Debris Removal Contract Costs

Appeal Brief Appeal Letter

Appeal Brief

DisasterFEMA-1665-DR
ApplicantCity of North Tonawanda
Appeal TypeSecond
PA ID#063-53682-00
PW ID#Project Worksheet 274
Date Signed2008-02-19T05:00:00

Citation: FEMA-1665-DR-NY, City of North Tonawanda, Project Worksheet 274

Summary:

Following snow storms in October 2006 the Applicant solicited bids for a comprehensive debris removal, management, and disposal contract. The contract included removal, reduction and disposal of rights-of-way vegetative debris, hazardous tree limbs (greater than 2”) and leaning/hazardous trees. The Applicant received bids from eight qualified contractors and chose the lowest bidder in all rate categories. The awarded contract included removal of 1,000 hazardous tree limbs at the unit price of $21.42 per limb.

The contractor removed a total of 70,132 hazardous tree limbs. FEMA used debris-monitoring data to determine that a unit cost of $21.42 per limb equated to a unit cost of $356.21 per tree. The data sample included 41,095 hazardous tree limbs removed from approximately 2,471 trees. FEMA compared the unit cost of $356.21 per tree to contracts entered into in contiguous/neighboring communities that used a per tree unit price for the performance of similar contract work and determined that the unit cost of $356.21 per tree was not reasonable. FEMA approved payment of the first 1,000 hazardous tree limbs at the contract rate of $21.42 per limb and payment of the remaining work at $145 per tree. The Regional Administrator sustained this determination on first appeal.

Issues:

Is the Applicant’s contract unit cost of $21.42 per limb reasonable?

Findings:

Yes. The Applicant competitively bid and properly procured the lowest bid.

Rationale:

44 CFR §13.22(b); 44 CFR §13.20(b) (5); OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments

Appeal Letter

February 19, 2007

John A. Agostino
Alternate Governor’s Authorized Representative
New York State Emergency Management Office
1220 Washington Avenue
Building 22, Suite 101
Albany, NY 12226-2251

Re: Second Appeal – City of North Tonawanda, PA ID 063-53682-00
Debris Removal Contract Costs, FEMA-1665-DR-NY, Project Worksheet (PW) 274

Dear Mr. Agostino:

This letter is in response to your letter dated September 12, 2007, which transmitted the referenced second appeal on behalf of the City of North Tonawanda (Applicant). The Applicant appealed the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) determination that the cost of $21.42 to remove each hazardous tree limb is unreasonable. The amount in dispute is $845,127.

Following the snowstorms in October 2006, the Applicant solicited bids for removal, reduction and disposal of rights-of-way vegetative debris, hazardous tree limbs (greater than 2”) and leaning/hazardous trees. The Applicant awarded a contract that included the removal of 1,000 hazardous tree limbs at the unit price of $21.42 per limb. The contractor removed a total of 70,132 hazardous tree limbs. Since the contractor removed over 70 times the number of limbs contained in the contract, FEMA Region II determined that the Applicant exceeded the scope of work. As such, FEMA had to determine if the $21.42 per limb was a reasonable cost for the work. FEMA used debris-monitoring data to determine that a unit cost of $21.42 per limb equated to a unit cost of $356.21 per tree. The data sample included 41,095 hazardous tree limbs removed from approximately 2,471 trees. FEMA concluded that the unit cost of $356.21 per tree far exceeded the price that contiguous communities paid for similar work. The highest cost that a contiguous community paid for removing hazardous limbs was $145 per tree. Therefore, FEMA approved payment of the first 1,000 hazardous tree limbs at the contract rate of $21.42 per limb and payment of the remaining work at $145 per tree. The Regional Director sustained this determination on first appeal.

The Applicant submitted its second appeal in a letter dated July 12, 2007, and amended it in a letter dated September 5, 2007. The Applicant stated that the rate of $21.42 per hazardous limb is reasonable because:

• It used a competitive procurement process;

• It selected the contractor who submitted the lowest bid for each item of work with bids for removal of hazardous limbs ranging from $21.42 to $68.75;
• It directed potential bidders to assess the extent of damage prior to submitting their bids;
• It directed potential bidders to base its submission for hazardous limb removal on an estimated quantity of 1,000 limbs so that it had a consistent basis on which to evaluate this part of the proposal; further, it did not include the 1,000 limbs in the contract with the successful bidder;
• It was the first community in the area to contract for debris removal; therefore, comparing its cost with those of communities that contracted for debris removal later is not appropriate; and
• FEMA paid more than $21.42 per limb to applicants in other disasters, including Hurricanes Ivan and Katrina.

The Applicant has provided compelling justification to support its claim that the cost it incurred to remove hazardous limbs is reasonable. Therefore, I am approving the appeal. By copy of this letter, I request that the Regional Administrator take appropriate action to implement this decision.

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: Stephen Kempf, Jr.

Regional Administrator
FEMA Region II

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