OIG Audit Report# DO-18-03

Appeal Brief Appeal Letter

Appeal Brief

Disaster1008
ApplicantSimi Valley Unified School Districts
Appeal TypeSecond
PA ID#111-91005-00
PW ID#multiple
Date Signed2007-10-23T04:00:00
Citation: FEMA-1008-DR-CA, Simi Valley Unified School District, OIG Audit
Report # DO-18-03, Multiple DSRs
Cross-reference: Improved Project, Administrative Allowance, Construction/Project Management

Summary: Following the Northridge Earthquake (January 1994), FEMA obligated multiple project worksheets to reimburse SVUSD for disaster damages to various facilities. After closeout of the Applicant’s projects, the Office of Inspector General (OIG) conducted an audit of the Applicant’s grant and observed that the Deputy Disaster Recovery Manager for the Northridge Long Term Recovery Office had granted a second appeal when he did not have authority to do so. It recommended that the Director of the Recovery Division evaluate the second appeal and that FEMA de-obligate $2,404,776. The Director of the Recovery Division evaluated the second appeal and determined that $770,392 of $1,701,399 requested by the Applicant was eligible. The Regional Response and Recovery Division Director further determined that only $1,838,585 of $2,404,776 recommended by the OIG was ineligible. The ineligible amount includes construction improvement as well as district-wide administrative and project/construction management costs. The Applicant submitted a first appeal in a letter dated December 2, 2004. In a letter dated August 26, 2005, FEMA denied the first appeal because the Applicant did not provide sufficient documentation to support its claim. On January 26, 2006, the Applicant submitted its second appeal reiterating its position presented in its first appeal. It did not submit any new information with the appeal.
Issues: Did the Applicant submit sufficient information to support its request for reimbursement?

Findings: No.
Rationale: 44 CFR §206.226(d); 44 CFR §206.228(a)(2); 44 CFR §206.228(e)

Appeal Letter

October 23, 2007

Mr. Paul Jacks
Governor’s Authorized Representative
Governor’s Office of Emergency Services
3650 Schriever Avenue
Mather, CA 95741-9565

Re: Second Appeal- Simi Valley Unified School District, PAID # 111-91005-00
OIG Audit Report # DO-18-03, FEMA-1008-DR-CA, Various Damage Survey Reports

Dear Mr. Jacks:

This is in response to your letter dated February 24, 2006, transmitting the referenced second appeal from the Simi Valley Unified School District (Applicant). The Applicant disputes the basis on which the Department of Homeland Security’s Federal Emergency Management Agency (FEMA) de-obligated funding for costs associated with the Simi Valley High School Gymnasium and Multiple Purpose Room. FEMA de-obligated $1,838,585 after evaluating the Office of Inspector General’s (OIG) Audit Report # DO-18-03.

FEMA obligated multiple damage survey reports to reimburse the Applicant for eligible disaster damages to many facilities following the Northridge Earthquake on January 17, 1994. After FEMA closed the Applicant’s grant application, the FEMA OIG conducted an audit of the Applicant’s projects and issued Audit Report # DO-18-03 on August 15, 2003. The OIG observed that the Deputy Disaster Recovery Manager of the Northridge Long Term Recovery Office had granted a second appeal from the Applicant when he did not have authority to do so. It recommended that the Director of the Recovery Division evaluate the second appeal pursuant to program regulations. The OIG further recommended that FEMA de-obligate $2,404,776 in questioned costs for ineligible improvements and upgrades, ineligible project costs, unsupported cost, cost covered by statutory administrative allowance and duplicated claims.

The second appeal that the Deputy Disaster Recovery Manager responded to involved costs related to the Simi Valley High School Gymnasium and Multiple Purpose Room. The Applicant requested an additional $915,956 for the Gymnasium and $785,443 for the Multiple Purpose Room. The total amount requested was $1,701,399. The Director of the Recovery Division evaluated the second appeal and determined that $455,616 of $915,956 was eligible for the Gymnasium and $314,776 of $785,443 was eligible for the Multiple Purpose Room. Accordingly, the Director of the Recovery Division approved $770,392 of $1,701,399 for funding. He denied $931,007 in funding. The ineligible amount consisted of construction improvements and administrative, project management and construction management costs.

The Director of the Recovery Division informed the Acting Regional Director of his determination by memorandum dated May 27, 2004. The Regional Response and Recovery Division Director considered this information in her evaluation of the OIG’s recommendations and concluded that $1,838,585 of $2,404,776 recommended by the OIG should be de-obligated. She informed the California Office of Emergency Services (OES) of FEMA’s intent to de-obligate $1,838,585 in a letter dated August 13, 2004.

The Applicant appealed the de-obligation of $1,838,585 in a letter dated December 2, 2004. The Acting Regional Director reviewed all information that the Applicant submitted with the appeal and determined that it did not support the Applicant’s assertion that the funds were for the performance of eligible work. Therefore, she denied the appeal in a letter dated August 26, 2005. The Applicant submitted a second appeal in a letter dated January 20, 2006. OES transmitted the appeal to FEMA by letter dated February 24, 2006.

The former Director of the Recovery Division determined on second appeal that $931,007 was ineligible for reimbursement. Pursuant to 44 CFR § 206.206, applicants have only two levels of appeal. Since the Applicant has already submitted a second appeal for this amount and the former Director of the Recovery Division has made a determination on the appeal, the Applicant does not have additional appeal rights. Regarding the remaining $907,578 that was de-obligated, we have reviewed all information the Applicant submitted with the second appeal and have determined that there is no basis for reversing previous decisions on this matter. Therefore, the appeal is denied.

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

Sincerely,
/s/
Carlos J. Castillo
Assistant Administrator
Disaster Assistance Directorate

cc: Nancy Ward
Regional Director
FEMA Region IX
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