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Second Appeal Brief
PA ID# 000-UV3S5-00; University of Texas Medical Branch
PW ID# 14602; Appeal Timeliness
Conclusion: The University of Texas Medical Branch’s (Applicant) second appeal is untimely because the Texas Division of Emergency Management (Grantee) submitted it beyond the 60-day regulatory timeline.
From September 12 to 13, 2008, Hurricane Ike caused substantial damage to the Applicant’s campus in Galveston, Texas. FEMA documented replacement costs and DAC for the Applicant’s Information Technology/Information Systems (IT/IS) contained in its John Sealy Hospital Building in Project Worksheet (PW) 14602 estimated at $125,459.95. The Applicant incurred labor costs and travel expenses for grant administration exceeding the approved DAC estimate and requested an amendment to increase DAC. FEMA denied the request because the project had not incurred a cost overrun at that time. On November 16, 2011, the Applicant requested an improved project to purchase more modern equipment and to place the equipment in various areas throughout its campus, which FEMA approved and capped at $112,913.96. The Grantee requested closeout, and informed FEMA the Applicant did not competitively procure one of its DAC contracts, which was a time and materials contract with an indefinite value and no ceiling price. At closeout, FEMA determined the Applicant did not track DAC for eligible costs separately from improvements and deemed the travel expenses ineligible as indirect costs prorated across multiple PWs. Based on actual DAC claimed minus costs for labor incurred after the improved project’s approval and travel expenses, FEMA awarded estimated DAC without determining the amount of actual costs substantiated or addressing the procurement issue raised by the Grantee. The Applicant appealed FEMA’s determination arguing: (1) grant management continues regardless of improvements for up to three years after a disaster’s closure; (2) improved project caps do not apply to DAC; (3) it tracked eligible costs separately from improvements in accord with FEMA policy by claiming DAC separately and with specific PWs; (4) FEMA’s DAC estimate did not account for project complexities; (5) FEMA did not advise that it would cap DAC or require DAC for eligible work to be tracked separately from improvements; (6) the travel expense methodology complies with FEMA policy and OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments; and (7) FEMA granted travel expenses claimed under the same methodology in a recent first appeal, which is precedent for this appeal. The FEMA Region VI Regional Administrator (RA) denied the first appeal and concurred with the findings at closeout. On second appeal, the Applicant requests $5,397.95 in DAC and reiterates its previous arguments. The Applicant also contends: (1) the RA erred in applying FEMA Disaster Assistance Policy, DAP9525.9, Section 324 Management Costs and Direct Administrative Costs because “management costs” were not claimed; (2) FEMA’s policy to track costs for improvements separately from eligible work only applies to “repair or replacement costs,” not DAC; (3) a recent second appeal decision deemed DAC eligible for the life of a grant and on appeal; (4) FEMA’s DAC policy lacks clarity and specificity, thus denying DAC for inadequate documentation would be arbitrary and capricious; and (5) FEMA’s guidance conflicts with federal law allowing allocation of direct costs to multiple cost objectives.
Authorities and Second Appeals
- Stafford Act §§ 423, 705(c).
- 44 C.F.R. § 206.206(c)(2).
- FP-205-081-2, Stafford Act Section 705, Disaster Grant Closeout Procedures.
- Fla. Dep’t of Transp., FEMA-1785-DR-FL, at 3 (July 9, 2016).
- Per 44 C.F.R. § 206.206(c)(2), a grantee must review and forward an applicant’s appeal to FEMA within 60-days of receipt. FEMA has no authority under the Stafford Act or 44 C.F.R. to grant time extensions for filing appeals.
- The Grantee submitted the second appeal 137 days after receipt, thus it is untimely.