Improved Project - Scope of Work

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

DisasterFEMA-4002
ApplicantWashington Township
Appeal TypeSecond
PA ID#025-81130-00
PW ID#1047
Date Signed2016-11-07T00:00:00

Conclusion:  Washington Township (Applicant) repaired its road through a method that went beyond the eligible scope of work of Project Worksheet 1047.  As such, the Applicant was required to obtain prior approval.  Because the Applicant did not receive prior approval, the additional work is not eligible.

Summary Paragraph

In April and May, 2011, severe storms caused flooding, which led to slope failure of the embankment along Big Indian Road (Facility) in Washington Township (Applicant).  FEMA prepared Project Worksheet (PW) 1047 obligating funding in the amount of $120,881.70 for repair of the Facility.  The scope of work (SOW) in the PW included excavation and compaction of the soil to stabilize the slope prior to repairing the Facility.  Subsequently, geotechnical testing was performed on the Facility and based on the results, the Applicant repaired the Facility through an alternate method, which placed a series of drilled piers along the roadway to stabilize the embankment.  The cost of the project cost $43,679.57 more than originally obligated.  The Ohio Emergency Management Agency (Grantee) submitted the project for approval of the cost overrun at closeout.  FEMA determined the Applicant changed the SOW without notifying the Grantee or FEMA prior to construction and considered the alternate repair method to be an improved project.  FEMA capped the costs to the original funding amount.  The Applicant appealed FEMA’s determination and argued the alternate repair method returned the Facility to its predisaster function and capacity.  The Regional Administrator (RA) denied the appeal, finding that, pursuant to 44 C.F.R. § 13.30, the Applicant failed to obtain prior written approval to change the restoration design.  The Applicant appeals the RA’s decision, arguing that the completed project stayed within the limits of the original PW and the repair was the only viable solution.  FEMA may approve an improved project, but federal funding is capped at the approved estimate of eligible costs.  The repair method utilized by the Applicant constitutes an improved project, and the increased costs are not eligible for funding.

Authorities and Second Appeals

  • Stafford Act § 406.
  • 44 C.F.R. §§ 13.30, 206.203(d)(1), 206.204(e), 206.205(b), and 206.226.
  • PA Guide at 79, 101, 110-11, 139-140 (Jun. 2007).

Headnotes

  • Pursuant to the Stafford Act § 406 and 44 C.F.R. § 206.226, FEMA may fund the cost of repairing a facility on the basis of the design of the facility as it existed immediately prior to the disaster.  
  • Per 44 C.F.R. § 206.203(d)(1), FEMA may also reimburse costs when an applicant makes improvements, but still restores the predisaster function of a damaged facility; Federal funding is capped at the approved estimate of eligible costs.
    • The repair method used by the Applicant went beyond repairing the Facility to its predisaster design.  It is an improved project and, as such, was capped at the approved estimate of eligible costs.
  • Pursuant to 44 C.F.R. §§ 13.30, 206.204(e) and 206.205(b), and the PA Guide, applicants must obtain approval from FEMA prior to incurring costs in excess of the approved amount.  Where the SOW has not changed, the RA has discretion in approving such costs.
    • The Applicant submitted the cost overrun at closeout after changing the SOW and completing construction.
    • The RA appropriately denied the costs.

 

Appeal Letter

Sima Merick
Executive Director
Ohio Emergency Management Agency
2855 West Dublin-Granville Road
Columbus, Ohio 43235-2206

Re:  Second Appeal – Washington Township, PA ID 025-81130-00,

FEMA-4002-DR-OH, Project Worksheet (PW) 1047 – Improved Project, Scope of Work

Dear Ms. Merick:

This is in response to your letter dated March 29, 2016, which transmitted the referenced second appeal on behalf of Washington Township (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of funding in the amount of $43,679.57 for improvements to Big Indian Road.

As explained in the enclosed analysis, I have determined the Applicant repaired its road through a method that went beyond the eligible scope of work approved for PW 1047.  As such, it was required to obtain prior approval from the Grantee and FEMA prior to construction.  Because the Applicant did not receive prior approval, the additional work is not eligible.  Accordingly, I am denying this appeal.

Please inform the Applicant of my decision.  This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.

Sincerely,

/s/

Christopher Logan
Director
Public Assistance Division

Enclosure

cc:  Janet Odeshoo
      Acting Regional Administrator
      FEMA Region V

 

Appeal Analysis

Background

From April 4, 2011 through May 15, 2011, severe storms caused flooding, which saturated the embankment along portions of Big Indian Road (Facility) in Washington Township, Ohio (Applicant). [1]  This led to an embankment failure which allowed the floodwaters to erode the roadway.  FEMA prepared Project Worksheet (PW) 1047 in January 2012 obligating $120,881.70 in funding for permanent repairs.  The scope of work (SOW) was written for the excavation and compaction of the soil to stabilize the slope prior to repairing the road.  In March 2013, the Applicant hired a geotechnical engineering firm to perform testing on the slope along the road.  Based on the results, the engineering firm recommended an alternate method of repair in which a series of drilled piers would be placed along the south edge of the roadway to stabilize the embankment rather than removing and replacing the existing fill and overburden soil.  The Clermont County Engineer (County Engineer) oversaw the bidding process and managed the construction of the project.  In June 2014, the Applicant completed construction utilizing the alternate repair method for $164,561.27, or $43,679.57 more than originally obligated. 

On January 23, 2015, the Ohio Emergency Management Agency (Grantee) submitted the project for closeout and for approval of the cost overrun.  FEMA determined the Applicant changed the SOW without notifying the Grantee or FEMA prior to construction.  FEMA considered the repair method used to be an improvement that went beyond restoring the embankment to its predisaster design.  FEMA notified the Grantee of this determination on March 10, 2015.  The Grantee requested FEMA classify the project as an improved project with the costs capped at the PW’s original funding amount of $120,881.70.  FEMA approved that recommendation, prepared PW 1047 Version 1 to reflect it, and closed out the project on March 17, 2015. 

First Appeal

The Applicant appealed FEMA’s determination on April 23, 2015.  The Applicant argued the work completed was not an improved project because it returned the Facility to its predisaster design, function, and capacity and requested reimbursement for the cost overrun in the amount of $43,679.57.  The Applicant further argued the approved repair method would not adequately support the Facility unlike the alternative repair method used.  The Grantee concurred and stated: (1) the method of repair was in accordance with the County Engineer’s direction pursuant to Ohio Revised Code § 5571.05, (2) the original method of repair would not adequately support the Facility and the alternate method was necessary based on the geotechnical study, (3) the repair method is not an improved project since it restored the Facility to its predisaster function and capacity, (4) the eligible work restored the Facility, but before it could be restored, the integral ground needed to be stabilized, and (5) the repair stayed within the original footprint as identified in PW 1047 Version 0, which FEMA environmental and historic preservation (EHP) staff cleared during closeout. 

FEMA sent the Applicant and the Grantee a Request for Information (RFI) on November 2, 2015, specifically asking for evidence of written approval from FEMA allowing the Applicant to change the SOW and increase funding for the project before it initiated construction.  The Grantee responded to the RFI on November 30, 2015, reiterating that although the work was not approved prior to completion, it stayed within the original footprint and returned the Facility to its predisaster design, function, and capacity.  The Grantee also included a letter from the engineering firm, which stated that the engineered drawings for the repair constituted a complete geotechnical study and no written report of alternatives was prepared because the solution chosen was the only economically viable one. 

The FEMA Region V Regional Administrator (RA) denied the appeal on December 23, 2015, finding that pursuant to Title 44 of the Code of Federal Regulations (44 C.F.R.) § 13.30, the Applicant failed to obtain prior written approval to change the restoration design and associated budget increase.  The RA determined that the alternate method of repair went beyond simply restoring the Facility to its predisaster design because the repairs implemented a structural stabilizer to mitigate against embankment failure in future flood events.  As such, the RA found the work conducted went beyond the authorized scope. 

In response to the Grantee’s arguments, the RA addressed each one.  First, the RA found that FEMA was not obligated to fund the work merely because the County Engineer revised it.  While acknowledging the legal role of the County Engineer in supervising the repair of the township’s roads,[2] the RA found that it did not obviate the Applicant’s requirement to receive FEMA’s approval prior to construction.  Second, the RA noted that the boring results provided did not include a supporting technical report to show that the Applicant examined other methods of repair or that it performed a cost analysis, to determine the most cost effective option.  Furthermore, the RA found the documentation submitted included correspondence from 2011, which showed the Applicant was contemplating utilizing the alternate repair method two years prior to the geotechnical study.  The RA interpreted this as an indication that the Applicant did not make its decision to utilize the alternate repair method based on the boring results.  Finally, the RA noted that although FEMA EHP staff cleared the project at closeout, that clearance is only one component of a project’s eligibility review and all grant compliance must be achieved to obtain funding.  Ultimately, the RA determined the Applicant’s repair method went beyond the approved SOW, installation of the piers improved the Facility, and FEMA correctly classified it as an improved project and capped funding.

Second Appeal

On March 3, 2016, the Applicant appealed the RA’s decision in the amount of $43,679.57.  The Applicant reiterates that the County Engineer’s office managed the project and hired an engineering firm to perform a study and the firm then presented its recommended repair.  The Applicant argues that the completed project was within the approved SOW of the original PW and the repair was the only viable solution based on the study. 

The Grantee concurred and addressed each of the RA’s reasons for denial.  The Grantee argues that although the Applicant did not get approval prior to completing the project, the repair method was consistent with the PW and FEMA approved similar work in other PWs under the same disaster.  The Grantee reasoned that while the PW’s SOW included excavation and backfill, there is no technical evidence to show that it was the most appropriate stabilization method.  The letter from the engineering firm stated that the test data from the borings provided the only economically viable solution.  The purpose of the soil borings was to determine the appropriate method of repair, not dispute other methods of repair. 

The Grantee argues FEMA failed to substantiate through citation of any professional standards that a full written report was required to determine the method of repair.  The Grantee states that FEMA approved stabilizations under the same disaster based on soil borings in lieu of written geotechnical reports.[3]  Regardless, the Grantee claims that the Applicant restored the Facility, which is only the road, to its predisaster design.  It states that the integral ground is not the Facility and stabilization of it is merely an action required to restore the Facility and therefore the PW is not an improved project.  Though the Grantee contends that the project was not an improved project, it agrees the budget change was submitted at closeout, which it contends is allowed under 44 C.F.R. § 206.205(b).  The Grantee claims that FEMA is arbitrarily implementing its regulations and if FEMA cites to 44 C.F.R. § 13.30, then it needs to implement it in all circumstances, which would negate the authority of the RA allowed under 44 C.F.R. § 206.205(b)(2), which it argues allows the RA to obligate additional funds where the eligible costs exceed the initial estimate.

Discussion

Improved Project-Change in Scope of Work

Pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) § 406, FEMA may fund the cost of repairing, restoring, reconstructing, or replacing an eligible facility on the basis of the design, function and capacity of the facility as it existed immediately prior to the major disaster.[4]   FEMA may also reimburse costs when an applicant makes improvements, but still restores the predisaster function of a damaged facility pursuant to 44 C.F.R. § 206.203(d)(1).[5]  In such instances, a grantee's approval must be obtained prior to the start of the construction, and funding for such improved projects is limited to the Federal share of the approved estimate of eligible costs.[6]

In addition, per 44 C.F.R. § 13.30(c)(2) and (d)(1) and FEMA’s Public Assistance (PA) Guide, when an applicant changes the scope of work or needs additional funding, it must obtain the prior approval of FEMA.[7]  In these cases, an applicant should notify the grantee as soon as possible and should not assume that unapproved costs can be reported at the end of the project and that it will receive the funds automatically.[8]  In this instance, PW 1047 Version 0 reiterates the notice requirement, stating, “the applicant must notify the [Grantee] and forward all documentation and Scope of Work change requests.  Approval from [the Grantee] and/or FEMA will be required for any change in the scope of work before that work begins.”[9] 

The Applicant and Grantee contend that the alternate method of repair restored the Facility to its predisaster design, the SOW did not change, and consequently the work did not constitute an improved project.  The Applicant argues that, “[t]he final project was within the limits of the original PW.”[10]  The Grantee adds further support by noting that, “a change in method of repair… does not constitute a significant diversion from the approved scope of work…”[11]  Both assert that the Applicant was not required to receive approval from the Grantee or FEMA prior to construction because the piers stabilizing the ground did not affect the road’s design.   Specifically, the Grantee claims that the work done to the integral ground is distinct from the road and is not part of the Facility, which it contends is only the road.[12]   The Grantee further states that, “FEMA’s statement that ‘the allowed repair of the integral ground is to return the ground to the design as it existed immediately prior to the disaster’ infers that the only eligible method of repair for an embankment failure is to return the failed, or new, soil, to act as the stabilizer.”[13]  

Determining if the SOW changed requires a comparison between what is described in a PW’s SOW and the work that was actually performed.  FEMA policy requires the SOW to “be completely described and correspond directly to the cause of damage.  The work should be specified as an action with quantifiable (length, width, depth, capacity) and descriptive (brick, wood, asphalt, timber deck bridge) terms.  The SOW should not be described only as ‘restore to pre-disaster design’”[14]  In short, the SOW must be detailed enough to encompass the work that needs to be performed in order to restore a facility to its predisaster design.

In this instance, PW 1047 Version 0 listed the eligible Facility as the “Asphalt Pavement Road and Embankment Slope” and the SOW allowed for excavation along the failed embankment and backfill to repair the road.[15]  As stated in the PW, the flooding and rain saturated the embankment and damaged the Facility, which exhibited a rough rectangular crack pattern 800-ft long by 16-ft wide and sunk (+/_ 4-inch down).[16]   The original repair to the road adequately repaired it, as it took into account the need to remove failed pavement and sub-base.  Specifically, the repair would have replaced the failed road section with new compacted 7-in sub-base, 8-in base course and two layers of 1-1/2-in thick intermediate and surface course hot mix asphalt to build the road back to its pre-disaster condition and function.

The Applicant’s engineer, however, changed the method of repair to use a pier wall to stabilize the embankment rather than by excavation and backfill.[17]  The mention of concrete piers along 400 feet of roadway is absent from the SOW in PW 1047 Version 0.  By the Grantee’s and Applicant’s own admissions,[18] this alternate repair method changed the embankment or “the integral ground” in order to better stabilize the embankment and road to mitigate against future failures, more so than the stabilization that existed prior to the disaster.[19]  Consequently, the work done to the integral ground or the embankment did not merely stabilize the embankment and road, it increased the stability.  While understandable, it does not excuse the Applicant from complying with 44 C.F.R. §§ 13.30(d)(1), (c)(2), and 206.203(d)(1), as well as the grant requirements outlined in PW 1047 Version 0.  In this instance, the constructed repair method improved the design of the project by implementing a structural stabilizer to mitigate against embankment failure in the future.  Accordingly, the work constitutes and improved project as defined under 44 C.F.R. § 206.203(d)(1). 

The Applicant and Grantee also argue that this alternative method of repair was the only economically viable option based on its engineer’s recommendations.[20]  However, as PW 1047 Version 1 states, FEMA reviewed the Applicant’s analysis of the soil borings after project implementation and did not conclude the change in method of repair was justified.[21]  The Applicant has not submitted any documentation to sufficiently demonstrate this point.  The engineering firm’s reasoning for electing to support the roadway with piers demonstrates a choice made by the Applicant and the engineers as to what they determined to be the most efficient method for repairing the road.  Because FEMA did not have the opportunity to review other possible alternatives, it could not assess the cost effectiveness.  Without ascertaining if the alternate repair method was cost effective, FEMA could not have approved the SOW change.

Alleged Inconsistent FEMA Determinations

Pursuant to 44 C.F.R. § 206.205(b)(2), an RA reviews a project’s accounting to determine the eligible amount for reimbursement and approves the eligible costs for a project.[22]  Where eligible costs exceed the initial approval, an RA will obligate additional funding as necessary.[23]  This regulation applies to cost reconciliation, whereas 44 C.F.R. § 13.30 addresses changes in both the cost and scope of a project and requires that the grantee or applicant receive approval from FEMA prior to any change in the SOW.[24]  The Grantee argues that FEMA is inconsistently applying 44 C.F.R. § 13.30 and § 206.205 because FEMA approved increased funding at closeout for other PWs where the Applicant did not receive prior approval from FEMA.  This assertion is incorrect.  Under 44 C.F.R. § 206.205(b)(2), the RA’s authority to grant costs exceeding the original estimate is limited only to those costs that are eligible.  In this instance the applicant failed to comply with 44 C.F.R. § 13.30 to amend the SOW, therefore all work performed outside the approved SOW is ineligible.

The Grantee also contends that because FEMA approved similar work in other projects under the same disaster, this alternate method of repair is of the type that FEMA should approve because it is eligible.[25]  It further argues that there was no technical evidence that the original method of repair was the appropriate method of repair, comparing this PW to other PWs with similar circumstances.[26]  However, these arguments omit the singular issue which is that the FEMA regulations required the Applicant to obtain approval from FEMA because it changed the scope of work and needed additional funding,[27] or “obtain approval for [the] improved project from the State prior to the start of construction.[28]  Contrary to the terms and conditions outlined in the grant, the Applicant did not notify the Grantee or FEMA and failed to receive prior approval to change the SOW.[29]

Conclusion

The alternate repair method utilized by the Applicant constitutes an improved project.  FEMA correctly classified it as such and capped funding.  Accordingly, the additional costs are not eligible for PA funding. 

 

[1] Project Worksheet 1047, Washington Township, Version 0 (Jan. 10, 2012) (stating that the “Damaged Facility” was the “Asphalt Pavement Road and Embankment Slope” located at “2054-2149 Big Indian Road, Washington, Ohio 45153”).

[2] Ohio Rev. Code § 5571.05 (1953) Supervision of maintenance and repair of township roads (“In the maintenance and repair of roads, the board township trustees and any township highway superintendent appointed by it, shall be subject to the general supervision and direction of the county engineer. Such board of township trustees shall follow the direction of the engineer as to methods to be followed in making repairs.”).

[3] Project Worksheet 469, Washington Township, Version 2 (Nov. 25, 2015). 

[4] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 406, 42 U.S.C. § 5172 (2007); Public Assistance Guide, FEMA 322, at 79 (June 2007) [hereinafter PA Guide].

[5] 44 C.F.R. § 206.203(d)(1) (2010); PA Guide, at 110-111.

[6] Id.

[7] 44 C.F.R. §§ 13.30(c)(2), (d)(1); PA Guide, at 110-111.

[8] PA Guide, at 140.

[9] PW 1047, Washington Township (Version 0).

[10] Letter from Fiscal Officer, Washington Township, to Alt. Governor’s Authorized Rep., at 1 (March 3, 2016) [hereinafter Applicant’s Second Appeal Letter].

[11] Letter from Exec. Dir., Ohio Emergency Mgmt. Agency, to Assistant Adm’r, Recovery Directorate, Fed. Emergency Mgmt. Agency, at 4 (Mar. 29, 2016) [hereinafter Grantee’s Second Appeal Letter].

[12] Id. at 3.

[13] Id.

 [14] PA Guide, at 101.

[15] PW 1047, Washington Township (Version 0) (stating that “the Applicant [will] excavate or scarify a maximum of 800-FT long X 16-FT wide X 18-in deep of damaged asphalt road surface through damage road sub-base.  The road sub-base construction of 7-in thick and lay 8-in aggregate base course with both minimum of 95% (ninety five percent) density compaction and replace damaged two layers of 1-1/2-in thick intermediate & surface course (AC-20) hot mix asphalt, to restore storm damage facility.  In addition, the PW’s SOW provided that to repair the road, the Applicant needed to excavate, provide subgrade compaction, filter fabric fence, lay 0-8 inches asphalt concrete base course, asphalt concrete intermediate course and leveling, asphalt surface course, traffic control, construction layout stakes, mobilization and demobilization of equipment, and hauling of excess soil or dirt.”).

[16] Id.

[17] Project Worksheet 1047, Washington Township, Version 1 (March 11, 2015) (stating that “[a]long a 400 linear foot section of roadway, the applicant installed 24 inch diameter reinforced concrete drilled shafts spaced 3.5 feet on center.  In the gap created by the spacing in the first alignment of piers, and in a second alignment slightly off from the first, additional 24 inch diameter unreinforced concrete piers were installed . . . 800 linear feet of roadway was repaved with asphalt.”).

[18] Grantee’s Second Appeal Letter, at 2; Applicant’s Second Appeal Letter, at 1.

[19] Grantee’s Second Appeal Letter, at 2.

[20] Letter from Senior Geotechnical Eng’r, Thelen Associates, to Clermont Cnty. Engineers Office, at 2 (Feb. 26, 2015) (stating that “[r]emoval and replacement of the existing fill and overburden soils would require excavations up to 10 to 15 feet deep along the road, necessitating the total closure of the roadway.  In addition, due to the limited access, it would be necessary to double handle the soils for an excavate/refill process.  The drilled pier wall was able to be installed during daylight hours, allowing the road to remain open in the evenings, and was able to be installed over a period of weeks.”). 

[21] PW 1047, Washington Township (Version 1).

[22] 44 C.F.R. § 206.205(b)(2).

[23] Id.

[24] 44 C.F.R. §§ 13.30(c)(2), (d)(1); 44 C.F.R. § 206.205(b)(2).

[25] Grantee’s Second Appeal Letter, at 4.

[26] Id. at 3.

[27] 44 C.F.R. §§ 13.30(c)(2), (d)(1); PA Guide, at 110-111.

[28] PA Guide, at 111. (emphasis in original).

[29] On November 3, 2011, the Applicant’s Fiscal Officer, signed off on PW 1047 before any work commenced, agreeing to the condition that if the scope changed, the Applicant would notify FEMA and the Grantee before work commenced.  PW 1047, Washington Township (Version 0).  In arguendo, if the Applicant did not change the SOW, there is still the issue of cost overrun.  Pursuant to 44 C.F.R. §§ 13.30 and 206.204(e), all requests for additional funding for cost overruns must contain sufficient documentation to support the eligibility of all claimed work and costs, meaning that even were the work to be eligible, the costs also must be eligible.  44 C.F.R. § 13.30 requires applicants to obtain approval from FEMA prior to incurring costs in excess of the approved amount.  FEMA does have discretion on a case-by-case basis to consider funding work completed without prior approval, if the applicant, to demonstrate eligibility and reasonableness, provides sufficient documentation.  The burden is on the applicant to do so.  In this instance, the Grantee argues that budget changes are allowed at closeout and FEMA cannot arbitrarily implement regulations.  It argues that if FEMA enforced it here, it must with all projects including those where the final costs are less than what is budgeted.  However, although FEMA may waive its approval for post-award changes in budgets, any budget changes that cause an increase in costs must be approved by FEMA.  While FEMA may have approved other projects in the past at closeout, this neither obligates FEMA to approve this project, nor does it conflict with its policy.  The Applicant, engineering firm, and Grantee repeatedly argue the alternate repair method was the only economically viable option.  While the geotechnical report does not need to include a cost analysis, as the Grantee pointed out, there is no other documentation to support the costs for the repair method were reasonable and necessary.  In short, the cost increase of $43,679.57 required FEMA approval and FEMA did not approve it.

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