. The subgrantee has not provided any compelling information substantiating that the engineering and design fees are warranted.
- Yes. These are eligible project management activities. However, the applicant did not submit an appeal for cost overruns on all small projects prior to the deadline. Furthermore, there is no evidence that the costs claimed were connected to the eligible project management activities.
Appeal Letter
April 27, 1999
Mr. Gilbert Najera
Governor's Authorized Representative
Governor's Office of Emergency Services
74 North Pasadena Avenue, West Annex, Second Floor
Pasadena, California 91103-3678
RE: Second Appeal - City of Santa Monica, Lincoln Park Tennis Court Building, FEMA-1008-DR-CA, DSR 74085
Dear Mr. Najera:
This is in response to your April 8, 1998, letter forwarding the referenced appeal. The Federal Emergency Management Agency (FEMA) initially prepared Damage Survey Report (DSR) 74085 for $7,860 to repair the Lincoln Park Tennis Court Building that was damaged following the Northridge earthquake. Upon review of the DSR, FEMA staff determined that the complexity of the repair work did not require engineering and design services and the costs of $566 for these services were deducted. The DSR was approved for $7,294. On January 23, 1996, your office submitted the City's first appeal to the Regional Director requesting that FEMA reconsider the eligibility of engineering and design costs for DSR 74085. The Regional Director upheld the decision to deduct these costs and denied the appeal.
In the second appeal, the City is requesting the inclusion of engineering and design services and reimbursement of actual costs of $28,978 for repairs of damages to the tennis court building. The City states that the repair of the tennis court and 33 other City facilities were grouped together and completed by contract. This process necessitated the use of engineering and design consultants, preparation of requests for proposals and construction documents, and supervision of contractors at a cost of $2,847 out of the total cost of $28,978. The City contends that these services should be eligible for public assistance funding.
In the second appeal, the City contends that FEMA has incorrectly determined that small projects do not warrant engineering and design services. The City asserts that the Stafford Act and FEMA's implementing regulations do not support this determination. In addition, the City cites Mr. Richard Krimm's July 6, 1995, letter that confirms that engineering and design and bid review costs are eligible for public assistance funding. Furthermore, the City contends that the existence of FEMA's cost estimating Curves A and B, which discuss the eligibility and estimated costs for engineering and design services, is evidence of FEMA's acknowledgement and general acceptance of those costs as eligible.
Curves A and B were developed for the purpose of estimating approximate costs for necessary engineering and design services and are not an indication of FEMA's general acceptance of engineering and design costs for all public works projects. The inclusion and subsequent approval of engineering and design costs must be justified by the nature of the work, on a case by case basis. Contrary to the City's contention, FEMA does not deny eligible engineering and design costs for small projects. Rather, the determination to include these costs for any project is based upon the complexity of the restoration work. DSR 74085 was prepared to repair ceramic tile, drywall, stucco, caulk seams, and an electric short and to paint affected areas. I have determined that the complexity of this work does not necessitate the inclusion of engineering and design costs.
Although the engineering and design services are not eligible costs as part of the original DSR, FEMA funded construction inspection services at 3-percent of the contract cost estimate to fund the cost of supervising contractors including reviewing bids, shop drawings, and payment requests. However, the cost to prepare requests for proposal and construction documents is not included in FEMA's description of activities covered by the construction inspection allowance. Although they are not included in the allowance, these activities are considered reasonable project management services and are eligible costs. Thus, if these additional activities resulted in a cost overrun above the total funding provided for all small projects, the City may have been eligible for additional funding through the small project netting process. If there was a cost overrun, the City should have submitted an appeal to FEMA for the overrun following completion of all small projects. However, the City did not submit an appeal by the deadline of May 17, 1998, which was 120 days after the required completion date for all small projects. The City contends that Leland Wilson's December 1, 1997 letter permits the City to continue to appeal for engineering and design costs. However, this letter did not grant an extension for submitting an appeal for the cost overrun on all small projects beyond the May 17 deadline. Therefore, FEMA must assume that the contract costs for developing requests for proposals and bid documents were covered by the construction inspection allowance and the overall cost savings on all small projects. With respect to the City's request to recoup actual construction costs of $26,131, FEMA must also assume that any additional construction costs above the approved project estimate were covered by the overall cost savings on all small projects.
Therefore, I am denying the appeal. Please inform the applicant of this 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, which amends 44 CFR 206.206.
Sincerely,
/S/
Lacy E. Suiter
Executive Associate Director
Response and Recovery
cc: Christina Lopez
Federal Coordinating Officer
FEMA-1008-DR-CA
Mr. Gilbert Najera
Governor's Authorized Representative
Governor's Office of Emergency Services
74 North Pasadena Avenue, West Annex, Second Floor
Pasadena, California 91103-3678
RE: Second Appeal - City of Santa Monica, Lincoln Park Tennis Court Building, FEMA-1008-DR-CA, DSR 74085
Dear Mr. Najera:
This is in response to your April 8, 1998, letter forwarding the referenced appeal. The Federal Emergency Management Agency (FEMA) initially prepared Damage Survey Report (DSR) 74085 for $7,860 to repair the Lincoln Park Tennis Court Building that was damaged following the Northridge earthquake. Upon review of the DSR, FEMA staff determined that the complexity of the repair work did not require engineering and design services and the costs of $566 for these services were deducted. The DSR was approved for $7,294. On January 23, 1996, your office submitted the City's first appeal to the Regional Director requesting that FEMA reconsider the eligibility of engineering and design costs for DSR 74085. The Regional Director upheld the decision to deduct these costs and denied the appeal.
In the second appeal, the City is requesting the inclusion of engineering and design services and reimbursement of actual costs of $28,978 for repairs of damages to the tennis court building. The City states that the repair of the tennis court and 33 other City facilities were grouped together and completed by contract. This process necessitated the use of engineering and design consultants, preparation of requests for proposals and construction documents, and supervision of contractors at a cost of $2,847 out of the total cost of $28,978. The City contends that these services should be eligible for public assistance funding.
In the second appeal, the City contends that FEMA has incorrectly determined that small projects do not warrant engineering and design services. The City asserts that the Stafford Act and FEMA's implementing regulations do not support this determination. In addition, the City cites Mr. Richard Krimm's July 6, 1995, letter that confirms that engineering and design and bid review costs are eligible for public assistance funding. Furthermore, the City contends that the existence of FEMA's cost estimating Curves A and B, which discuss the eligibility and estimated costs for engineering and design services, is evidence of FEMA's acknowledgement and general acceptance of those costs as eligible.
Curves A and B were developed for the purpose of estimating approximate costs for necessary engineering and design services and are not an indication of FEMA's general acceptance of engineering and design costs for all public works projects. The inclusion and subsequent approval of engineering and design costs must be justified by the nature of the work, on a case by case basis. Contrary to the City's contention, FEMA does not deny eligible engineering and design costs for small projects. Rather, the determination to include these costs for any project is based upon the complexity of the restoration work. DSR 74085 was prepared to repair ceramic tile, drywall, stucco, caulk seams, and an electric short and to paint affected areas. I have determined that the complexity of this work does not necessitate the inclusion of engineering and design costs.
Although the engineering and design services are not eligible costs as part of the original DSR, FEMA funded construction inspection services at 3-percent of the contract cost estimate to fund the cost of supervising contractors including reviewing bids, shop drawings, and payment requests. However, the cost to prepare requests for proposal and construction documents is not included in FEMA's description of activities covered by the construction inspection allowance. Although they are not included in the allowance, these activities are considered reasonable project management services and are eligible costs. Thus, if these additional activities resulted in a cost overrun above the total funding provided for all small projects, the City may have been eligible for additional funding through the small project netting process. If there was a cost overrun, the City should have submitted an appeal to FEMA for the overrun following completion of all small projects. However, the City did not submit an appeal by the deadline of May 17, 1998, which was 120 days after the required completion date for all small projects. The City contends that Leland Wilson's December 1, 1997 letter permits the City to continue to appeal for engineering and design costs. However, this letter did not grant an extension for submitting an appeal for the cost overrun on all small projects beyond the May 17 deadline. Therefore, FEMA must assume that the contract costs for developing requests for proposals and bid documents were covered by the construction inspection allowance and the overall cost savings on all small projects. With respect to the City's request to recoup actual construction costs of $26,131, FEMA must also assume that any additional construction costs above the approved project estimate were covered by the overall cost savings on all small projects.
Therefore, I am denying the appeal. Please inform the applicant of this 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, which amends 44 CFR 206.206.
Sincerely,
/S/
Lacy E. Suiter
Executive Associate Director
Response and Recovery
cc: Christina Lopez
Federal Coordinating Officer
FEMA-1008-DR-CA