Project Management Costs

Appeal Brief Appeal Letter

Appeal Brief

Disaster1604-DR-MS
ApplicantPearl River County Board of Supervisors
Appeal TypeSecond
PA ID#109-99109-00
PW ID#8131, 8733, 8761, 8771 & 9471
Date Signed2012-08-07T00:00:00

Citation:         FEMA-1604-DR-MS; Pearl River County Board of Supervisors (Applicant)

Cross - 
Reference:   Project Management Costs; Administrative Allowance

Summary:   Hurricane Katrina’s heavy rain and flooding coupled with the increased traffic of heavy equipment and vehicles performing debris removal activities caused damage to multiple roadways in Pearl River County.  FEMA prepared five PWs to capture the work and costs necessary to restore the roadways to pre-disaster condition.  The Applicant used force account labor, equipment and materials to repair the roads and culverts. 

At final inspection, the Applicant submitted documentation of incurred expenses in the amount of $10,950 for what the Applicant claimed was project management performed by an independent contractor for the road projects.  FEMA denied the Applicant’s cost and determined that the project management costs were not included in the approved scopes of work of the five PWs.  Additionally, FEMA determined that the Applicant did not provide adequate documentation from the contractor specifying the daily hours worked and type of work performed.

In its first appeal dated July 8, 2010, the Applicant argued that FEMA and the State recommended that the Applicant hire someone to help with the paperwork associated with the PWs.  In addition, the cost is less than what was paid for similar services on other projects.  The Regional Administrator denied the appeal on March 11, 2011, stating that the project management activities claimed were actually grant administration activities which are funded by the administrative allowance on each PW.  Furthermore, the Applicant had not provided documentation demonstrating that the contractor was performing tasks related to management of road construction projects.

In its second appeal dated September 3, 2010, the Applicant claims that the contractor monitored the work performed by the construction crews, verifying the workers and the equipment used to perform the work and then prepared the paperwork to submit to the State for reimbursement.  

Issues:   1. Did the Applicant provide documentation demonstrating that the contractor performed eligible project management activities?
                2. Did the Applicant relate the cost claimed to the eligible scope of work on the five PWs?

Findings:  1. No.  The Applicant provided insufficient documentation to justify project management costs.
                  2. No.  The Applicant did not submit any work logs or specific job details for the work the contractor performed for the five PWs.

Rationale:   FEMA Response and Recovery Policy 9525.6 Project Supervision and Management Costs of Subgrantees, dated April 22, 2001, FEMA 322 Public Assistance Guide, Project Supervision and Grant Management Costs.

Appeal Letter

August 7, 2012

Robert Latham, Jr.
Executive Director
Mississippi Emergency Management Agency
P.O. Box 5644
Pearl, MS 39208

RE:   Second Appeal–Pearl River County Board of Supervisors, PA ID 109-99109-00,
Project Management Costs, FEMA-1604-DR-MS, Project Worksheets (PWs) 8131, 8733, 8761, 8771 & 9471

Dear Mr. Latham:

This letter is in response to a letter from your office dated August 10, 2011, which transmitted the referenced second appeal on behalf of the Pearl River County Board of Supervisors (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $10,950 in project management costs.

Background

In the aftermath of Hurricane Katrina, heavy rain and flooding coupled with increased traffic of heavy equipment and vehicles performing debris removal activities damaged roads, culverts and ditches in Pearl River County.  The Applicant used force account labor, equipment and materials to repair the roads and culverts.  FEMA prepared the above referenced five Project Worksheets (PWs) documenting the damage to the roadways, the eligible scopes of work, and cost estimates.

During the final inspection process, the Applicant provided documentation of incurred expenses of $10,950 for an independent contractor hired to assist with preparing documentation for the repair PWs.  At a meeting with the Applicant on March 1, 2010, FEMA requested additional information to document the type and amount of work performed by the independent contractor.  The Applicant did not submit the requested information and FEMA denied the requested project management costs for PW 8131 ($962.51), PW 8733 ($1,212.50), PW 8761 ($1,412.50), PW 8771 ($2,412.50), and PW 9471 ($4,950.00). 

First Appeal

On July 8, 2010, the Applicant filed its first appeal requesting that FEMA reimburse the total ineligible project management fees of $10,950.  In its appeal, the Applicant asserted that the contractor monitored road crews performing construction work, verified that the crews reported for duty, segregated road construction sites to associate the projects with PWs, and prepared paperwork for submission of PWs to the Mississippi Emergency Management Agency (Grantee).  The FEMA Region IV Regional Administrator denied the Applicant’s first appeal on March 11, 2011, stating that the activities performed by the Applicant’s contractor were classified as grant administration activities.  The Regional Administrator cited FEMA Policy 9525.6 Project Supervision and Management Costs of Subgrantees, dated April 22, 2001, which states that “there are activities that Subgrantee’s may consider to be project specific, but are actually grant administration activities and, therefore, are not eligible as project supervision and management costs…These grant administration activities are covered by the statutory administrative allowance (sliding scale) that is automatically added as a percentage of the total amount of assistance for a subgrantee when the projects are processed.”   The Regional Administrator noted that funding for the Applicant’s grant administration activities was obligated to the Grantee via the sliding scale for each PW at the time of PW approval.

Second Appeal

The Applicant submitted its second appeal in a letter dated June 17, 2011, which the Grantee forwarded to FEMA on August 10, 2011.  The Applicant reiterates its claim that the project management fees incurred should be reimbursed.  According to the Grantee, officials representing FEMA and the Grantee advised the Applicant that it should enlist someone with Public Assistance experience to manage the work.  The Applicant submitted a letter to the Grantee dated September 3, 2010, stating the contractor worked with road crews to mark and verify that all roads matched the PWs, monitored work being performed, verified workers on the job and the equipment used to perform the work, and prepared paperwork to be submitted to the Grantee.   Further, it states the contractor played a vital role in the process of the Applicant tracking all of the PWs and reporting the work correctly.  The Grantee recommends that FEMA reimburse $10,950 for project management fees. 

Discussion

While the Applicant’s contract did not provide documentation of the activities to be performed by the contractor, the Applicant’s description of the contractor’s activities of monitoring and documenting the work performed for the purposes of requesting reimbursement are consistent with grant administration activities and not project management.  Pursuant to FEMA Policy 9525.6 Project Supervision and Management Costs of Subgrantees, “…administrative activities are those necessary in requesting, obtaining, and administering Federal disaster subgrants.  Examples include identifying damage; writing PWs; assessing damage; attending Grantee and FEMA meetings; completing forms to request assistance; establishing files; collecting cost data;
developing cost estimates; and working with the Grantee and FEMA during project monitoring, final inspections and audits.”  These grant administration activities are funded by the statutory administrative allowance, which was obligated to the State via the sliding scale for each PW at the time of PW approval.  The requested funding is therefore not eligible as project management costs.

Conclusion

I have reviewed the information submitted with the appeal and have determined that the Regional Administrator’s decision in the first appeal is consistent with Public Assistance regulations and policy.  Accordingly, 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/

Elizabeth Zimmerman
Deputy Associate Administrator
Office of Response and Recovery

cc:   Major P. May
       Regional Administrator
       FEMA Region IV

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