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OIG Audit Report

Appeal Brief Appeal Letter

Appeal Brief

DisasterFEMA-1603-DR
ApplicantDowntown Development District
Appeal TypeSecond
PA ID#071-UBAAP-00
PW ID#12490
Date Signed2011-08-11T04:00:00

Citation:         FEMA-1603-DR-LA, Downtown Development District, OIG Audit Report Findings, Project Worksheet 12490

Cross-

Reference:     Reasonable Cost, OIG Audit Report

Summary:      The Downtown Development District (Applicant) had a sidewalk cleaning maintenance contract in place prior to Hurricane Katrina.  There was little to no work being performed and the contract was about to be cancelled.  Following Hurricane Katrina, the Applicant re-scoped the contract to allow OneSource to additionally perform debris removal activities.  FEMA prepared PW 12490 for the cost associated with debris removal from the Applicant’s district. 

                        The Central Regional Office, Office of Emergency Management Oversight, DHSOffice of the Inspector General (OIG) issued Audit Report DD-09-09 on May 29, 2009.  The OIG determined that the Applicant did not comply with Federal regulations and guidelines and recommended de-obligation of $149,020 in unreasonable debris removal cost.  The agreed upon rate for debris removal of $85 per cubic yard (CY) was based on FEMA’s established reasonable cost matrix for Hurricane Katrina related debris operations in Louisiana.

January 14, 2010, FEMA de-obligated $149,020 from PW 12490. 

The Applicant submitted its first appeal June 2, 2010, requesting the re-obligation of $149,020 to PW 12490.  On September 10, 2010, the Regional Administrator denied the first appeal agreeing with the OIG audit findings.  In its second appeal dated November 10, 2010, the Applicant reiterated its original argument and did not provide any additional documentation to substantiate its claim. 

Issues:             1.  Did the Applicant comply with Federal procurement standards?

2. Has the Applicant provided sufficient documentation to justify its debris removal costs?

Findings:         1.  No.

                         2.  No.

Rationale:       OMB Circular A-87; 44 CFR § 13.36(f), Procurement, Contract cost and price; Public Assistance Policy Digest (FEMA 321) dated October 2001, page 101.

Appeal Letter

August 11, 2011

 

Mark DeBosier

Deputy Director

Disaster Recovery Division

Governor’s Office of Homeland Security and Emergency Preparedness

State of Louisiana

7667 Independence Boulevard

Baton Rouge, Louisiana  70806

Re:  Second Appeal–Downtown Development District of New Orleans, PA ID 071-UBAAP-00, Office of Inspector General (OIG) Audit Report DD-09-09, FEMA-1603-DR-LA, Project Worksheet (PW) 12490

Dear Mr. DeBosier:

This letter is in response to a letter from your office dated November 19, 2010, which transmitted the referenced second appeal on behalf of the Downtown Development District of New Orleans (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) decision to de-obligate $149,020 based on the findings and recommendations of the Department of Homeland Security Office of Inspector General (OIG) Audit Report DD-09-09.

Background

Prior to Hurricane Katrina, the Applicant maintained a contract for the cleaning and maintenance of sidewalks in the New Orleans downtown districts.  Following Hurricane Katrina, the contract was re-scoped to include debris removal and cleanup.  Project Worksheet (PW) 12490 was written for $306,775 for the removal of 1,860 cubic yards (CY) of debris from multiple sites within the Applicant’s district area.

The OIG Central Regional Office issued Audit Report DD-09-09 on May 29, 2009.  The OIG determined that the Applicant did not comply with Federal regulations and guidelines and recommended de-obligation of $149,020 in debris removal costs that it found to be unreasonable.  The Regional Administrator agreed with the OIG findings and on January 14, 2010, FEMA de-obligated $149,020 from PW 12490. 

First Appeal

On June 2, 2010, the Applicant submitted its first appeal to the State, which was transmitted to FEMA on June 3, 2010.  The Applicant stated that the OIG audit failed to recognize that the scope of work in PW 12490 consisted of two tasks, debris removal and street cleaning.  The Applicant submitted invoices for the removal of 1,860 CY of debris for a total of $306,775 which equates to a rate of $165 per CY.  The Regional Administrator denied the first appealagreeing with the OIG audit findings deeming the $165 per CY rate unreasonable.  The calculation of the eligible debris removal cost of $157,755 was based on a rate of $85 per CY for similar Hurricane Katrina-related debris operations in Louisiana.

Second Appeal

The Applicant submitted its second appeal on November 10, 2010, which was forwarded by the State on November 19, 2010.  The Applicant stated that FEMA disregarded the $215,240 cost for 14,236 labor hours for cleaning sidewalks and streets.  No additional documentation was submitted by the Applicant to support its claim. 

Discussion

The Applicant provided invoices accounting for the removal of 1,860 CY of debris.  The OIG audit found the Applicant did not adhere to Federal procurement procedures for the work and that the cost of debris removal ($165 CY) was not reasonable.  FEMA then determined a reasonable rate based on similar debris operations in Louisiana for this disaster.  The $85 per CY rate utilized by FEMA included all costs for material, equipment, and labor necessary to complete the eligible scope of work, and thus accounted for the cost of street cleaning attributable to debris removal.  The debris removal costs in excess of $85 per CY are considered unreasonable, and therefore, ineligible for Public Assistance funding.

Conclusion

I have reviewed the information submitted with this appeal and have determined that the Regional Administrator’s decision in the first appeal is consistent with Public Assistance program regulations and policies.  Therefore, I am denying the second appeal. 

Please inform the Applicant of my decision.  This determination is the final decision on this matter pursuant to 44 CFR§206.206, Appeals.

Sincerely,

/s/

Deborah Ingram

Assistant Administrator

Recovery Directorate

cc:  Tony Russell

       Regional Administrator

       FEMA Region VI