Support Documentation

Appeal Brief

Summary Paragraph Between April 30, 2010 and May 18, 2010, severe rainstorms, tornadoes, and straight-line winds impacted Nashville-Davidson County.  The rainstorms caused the Cumberland River to overflow, and submerge buildings located at Applicant’s Metropolitan Water Services Biosolids Facility. To document needed repairs, FEMA prepared PW 5580 for building 60, the solids processing building; PW 5571 for building 46, the flares building; PW 5569 for building 80, the recirculating pump station; and PW 5531for building 45, the boiler and compressor system. FEMA combined these four appeals because they share the same substantive issue—whether the Applicant provided adequate documentation of resident engineering costs.  In letters dated June 3, 2011, the Applicant filed four appeals requesting reimbursement of additional repair costs, replacement costs, direct administrative costs (DAC), and resident engineering costs in the amounts outlined here: $207,400.00 (PW5580); $35,105.32 (PW 5571); $60,255.24(PW 5569); and $155,741.04 (PW 5531).  In responses dated May 11, 2012, the FEMA Region IV Regional Administrator (RA) partially approved the Applicant’s first appeals, but denied requests for resident engineering costs.  The RA based the denial of resident engineering costs on a lack of adequate documentation.  On July 24, 2012, the Applicant submitted four second appeals based solely on resident engineering costs: $117,165.00 (PW 5580), $18,089.00 (PW 5571), $23,361.00 (PW 5569), and $109.417.00 (PW 5531).  Upon FEMA’s subsequent request for additional information, the Applicant provided additional documents adequately describing resident engineer’s services.  

Authorities and Second Appeals

• Stafford Act § 406 (a)(1)(A), 42 U.S.C. § 5172.

• 44 C.F.R. § 13.22.

• OMB Circular A-87 Attachment A (C)(1)(a), (j), 2 C.F.R. § 225 Appendix A (C)(1)(a),(j).

• PA Digest, at 48.

• PA Guide, at 40, 59.

Headnotes

• OMB Circular A-87 provides that allowable costs must meet the cost principles of being necessary; allocable to Federal awards; and adequately documented.

  • The Applicant provided documentation to demonstrate that the resident engineering costs are necessary, allocable, and adequately documented for PW 5586.

• PA Digest, at 48, provides that “[s]pecial services[,] which are not required on every restoration project, include engineering surveys, soil investigations, services of a resident engineer, and feasibility studies. These services must be specifically described and must be shown to be necessary for completing the eligible scope of work.”

  • This project is part of 19 separate PWs associated with flood recovery efforts of a complex nature, and could require the use of resident engineering services.

Appeal Letter

Appeal Analysis

Background

Between April 30, 2010 and May 18, 2010, severe rainstorms, tornadoes, and straight-line winds impacted Nashville-Davidson County (Applicant).  The rainstorms caused the Cumberland River to overflow, and the resulting floodwaters damaged the Applicant’s Central Waste Water Treatment Plant as well as the Applicant’s Metropolitan Water Services Biosolids Facility (Biosolids Facility).  A multi-building and multi-component facility, the Biosolids Facility processes solids generated at the Central Waste Water Treatment Plant as well as at the Applicant’s Whites Creek Waste Water Treatment Plant.

At the time of the weather event, floodwaters submerged buildings located at the Biosolids Facility and damaged components and equipment located inside.  To document damage, FEMA prepared the following Project Worksheets (PWs): PW 5580 for building 60, the solids processing building; PW 5571 for building 46, the flares building; PW 5569 for building 80, the recirculating pump station; and PW 5531for building 45, the boiler and compressor system. 

First Appeal

In letters dated June 3, 2011, the Applicant submitted four first appeals requesting reimbursement of additional repair costs, replacement costs, construction management costs, direct administrative costs (DAC), and resident engineering costs in the amounts outlined here: $207,400.00 (PW5580); $35,105.32 (PW 5571); $60,255.24(PW 5569); and $155,741.04 (PW 5531).  The Applicant asserted resident engineering funding was for activities needed to complete the project and DAC funding was for costs incurred in completing tasks associated with the PW and those that would occur at project closeout.

In response letters dated May 11, 2012, the FEMA Region IV Regional Administrator (RA) partially approved the Applicant’s first appeals but denied all requests for resident engineering services, DAC and some additional repairs.  In all four letters, the RA acknowledged the appropriateness of special engineering services for the projects and concluded they met the “large and complex” requirement.  However, he denied the requests stating the documents provided did not highlight specific tasks on daily reports, nor specific daily hours of the personnel attributed to oversight of the facility.

Second Appeal

In July 24, 2012 letters, the Applicant submitted second appeals through the grantee requesting only reimbursement of costs associated with resident engineering services.  The requested amounts are listed as follows: $117,165.00 (PW 5580), $18,089.00 (PW 5571), $23,361.00 (PW 5569), and $109.417.00 (PW 5531).  The Grantee transmitted the appeals to FEMA on September 18, 2012. As the Applicant’s four second appeals share the same substantive issue—whether the applicant provided adequate documentation to support reimbursement of costs associated with resident engineering services—FEMA has combined its analysis and response to the issue.   

Through its appeals, the Applicant argues that the lack of adequate documentation resulted from FEMA’s delay in completing the PWs and decision to prepare individual PWs for each building at the facility.  The Applicant indicated that it verified and supported each employee’s activities through daily timesheets.  Through its second appeal submissions as well as subsequent responses to FEMA’s requests for additional information, the Applicant provided more detailed summary sheets reflecting the work performed by resident engineers.

Discussion

Pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) § 406, FEMA is authorized to provide reimbursement for the associated expenses incurred by a local government during the repair, restoration, reconstruction, or replacement of a facility damaged as the result of a declared disaster.[1]  FEMA determines allowable costs in accordance with the Office of Management and Budget (OMB) cost principles.[2]  As a local government, the Applicant must follow  the OMB Circular A-87[3] requirement that costs must be necessary for proper and efficient performance and administration of the Federal award.[4]  It also mandates that costs are adequately documented and allocable to the specific project completed with Public Assistance funds.[5]  Generally, costs that can be directly tied to the performance of eligible work are eligible for FEMA reimbursement.[6]  Further, FEMA policy provides that services of a resident engineer may be required for some projects, and that such services are estimated separately from standard engineering and design service costs.[7]

Adequately Documented and Allocable

As acknowledged earlier, FEMA does not dispute that this project meets the complexity requirement necessary to reimburse costs associated with resident engineering services.[8]  Consequently, the only issue presented in this appeal is whether the Applicant provided adequate documentation to show the costs are allocable to PWs 5580, 5571, 5569, and 5531.

Before FEMA can agree to reimburse resident engineering costs, any provided documentation must adequately show necessary work within the eligible scope of work.[9]  Submitted with its second appeal, the Applicant has provided additional information associated with the daily activities performed by resident engineers.  Specifically, detailed time sheet reports clearly demonstrate hours worked on various parts of the facility, the date the work was performed, the number of hours worked, and the rate billed for the work performed.  These daily time sheet reports also show task codes that provide a description of resident engineering services performed, which include the following: evaluating damaged equipment; tagging-out equipment for inspection, repair, and startup; inspecting equipment for cause of malfunction; preparing scope of work for facility repairs; monitoring contractor and vendors repair work for compliance with scope of work; coordinating contractor work schedules; assisting with testing and re-commissioning of the facility; and monitoring the installation of repaired equipment. 

The information submitted in conjunction with the second appeal adequately documents resident engineering services performed on the components and equipment in question at the different buildings.  Therefore, the costs are eligible for reimbursement.    

Conclusion

The Applicant provided adequate documentation to support the incurred costs associated with resident engineering services.  Accordingly, this appeal is granted contingent upon the Applicant’s ability to produce documents substantiating proper procurement.  Further, final costs must be reconciled during the closeout process.