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Second Appeal Brief
PA ID# 019-78820-00; Town of Vinton
PW ID# 564; Procurement
Conclusion: Although the Applicant did not use competitive procurement procedures in contracting for debris removal services, FEMA has determined that the debris removal rates paid by the Applicant were reasonable, and, as such, the actual cost billed for debris removal in PW 564 is eligible for funding. Accordingly, the additional amount of $119,934 requested by the Applicant is eligible.
High winds due to Hurricane Rita resulted in downed tree limbs which severely interrupted electrical service throughout the Applicant’s service area. The Applicant contracted to remove tree limbs from electric utility power lines. Initially, FEMA obligated $319,976, as recorded on PW 564, for work that the contractor completed. The OIG performed an audit of the Applicant’s Public Assistance sub-grant and recommended that FEMA de-obligate $119,934 in funding, to which FEMA agreed and de-obligated that amount. The rationale for de-obligating the funding was that the Applicant “piggybacked” on a written contract between the Contractor and another local government. In addition, FEMA contended that the Applicant did not follow proper procurement methods, as outlined in 44 C.F.R. § 13.36. In its first appeal, the Applicant stated that its contract with the Contractor was not “piggybacking” because the Applicant did not adopt all of the terms, conditions, and charges set forth in the original contract between Lafayette and the Contractor. The Regional Administrator (RA) denied the first appeal and added that the costs of the work performed were unreasonable. The RA noted that there was no written contract that included language accepting higher rates for disaster conditions. The RA determined that the eligible amount of the PW was $200,042 by deducting the excess contract costs charged by the contractor from the amount that FEMA originally obligated. The Applicant submitted a second appeal on the basis that the contract is not “piggybacking” for the aforementioned reasons and that reasonableness of costs should not have been considered in the first appeal response because DHS-OIG did not question reasonable costs. The Applicant cites 44 C.F.R. § 13.36(d)(4), Procurement, Procurement by noncompetitive proposals, as supporting its claim regarding the reasonableness of the contractor’s hourly rate.
Authorities and Second Appeals
• 44 C.F.R. § 13.36.
• 44 C.F.R. § 13.43.
• OMB Circular A-87, 2 C.F.R. § 225.
• Pursuant to 44 C.F.R. § 13.36(d)(4)(i)(B), noncompetitive procurement methods may be used in limited circumstances. If “there is an emergency requirement that will not permit a delay for competition,” a subgrantee may use a noncompetitive proposal.
o Due to the extenuating circumstances caused by Hurricanes Katrina and Rita, the widespread demand for debris removal services, and the immediate necessity to restore the Applicant’s electrical system, 44 C.F.R. § 13.36(d)(4) applies to the Applicant’s verbal contract with its Contractor.
• Pursuant to OMB Circular A-87, a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.
o The Contractor charged the Applicant $319,976, or approximately $16.00 per CY to complete this project. According to FEMA’s debris costs assessment, this rate is at the lower end of the range of market costs for debris removal in the area after Hurricane Rita. The rate is reasonable, and the rates that the Contractor charged to the Applicant are eligible for reimbursement under the Public Assistance program.