Direct Administrative Costs

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster1909-DR-TN
ApplicantNashville-Davidson County
Appeal TypeSecond
PA ID#037-52004-00
PW ID#2488, 5206, 5505, and 5576
Date Signed2013-08-20T00:00:00

Citation:  FEMA-1909-DR-TN, Nashville-Davidson County, Direct Administrative Costs, Project Worksheets (PWs) 2488, 5206, 5505, and 5576

Cross-Reference: Direct Administrative Cost, Project Management Costs, Reasonable Costs

SummaryIn the aftermath of severe storms and flooding in Tennessee in April and May 2010, the Metropolitan Water Service (Applicant) in Nashville-Davison County completed repairs to damaged facilities and replaced flooded building contents. As part of the PWs prepared for the work, the Applicant included DAC.  FEMA approved $1,723 in expenses in the four PWs as eligible DAC and excluded $4,508 as either indirect costs or excessive. 

The Applicant submitted a first appeal covering seven PWs for $8,714 and submitted a separate first appeal for PW 5576 for $1,248.  The Applicant requested that FEMA approve the full amount of DAC originally requested.  The scope of work for the charges submitted included processing delivery orders, payment of vendors, procurement, site visits, PW development, and close-out activities.  FEMA denied the appeal, stating that the additional DAC requested by the Applicant was for construction or project management activities, which are part of normal project completion and already included in the PWs.

In the second appeal, the Applicant submitted a revised request for an additional $4,766 in costs related to PW formulation for four PWs and $4,109 for the costs related to closeout activities.  The second appeal contains a scope of work for the additional DAC and copies of memos and emails to and from FEMA that support the scope of work for the requested DAC.

Issue:  1. Did the work performed by the Applicant related to PW formulation and closeout activities meet the criteria for Direct Administrative Costs?

Finding:  1. Yes.

Rationale:  Section 324 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act; 44 CFR §207; Disaster Assistance Policy DAP9525.9 Section 324 Management Costs & Direct Administrative Costs

Appeal Letter

August 20, 2013

James H. Bassham
Director
Tennessee Emergency Management Agency
3041 Sidco Drive, P.O. Box 41502
Nashville, Tennessee  37204

Re:  Second Appeal—Nashville-Davidson County, PA ID 037-52004-00, Direct Administrative Costs, FEMA-1909-DR-TN, Project Worksheets (PWs) 2488, 5206, 5505, and 5576

Dear Mr. Bassham:

This letter is in response to your letters dated August 13, 2012, which transmitted the referenced second appeals on behalf of Nashville-Davidson County (Applicant).  The Applicant appealed the Department of Homeland Security's Federal Emergency Management Agency's (FEMA) decision to deny funding for portions of the Direct Administrative Costs (DAC) on four Project Worksheets (PWs). 

As explained in the enclosed analysis, I have determined that the Applicant’s revised submission of Direct Administrative Costs is eligible in accordance with FEMA Disaster Assistance Policy 9525.9 Section 324 Management Costs & Direct Administrative Costs.  The cost of $8,874 to complete the preparation of the PWs and for closeout activities are approved.  Accordingly, I am granting the second appeal.  By copy of this letter, I am requesting the Regional Administrator take appropriate action to implement this decision.

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

Enclosure

cc:   Major P. May
       Regional Administrator
       FEMA Region IV

Appeal Analysis

Background

In the aftermath of severe storms and flooding in Tennessee in April and May 2010, the Metropolitan Water Service (Applicant) in Nashville-Davidson County completed repairs to several damaged facilities and replaced flooded building contents.  The Applicant requested reimbursement of Direct Administrative Costs (DAC) in the amount of $6,231 for the following activities: procurement, vendor invoice review and payment, site visits with FEMA staff, project description and scope development, cost estimation and documentation, PW review and approval, and program management/close-out activities.  FEMA reduced the approved DAC amount to $1,723 to include only the time spent on PW development activities.  FEMA reclassified the remaining activities as indirect or unnecessary.

First Appeal

The Applicant submitted a first appeal covering seven PWs for $8,714 and submitted a separate first appeal for PW 5576 for $1,248.  The Applicant stated that the costs submitted were allowable direct charges as listed on FEMA’s “Public Assistance Program Indirect and Direct Administration Activity List” (provided by FEMA as additional guidance on implementing Disaster Assistance Policy DAP 9525.9, Section 324 Management Costs and Direct Administrative Costs).  FEMA denied the first appeal, stating that the costs denied by FEMA in the original PWs were either indirect in nature or were part of normal project completion which would be covered by the construction management included in the scope of work.

Second Appeal

In the second appeal, the Applicant revised its request for DAC and submitted additional documentation to support the scope of work for the direct administration activities performed.  The Applicant is requesting an additional $8,874 covering four PWs.  This amount includes $4,766 related to the PW formulation, processing, and management and $4,109 in force account labor charges for closeout activities.  The Applicant submitted a revised breakdown of labor and a detailed scope of work, with emails and notes to support the scope of work performed.  The revised scope of work includes responding to inquiries from FEMA, responding to requests for documentation from FEMA, attending meetings with FEMA to document the scope and damage description of the PW, writing damage descriptions, and developing cost estimates.  

Discussion

In accordance with Section 324 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), 42 U.S.C. 5165b, and Title 44 of the Code of Federal Regulations (44 CFR) §207, FEMA provides reimbursement of management costs reasonably incurred by a grantee or subgrantee in administering and managing a Public Assistance grant.  DAP 9525.9, Section 324 Management Costs and Direct Administrative Costs provides further guidance on how FEMA reimburses the direct and indirect costs associated with applying for Public Assistance.  According to the policy, “Direct administrative costs include costs that can be tracked, charged, and accounted for directly to a specific project, such as staff time to complete field inspection and preparation of a PW.”  FEMA’s “Reasonable Costs Memo” dated September 8, 2009, and “Public Assistance Program Indirect and Direct Administrative Activity List” (Activity List) provide further clarification on specific activities that are considered eligible as direct administrative costs.

In support of the second appeal, the Applicant has submitted documentation for costs of activities, with descriptions linked to eligible activity descriptions in the Activity List.  Based on a review of the documentation, a determination for each PW is provided below.

Project Worksheet 2488

PW 2488 covers permanent work to repair shifted castings for five manholes.  In the second appeal, the Applicant submitted a revised request for DAC for the following activities:

Activity

Amount

Project Cost Estimate and Documentation

$       97.20

PW Final Approval

$       98.61

Appeals

$     444.98

Total DAC

$     640.79

Less DAC previously approved

$   (101.88)

Second Appeal Request

$     538.91

The additional hours requested occurred after the small project worksheet was completed and included one-half hour each for two Finance Managers to review and sign the completed PW and one hour for an Administrative Services Officer to copy, file, and scan the completed PW.  The Applicant also claimed six hours of staff time to research, document, and prepare the first and second appeals. These activities are reasonable in scope and are eligible direct administrative costs.

Project Worksheet 5505

PW 5505 covers the cost of a temporary lime feed system during permanent work repairs to the KR Harrington Water Treatment Plant.  In the second appeal, the Applicant submitted a revised request for DAC for the following activities:

Activity

Amount

Site Visits

$             89.76

Project Scope Development

$        2,020.67

PW Final Approval

$           854.29

Appeals

$           846.52

Total DAC

$        3,811.24

Less DAC previously approved

$         (108.88)

Second Appeal Request

$         3,702.36

The Project Scope Development category includes 4.75 hours to respond to documentation requests from FEMA and requesting a time extension from Tennessee Emergency Management Agency (TEMA).  In addition, the Applicant spent 30 hours writing a report, “Findings from FEMA Project Worksheet NAELC11,”  used  to justify the eligibility of the temporary lime feed system which FEMA originally denied and other items that the Applicant felt were not properly documented in the PW prepared by FEMA.  The PW Final Approval category includes hours to review the draft PW as prepared by FEMA and provide comments, as well as reviewing and signing the revised PW.   The Applicant is also claiming 12.5 hours associated with reaearching, documenting, and preparing the first and second apeals. The scope of work performed in the DAC request appears to be reasonable in nature and necessary to support the development and closeout of PW 5505.

Project Worksheet 5206

PW 5206 covers permanent work to repair five sewer pumping stations.  The Applicant submitted a revised request for DAC for the following activities:

Activity

Amount

Site Visits

 $       300.72

Project Cost Estimate and Documentation

 $    1,052.65

PW Final Approval

 $       325.55

Appeals

 $       584.64

Total DAC

 $     2,263.56

Less DAC previously approved

 $   (1,086.40)

Second Appeal Request

 $     1,177.16

The documentation submitted by the Applicant includes emails to and from FEMA which support the Applicant’s dates and hours spent on each activity.  In addition, the Applicant claimed 8.75 hours to research, document, and prepare the first and second appeals.  The activities are eligible, reasonable direct administrative costs that support the development and closeout of a single project worksheet. 

Project Worksheet 5576

PW 5576 covers contents of the Main Office Building, which was flooded during the disaster.  The Applicant submitted a revised request for DAC for the following activities:

Activity

Amount

Site Visits

 $      64.44

Project Description Development

 $    192.55

Project Scope Development

 $    192.55

Additional FEMA/Grantee Documentation Requests

 $    249.15

Project Cost Estimate and Documentation

 $    364.83

PW Review and Discussion

 $    356.81

PW Final Approval

 $    228.87

Appeals

 $  2,232.47

Total DAC

 $  3,881.67

Less DAC previously approved

 $  (425.76)

Second Appeal Request

 $  3,455.91

The documentation submitted by the Applicant includes emails to and from FEMA which support the Applicant’s dates and hours spent on each activity.  The Applicant is also claiming 35 hours for researching, documenting, and preparing the first and second appeals.  The activities are eligible, reasonable direct administrative costs that support the development and closeout of a single project worksheet. 

Conclusion

Based on a review of the documentation submitted, the Applicant’s revised request for Direct Administrative Costs is eligible in accordance with DAP 9525.9, Section 324 Management Costs & Direct Administrative Costs.  Costs in the amount of $8,874 are reasonable to complete the preparation of the PWs and closeout activities  and are approved.  Accordingly, the appeal is granted.

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