Improved Project – Procurement – Direct Administrative Costs

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

DisasterFEMA-1980
ApplicantJoplin Schools
Appeal TypeSecond
PA ID#097-U4T46-00
PW ID#(PW) 1684
Date Signed2018-07-16T00:00:00
Conclusion: Joplin Schools (Applicant) failed to seek additional funding in a timely manner, and did not justify its request for Cost Estimating Format (CEF) adjustments.  The Applicant’s procurement of administrative services did not comply with federal standards, and the Acting Regional Administrator exercised appropriate discretion in awarding Direct Administrative Costs (DAC) capped at $155 per hour and denying travel costs or costs incurred when no contract was in place. 
Summary Paragraph
On May 22, 2011, a tornado damaged Old South Middle School, which qualified for replacement.  FEMA prepared PW 1684 to address the replacement project and, in 2012, approved an improved project to build a new school at a different location.  In 2014, the Applicant requested an increase to the funding cap for additional work and higher costs not reflected in the CEF.  FEMA denied the request as untimely.  The Applicant renewed its request at project closeout in 2016, and FEMA again denied the request as untimely.  The Applicant also sought DAC at closeout, and FEMA found that the Applicant’s procurement of its DAC contracts did not meet federal standards, but awarded reasonable costs at a maximum rate of $155 per hour, while denying travel costs and costs incurred while there was no contract in place.  The Applicant appealed, reiterating its prior arguments.  The Acting Regional Administrator denied the appeal, finding that the Applicant’s request was untimely and the requested cost increases were unsupported.  Regarding DAC, it determined that the $155 hourly cap was reasonable absent justification warranting a higher rate, so additional DAC funding was ineligible.  The Applicant submitted a second appeal, arguing that it could seek a revision in the SOW at any point before closeout.  It argues that its procurement of DAC contracts complied with federal regulations, its actual costs were reasonable, and the travel costs were reasonably apportioned. 
Authorities and Second Appeals
  •  Stafford Act § 324.
  • 2 C.F.R. pt. 225, app. A § (C)(2).
  • 44 C.F.R. §§ 13.30, 13.36, 13.43, 206.201-206.203, 206.206. 
  • DAP 9529.9, at 2-5.
  • PA Guide, at 51-52, 79, 96, 110-111, 139-140.
  • PA Policy Digest, at 71.
  • Los Angeles Dep’t of Water and Power, FEMA-1577-DR-CA, at 2.
  • City of Cedar Rapids, FEMA-1763-DR-IA, at 7, 11.
  • Columbus Reg’l Hosp., FEMA-1766-DR-IN, at 7-8.
  • City of Nome, FEMA-4050-DR-AK, at 5-6.
  • Vill. of Waterford, FEMA-4020-DR-NY, at 4.
Headnotes
  •  The PA Guide requires applicants to submit damage within 60 days of the kickoff meeting, submit new damage as soon as possible, and obtain approval when the need for additional funding or a revision in scope is anticipated.
    • The Applicant did not identify the damage until more than a year after the PW was obligated, and did not obtain approval when it anticipated the need for additional funds.
  • Under 44 C.F.R. § 206.206, the burden is on the Applicant to substantiate its appeal with documented justification.
    • The Applicant failed to justify its request for increased costs and CEF factors.
  • 44 C.F.R. § 13.36 requires full and open competition unless public exigency or emergency makes competition infeasible.
    • The Applicant did not demonstrate that any public exigency or emergency made noncompetitive procurement necessary.
  • Following a procurement noncompliance, 44 C.F.R. § 13.43 authorizes FEMA to award reasonable costs as an enforcement action.
    • Awarding hourly costs capped at $155 per hour, but disallowing, travel costs and costs incurred when no contract was in place, was an appropriate exercise of discretion.

 

Appeal Letter

Ernie Rhodes, Director
Missouri Department of Public Safety
State Emergency Management Agency
2302 Militia Drive
P.O. Box 116
Jefferson City, MO 65102
 
Re:  Second Appeal – Joplin Schools, PA ID: 097-U4T46-00, FEMA-1980-DR-MO, Project Worksheet (PW) 1684 – Improved Project – Procurement – Direct Administrative Costs
 
Dear Mr. Rhodes:
 
This is in response to a letter from your office dated January 16, 2018, which transmitted the referenced second appeal on behalf of Joplin Schools (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $6,949,377.33 in costs, including a proposed change to the scope of its improved project, an increase in estimated costs, and Direct Administrative Costs (DAC) above those previously awarded.
 As explained in the enclosed analysis, I have determined that the Applicant failed to seek funding for additional work in a timely manner, and failed to justify its request for adjustments to the cost estimate.  Regarding DAC, the Acting Regional Administrator took appropriate action in awarding costs capped at $155 per hour, as a remedy for the Applicant’s noncompliance with procurement regulations.  It was also proper, in accordance with federal regulation, not to award travel costs or costs incurred during a period when no contract was in place.  Accordingly, I am denying this second 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/
          Jonathan Hoyes 
          Director
          Public Assistance Division                                                                       
                                                                       
Enclosure
 
cc: Paul Taylor
      Regional Administrator
      FEMA Region VII

 

Appeal Analysis

Background
On May 22, 2011, a catastrophic EF-5 tornado struck Joplin, Missouri.  The accompanying high winds and flying debris damaged Old South Middle School, which is owned and operated by Joplin Schools (Applicant).  Following a site visit and analysis conducted by two registered architects, FEMA determined that the school was more than 50 percent damaged and warranted replacement, and created Project Worksheet (PW) 1684 to address the replacement.  The model used to establish replacement was an RS Means square foot model supplemented with a detailed take-off[1] and the architects’ observation of the site.  Version 0 of the PW provided that eligible Direct Administrative Costs (DAC) would be captured in a subsequent amendment.
On July 5, 2012, the Applicant requested an improved project, seeking to rebuild Old South Middle School on a new site as a split-level facility, rather than the original two and three story configuration.[2]  On August 6, 2012, FEMA approved the request.[3]  Accordingly, on September 27, 2012, it obligated a PW 1684 Version 1, which did not include a reference to DAC or a DAC estimate.  Based on the approved PW’s scope of work (SOW) describing the eligible project and the cost estimating format (CEF) factors used, the capped improved project cost was $15,704,113.00, less insurance proceeds of $8,400,135.00, for a total project cap of $7,303,978.00.  By a letter dated September 28, 2012, Missouri’s State Emergency Management Agency (Grantee) notified the Applicant of the obligation of the amended PW.[4]  It advised the Applicant that, if it wished to appeal the obligation, it had 60 days to do so.  It also advised the Applicant that any damage that was not previously identified needed to be reported to the Grantee in writing within 60 days after the initial visit.[5]
On June 30, 2014, the Applicant submitted a request to the Grantee seeking additional funding for what it called errors and omissions.[6]  It stated that it hired an architectural firm to compare drawings of the Old South Middle School to the FEMA CEF estimate.  It first stated that its architectural firm had prepared a new CEF using a different city adjustment factor drawn from 2011 Quarter 4, rather than the 2011 Quarters 2 and 3 factors that FEMA had used, which resulted in an increase of estimated costs for each CEF item.  It also stated that it used a different factor to estimate additional soft costs for the project, although it did not explain how it arrived at the revised factor.  It then provided an itemized list of its specific requests.
First, for certain building components,[7] it stated that its architectural firm’s estimate was calculated by “using consistent RSMeans costing with approved CEF add-on factors,”[8] which resulted in a higher total estimate than the estimate in the PW.  The Applicant attached a spreadsheet, which compared the FEMA CEF estimate and its own revised estimate for each of these line items.  This spreadsheet showed that in various places the Applicant utilized different cost codes, unit prices, or unit quantities, as well as the different city adjustment factor and soft cost factors discussed above.
Second, the Applicant stated that its architectural firm had found that the school had an additional 5,902 square feet of acoustical ceilings.  Third, it asserted that the CEF had omitted custom plaster panels, wood trim, and an 18-foot-tall custom hardwood folding door in the auditorium.  Fourth, it argued that the CEF should have had a higher estimated cost for plumbing based on “the median of RSMeans square foot costs and the Consumer Price Index adjusted 2010 actual East Middle School plumbing costs with approved CEF add-on factors.”[9]
Fifth, the Applicant argued that the CEF did not allow for additional square footage for water closets, lavatories, and elevators required for Americans with Disabilities Act (ADA) compliance, and that an additional 941 square feet needed to be added.  Sixth, it requested reimbursement of the pro-rated cost for its architectural firm’s review of the CEF.  Seventh, it argued that various cost factors in the CEF should be adjusted to use 2011 Quarter 4 data, rather than 2011 Quarter 2 data.  Finally, it stated that its construction management firm had recently competed two Kansas City area school projects that cost 24 percent lower[10] than comparable Joplin schools, and requested a funding increase of 17 percent to account for adverse economic conditions and a shortage of sub-contractors and labor.  Accordingly, the Applicant requested a total increase in funding of $7,558,620.72.
On August 7, 2014, FEMA denied the Applicant’s request as untimely, stating that the Applicant had 60 days from September 27, 2012, the date on which PW 1684 Version 1 was obligated, to appeal the amount of the grant.[11]  Rather than appeal FEMA’s determination, the Applicant renewed its request for additional funding above the approved improved project cap at closeout.  Its request came in two letters, both dated March 11, 2016, which were nearly identical to the 2014 request.[12]  The Applicant’s arguments were the same, but it used a smaller factor for CEF soft costs bringing its total request down to $6,908,411.05.
At closeout, the Applicant also sought reimbursement for DAC, including force account labor in the amount of $4,998.12, and services contracted from Witt Associates (Witt) in the amount of $79,335.83.[13]  The Applicant contracted with Witt to provide professional services for a term to run from June 9, 2011, through June 8, 2014.  Prior to its expiration, the Applicant signed a Cooperative Purchasing Agreement with the Houston-Galveston Area Cooperative (HGAC) which authorized the purchasing of services from certain designated contractors, including Witt.  The Applicant then signed a second agreement with Witt, designated Task Order No. 1, with a term beginning January 1, 2012, and continuing through May 31, 2013, and with minor changes from the original agreement.
In response to these requests, FEMA prepared a determination memorandum stating that the Applicant had 60 days from the obligation of PW 1684 Version 1 to appeal the amount obligated.  It also noted that the improved project was capped at the amount associated with restoring the facility to its predisaster design, but that the Applicant was requesting an amount which equaled the entire actual cost of the improved project.  Finally, it stated that the Applicant had not separated the actual cost of completing the original SOW from the cost to complete the improved project, and that these costs could not be tracked separately because of the alterations to the facility’s predisaster design.  Accordingly, these costs were determined to be ineligible.
With respect to DAC, FEMA concluded that the there was no documentation supporting the selection of Witt or that it was the least cost alternative available.  It determined, however, that FEMA could award reasonable costs, which it fixed at $155 per hour, except where actual costs were lower than that figure.  It disallowed any DAC costs claimed for a period not covered by one of the contracts with Witt, as well as those not directly related to a specific project, which referenced Witt employee travel expenses that had been allocated across various PWs.[14]  The determination memorandum found that all claimed force account DAC was eligible.  Accordingly, it awarded an additional $43,367.67 in DAC.[15]
In accordance with the determination memorandum, FEMA prepared PW 1684 Version 2, which included the additional DAC found to be eligible, and deducted total actual insurance receipts of $8,753,770.00, for a final approved amount of $6,993,710.67. 
First Appeal[16]
First Appeal Letter
The Applicant appealed FEMA’s determination in a letter dated April 25, 2017.  First, the Applicant stated that, when PW 1684 was being formulated, FEMA would prepare a draft PW with a SOW and estimated costs, and then give the Applicant five business days to propose revisions.  FEMA would then take the Applicant’s revisions and create a new draft, which the Applicant would again have five business days to review.  It asserted that this was an unattainable and unfair timeline for analysis, and that it found it difficult to participate in the formulation of the PWs when completion of the replacement school facility was its priority.  It stated that it believed at the time that the SOW was not correct, but believed that FEMA would continually amend the PW through closeout.  The Applicant noted that the requested increase in funding related only to the original eligible project, and not the improved project. 
The Applicant argued that it was not required to appeal the obligated PW if it disagreed with the obligated amount, but rather all it needed to do was request a new PW version at some point when changes were identified.  It argued that it could not have made the request until its architectural firm had completed its review.  It also argued that FEMA had informed it that it could continue to request revisions to the PW, and attached an email exchange in which it asked a FEMA employee the following:
I understood you to say a project could be declared an Improved Project and a subsequent Request for Version Change could be approved for any error or omissions or single line item within that PW, including approval of this scenario: a version change to the PW line item estimate of cost/sq ft, if competitive bid costs come in higher than the estimate listed in the PW.  Is this correct?[17] 
The FEMA employee responded, “If the cost per square foot is related to approved FEMA scope and in line with appropriate codes and standards, your statement is correct.”[18]
With respect to DAC, the Applicant explained that on May 26, 2011, Witt submitted a proposal to provide disaster recovery administrative services, and the Applicant entered into a three-year agreement with Witt on June 1, 2011.  On December 22, 2011, the Applicant joined HGAC, and replaced the existing agreement with Witt with Task Order No. 1, reflecting its selection of Witt through HGAC but leaving the rate schedule and reimbursable expenses at the same or lower rates.  In January 2016, the Applicant agreed to Task Order No. 1, Modification No. 1, which extended the agreement to May 31, 2016, and left the rate schedule and reimbursable expenses unchanged from Task Order No. 1.  The Applicant argued that there was no requirement that it contract with the lowest cost provider.  It stated that it entered into the original agreement with Witt under its authority to quickly contract in an emergency situation without having to compare competing proposals.  It argued that this was reasonable because the rate that Witt gave them was the same or lower as that given to other clients, including the U.S. General Services Administration (GSA).  The Applicant stated that the reasonableness of its decision to contract with Witt was confirmed when it later joined HGAC and received the lowest rate, regardless of whether it was on the HGAC schedule or in the original contract.  It argued that HGAC was an appropriate tool to confirm that its original contract with Witt was properly procured.
Next, the Applicant argued that, apart from the procurement issue, Witt’s contract rates were reasonable and that FEMA should not have set $155 per hour as the reasonable rate.  It argued that Witt’s contract rates for the Applicant were the same as those provided for other HGAC members and for other government entities.  It stated that it determined that Witt’s proposed prices and services more closely met its needs compared to alternatives, although it did not specify what alternatives were considered or what criteria it used in its evaluation. 
Regarding travel costs, the Applicant explained that these costs were for travel activities that allowed Witt’s employees to provide services under the contract.  It argued that it was reasonable to take these costs and apportion them among the various projects that the particular Witt employee worked on, distributed according to the time utilized for each project.  It argued that the 2014 regulations in 2 C.F.R. Part 200 clarified the older regulations that were in effect at the time of the disaster, and that the later regulation stated that if a cost benefitted two or more projects or activities in proportions that can be determined without undue effort, the cost should be allocated to the projects based on proportional benefit.  If the proportional benefit could not be determined, then the costs could be allocated or transferred between the projects on any reasonable documented basis.
Finally, the Applicant argued that contracts were in place for the entire duration of the period during which Witt charged the Applicant for disaster recovery services.  It again recounted the series of contracts that it entered into with Witt, and asserted that the agreements were confirmed to extend from the initial date through May 31, 2016.  It argued that the parties intended to continue their relationship, so it was sufficient to sign Modification No. 1 in 2016.  On April 27, 2017, the Grantee forwarded the Applicant’s appeal to FEMA without a recommendation.
Final Request for Information
On July 26, 2017, FEMA sent the Applicant and Grantee, a final request for information (Final RFI), first noting that the Applicant had submitted over 9,000 pages of documents that were unindexed, spanning multiple dates and pages.  The Final RFI stated that it was unclear which, if any, of the documents supported the Applicant’s claims.  Accordingly, it stated that FEMA was returning the exhibits so that they could be identified and their relevance could be explained.  It noted that this first appeal involved issues similar to the appeals of PWs 575, 1438, 1980, 1336, 488, and 1799, and stated that the administrative records of those various PWs had also been examined and were incorporated by reference.
Next, with respect to the claimed additional errors and omissions, the Final RFI requested that the Applicant provide the total actual costs of the improved project, and the separately tracked expenses associated only with the eligible original project.  It requested that the Applicant give specific reasons why 2011 Quarter 4 data and increased CEF cost adjustment factors should have been used, other than the desire for the same factors to be used in this project as were used in another project.  It requested specific reasons why any part of the CEF that FEMA used was erroneous, and asked for documentation supporting its claim for job escalation factors.  It requested documentation demonstrating that the Applicant filed an appeal after any one of a list of events that took place regarding PW 1684. 
With respect to DAC, the Final RFI requested documentation showing that the Applicant considered submissions of vendors other than Witt.  It asked what sources the Applicant relied upon to select Witt, and whether it considered only information provided by Witt itself.  Regarding Task Order No. 1, it requested documentation showing that Witt’s inclusion in the HGAC was the result of a solicitation that approximated the Applicant’s needs, and was specific to school systems.  It requested a justification that the hours that Witt’s employees billed were appropriate to the tasks required for the PW.  Regarding travel costs, it requested documentation showing that any of the travel costs were incurred specifically and exclusively for PW 1684.
The Applicant responded to the Final RFI in a letter dated August 22, 2017.  It first stated that the total cost for the improved project was $16,318,668.79, and explained that it did not separately track the improvements because the new school was built wholly apart from the estimated original project.  It also explained that it was not seeking any actual replacement costs, but rather only estimates related to the theoretical design and SOW associated with the original eligible project.  It argued that its cost escalation request was supported because contractors and sub-contractors used for the project were from out of town or state, and therefore additional expenses were incurred.  Additionally, the construction boom following the tornado damage drove costs up, justifying higher CEF factors. 
Regarding specific CEF factors alleged to be erroneous, the Applicant contended that the building’s location in a residential neighborhood meant that there would not have been a place to stage equipment and materials, and that the CEF factors needed to be increased to account for those issues.  It argued that it was not claiming costs for any additional damages, but only changes to the original SOW, but it also stated it was claiming costs for errors and omissions not previously included in the SOW.[19]  It acknowledged that it had not previously filed any appeals regarding this PW.
Regarding DAC, the Applicant stated that it entered into the agreement with Witt because it had extensive experience in disaster recovery and its rates were reasonable.  It acknowledged that it originally relied upon Witt’s representations and recommendations when reaching this conclusion.  After the Applicant joined HGAC, the reasonableness of Witt’s rates was confirmed and any change of service provider would have created an unacceptable delay.  The Applicant noted that Witt’s rates were not specific to a single PW, but were to support all of the Applicant’s projects.  Regarding travel expenses, the Applicant reiterated its position that proportionally allocating such expenses between PWs was allowable under federal cost attribution guidelines.
First Appeal Decision
On November 24, 2017, FEMA’s Region VII Acting Regional Administrator (RA) denied the first appeal.  The first appeal decision first noted that the Applicant had opportunities to seek revised estimates and to appeal the amount of funding throughout the process of formulating the estimate up to the obligation of PW 1684 Version 1.  It did not retain its architectural firm to identify additional damage until after the PW had been obligated and Old South Middle School had been demolished.  It determined that the Applicant should not have assumed that it could continue to seek additional money through closeout, particularly if it was aware of the need for additional funding earlier in the process and had already agreed to a SOW and funding cap in an improved project.  The first appeal decision then noted that the Applicant has the responsibility to identify all eligible work and submit costs for funding within 60 days from the first substantive meeting.  Additionally, it was the Applicant’s responsibility to request inspections or changes to the PW at the point in the grant process when such changes are anticipated. 
The Acting RA noted that, according to Witt’s logs, many hours were spent in the formulation of PW 1684’s SOW, including site visits, documentation and photo reviews, and CEF reviews.  This specifically included an analysis of the building’s square footage.  The Applicant was sufficiently confident in its damage assessment that it could reach a settlement with its insurer prior to the obligation of Version 1 of the PW. 
The Acting RA explained that the items of work and costs in question were not “newly discovered” during the course of performing eligible work.  The Applicant was aware of the need to report the extent of damage for which it was seeking funding, and it failed to identify all eligible work and submit all costs.  The Acting RA found that this request should have been made during the grant process before the grant was awarded.  Contrary to the Applicant’s assertion that it had no obligation to inform FEMA of its intent to commission a review of the SOW, the Acting RA determined that the Applicant was required to obtain approval whenever a change in the SOW or the need for additional funds is anticipated.  Moreover, if the Applicant did not agree with the approved cap, the Applicant was required to appeal within 60 days, and could not intentionally delay informing FEMA that it intended to seek additional funding.  Regarding the email exchange that the Applicant attached to its first appeal the Acting RA stated that FEMA did not give incorrect advice because, at no time during the grant process, did the Applicant make a request for a budget revision based on a bid that came in higher than estimates.  The Applicant’s inquiry to FEMA did not address requests for SOW increases late in the process.[20] 
The Acting RA also noted that an increase to the funding cap was not available as a cost overrun, as the work described in the PW was not actually done and improved projects are not closed out based on actual costs.  The Applicant’s additional costs were based on a CEF review by an architectural firm, but the Applicant failed to provide documentation showing that the original estimates were incorrect.  It notes that the time for adjusting the SOW was when the improved project was written, not much later during closeout. 
Regarding the CEF estimate, the Acting RA noted that it had addressed this issue at length in prior similar appeals.[21]  Those appeal decisions found that because nationwide, rather than local, data was used, an adjustment factor was applied.  RSMeans releases the adjustment factors quarterly.  Following its standard practice, FEMA applied the adjustment factor that was published at the time that the estimate was created.  There was no reason to go back and change this factor simply because a different number was used in a separate CEF for an unrelated PW that was prepared at a later date.  The Acting RA also rejected the Applicant’s argument that Kansas City should have been used in determining the city adjustment factor, given that there was an adjustment factor published for the City of Joplin.  Regarding CEF cost escalation factors, the Applicant had failed to establish why FEMA’s estimate was incorrect or explain how it came up with different numbers.  Regarding the requested 17 percent cost increase, the Acting RA determined that the Applicant had failed to provide any documentation to support such an increase.
Additionally, the Acting RA found that the Applicant was aware the cap represented a limit to available federal funding, and the costs above the cap were its own responsibility.  Regarding the specific claim that the CEF factors failed to consider the residential location of the school, the Acting RA found that this was a matter clearly determinable at the time the original project was written, as well as when the improved project was approved and obligated.  The Acting RA noted the Applicant’s consistent attempt to shift the burden to FEMA for identifying, documenting, and reporting damage, and explained that it is the Applicant’s responsibility to ensure that all damages, work, and costs are reflected in the PW.
Turning to the issue of DAC, the Acting RA determined that the Applicant’s initial decision to contract with Witt without competition was an improper procurement, both under federal standards and the Applicant’s own guidance.  It did not meet federal standards because the Applicant did not establish that a competitive procurement was not feasible or that any public exigency would not have permitted a delay from competitive selection.  Moreover, the Applicant did not comply with its own procurement standards because it did not establish that non-competitive procurement was required to protect against loss of property or minimize a serious disruption in services, that it used as much competition as was practical under the circumstances, or that the contract was limited to a purchase necessary to alleviate the emergency.  The Acting RA noted that, even if there had been an emergency that justified non-competitive procurement, this was a three-year contract and was not limited to meeting any exigency.  Finally, the Acting RA determined that the Applicant did not perform the required cost analysis for its contract with Witt.  While it claimed to have reviewed the prices given from other HGAC vendor, it did not document this assertion, and, in any event, that was not a sufficient cost analysis.
With respect to Task Order No. 1, the Acting RA discussed whether this represented an amendment to or a termination of the original contract, but ultimately concluded that was an improper procurement either way.  As a new procurement, it was not competitively procured because selecting from a list of HGAC vendors was not free and open competition.  As an amendment it could not cure the original non-competitive procurement with a second non-competitive process and created the additional problem that it reduced covered period from 2014 to 2013.  Modification No. 1 was also improper because it was not accepted until after the request for closeout and well after the expiration of the prior contract.  The Applicant could not retroactively extend the prior contract in this manner and, even if it could, it still did not remedy the problems described above.
In light of this procurement noncompliance, the Acting RA determined that FEMA had acted within its discretion to award costs that it determined to be reasonable through June 8, 2014.  The Acting RA determined that it was appropriate to use a rate of $155 per hour and require a justification for a higher rate.  The Applicant’s only proffered justification was that Witt offered the same fee schedule to other HGAC members and through a GSA contract.  The Acting RA explained that these facts could not establish that a higher rate was reasonable for market conditions for this particular disaster and location.  For any individual who billed above $155 per hour, the Acting RA found that the Applicant had not demonstrated that such a rate was appropriate to the complexity of the work, the amount of time required to perform it, and the skill level required to perform the activities.  Finally, with respect to travel-related DAC, the Acting RA found that these were indirect costs that could not be readily attributable to specific PWs.  Thus, they were reimbursable as project management costs that FEMA already funded, and were not reimbursable as DAC.
Accordingly, the Acting RA denied the Applicant’s first appeal on all of the issues raised.
Second Appeal
The Applicant filed a second appeal in a letter dated January 10, 2018.  It begins by stating its intent to clarify that it was not seeking funding for new or additional damage, but rather seeking to amend the SOW and costs.  It argues that its procedure of having its architectural firm review drawings was appropriate to evaluate the estimates for the project.  It also notes that FEMA modified PW 1438 to include a kitchen that was omitted from the SOW, and argues that FEMA is treating PW 1684 inconsistently.
The Applicant then argues that it was not required to appeal the obligated PW, even it if disagreed with the amount of capped funding.  It reiterates is prior assertion that it was not given enough time to review the PWs, and found it difficult to participate in the PW formulation while trying to restore school operations.  It argues that PWs may be continually amended up until final closeout.  It acknowledges that FEMA’s PA Guide states that if an applicant believes eligible costs exceed the original estimate the amount of the grant can be appealed, but argues that this does not require a formal appeal, only a request for an amendment to the PW.  It also asserts that such a requirement conflicts with advice it received from a FEMA employee, and again references the email exchange it included with its first appeal. 
The Applicant argues that it could not have made the request earlier because the information was not available until its architectural firm completed its analysis of the CEF.  It acknowledges that it believed the SOW in Version 1 of PW 1684 was incorrect at the time of obligation, but states that it was not possible to request an amendment within 60 days. 
With respect to DAC, the Applicant argues that its procurement of Witt’s services was proper because Witt had a good reputation as a provider of disaster recovery assistance services and it offered at or below the rates it offered through its GSA contract.  It characterizes the first appeal decision as finding that a term of three years was not allowable for disaster recovery services and argues that disaster recovery often takes much longer than three years.  It argues that when it joined HGAC, it confirmed that its procurement of Witt was proper.  While Task Order No. 1 had an expiration date of May 31, 2013, the Applicant states that it needed Witt’s services and intended to continue the relationship through May 31, 2016, and therefore it did not matter that there was no signed contract in place for a period of time. 
Next, the Applicant argues that FEMA should not have established $155 per hour as the only reasonable rate.  It again asserts that Witt’s rates were at or below those offered in its GSA contract, and asserts that this makes them reasonable. 
Finally, the Applicant argues that its allocation of Witt’s travel-related costs among various PWs was proper.  It explains that all Witt employees prepared daily timesheets indicating the hours that they worked on specific PWs, and that hours not related to a specific PW were considered to be indirect management costs.  It further explains that it took each employee’s travel related costs and divided them by the total number of hours worked, thereby proportionally allocating them among the various PWs.  It argues that this process is reasonable and conforms to federal cost allocation standards.  Finally, the Applicant argues that the entire period during which Witt provided services was covered by contract.
The Grantee forwarded the Applicant’s second appeal on January 16, 2018, without a recommendation.
Discussion
Improved Project[22]
The Applicant’s request for an increase to the capped funding for its improved project can be separated into two categories.  The first seeks $3,137,892.65 for items of work not included in PW 1684’s SOW, or higher costs for items that were included in the SOW, as well as the cost of the review by its architectural firm.  The second relates to requested cost adjustments in PW 1684’s CEF factors in the total amount of $3,770,518.40.
Errors, Omissions, and Architectural Review
FEMA provides Public Assistance (PA) funding for work to restore damaged eligible facilities to their predisaster design, function, and capacity in accordance with applicable codes and standards.[23]  It is the applicant’s responsibility to identify and report all damage and submit all costs for disaster-related funding.[24]  The applicant has 60 days from the first substantive meeting, usually the kickoff meeting, to provide this information.[25]  Failure to report damage within the required timeframe can jeopardize funding.[26]  If an applicant discovers hidden damage, additional work that is necessary to complete a project, or costs that are higher than estimated, the applicant should notify the state as soon as possible.[27]  It should not be assumed that such costs can be reported at the end of the project and that additional funds will be approved.[28]  The timing must be such that the newly claimed damage can be inspected before it is covered up or repaired.[29]  Federal regulations require that an applicant must obtain FEMA’s prior approval whenever it is anticipated that additional funding or any revision of the scope of the project will be required.[30] 
When performing permanent restoration work, if an applicant decides to make improvements to the facility while still restoring its predisaster function, it may request an improved project.[31]  It must obtain this approval prior to the start of construction.[32]  PA funding for improved projects is limited to the costs that would be associated with repairing or replacing the damaged facility to its predisaster design.[33]  This limit represents a funding cap, and the balance of the funds required to complete the project is the applicant’s responsibility.[34]  If an applicant believes that eligible costs exceed the estimate, and those costs can be tracked and documented separately from the improvements, then the applicant may appeal the amount of the grant.[35] 
There are certain instances where FEMA may adjust the funding cap of an improved project for errors and omissions, for example, where additional costs are necessary to complete the original SOW,[36] when the applicant demonstrated that the PW underestimated the costs required to complete the original SOW,[37] or where it was later discovered that the PW’s CEF contained a calculation error.[38]  However, FEMA has denied requests to adjust funding caps in situations where the additional funding requested was associated with work FEMA did not approve,[39] the costs were inappropriate to the original SOW,[40] the work was not required as a direct result of the disaster,[41] or when the applicant should have been aware of damage but did not report it until it was too late for FEMA to perform an inspection.[42]
While the Applicant has characterized its request as a correction of “errors and omissions,” it actually seeks funding for work outside the SOW approved in PW 1684, and additional funding for specific line items that were included in the CEF.  The CEF contained a specific, detailed description of the Applicant’s claimed damages and the work and associated costs required to address those damages.  The Applicant sought approval for additional work and costs well after it agreed to the funding cap calculated in the CEF.
This is not a situation where the Applicant discovered hidden damage during the performance of eligible work or where the PW’s SOW omitted work that had already been determined to be eligible.  The Applicant’s request for funding for its architectural firm’s review had never been determined to be eligible.  Similarly, while the auditorium generally was eligible for replacement, the requested custom plaster panels, wood trim, and hardwood folding door were additional items of work that needed to be identified early enough that an inspection could be done to confirm the required work and costs.  Here, because of the delay in reporting this damage no such inspection could be conducted.  On the other hand, regarding the Applicant’s request for work it asserted to be required to ensure ADA compliance, FEMA may increase the funding cap if additional work is required due to codes and standards.[43]  But here, the Applicant did not provide any documentation showing how the CEF estimate was not ADA compliant, or what additional work would be required to remedy the asserted non-compliance.  It simply asserted that additional square footage was necessary.  The Final RFI requested the calculations and data upon which this claim was based, but the Applicant did not provide further information.  Additionally, all of the information that these requests were based on was available to the Applicant when it agreed to the funding cap, and there was no hidden damage.
This was also not a situation where the Applicant demonstrated through bids or some other documentation that the CEF underestimated costs associated with an eligible item of work.  The Applicant’s request for additional funding for line items already included in the CEF stated that its architectural firm provided a higher take-off estimate.  The Applicant included a spreadsheet showing that it created its estimates using different cost codes, different unit prices, different unit quantities, or a combination of these.  However, it did not provide any documentation showing that the CEF underestimated unit prices, used incorrect cost codes, or underestimated the required amount of materials.  The square footage of acoustical ceilings reflected in the CEF was used since the initial formulation of the project.  Any challenge to this figure needed to be raised when detailed measurements could be taken, but instead the Applicant accepted the CEF’s calculations and contested the square footage long after such an inspection could have been performed.  The Final RFI requested that the Applicant provide any source documentation or data for how it arrived at its figures, but the Applicant only provided the letters that it previously submitted, which simply stated that its architectural firm had arrived at different numbers.  Without additional justification, the Applicant did not provide any basis for the Acting RA to increase funding. 
It was incumbent upon the Applicant to identify all of the additional work and costs before it agreed to a funding cap, which it knew represented the limit of available federal funding for the project.  All of the facts upon which its request was based were available to the Applicant at the time that it agreed to the funding cap.  While the Applicant argues that it could not have made the request for additional funding until it received a report from its retained architectural firm, this argument is unpersuasive.  The Applicant states that, during the process of formulating PW 1684, it believed that there were additional damages and costs not identified in the CEF, and it knew that it intended to seek additional money.  However, it did not previously inform FEMA that it needed additional time for an architectural firm to review the project, nor did it justify its decision not to involve its architects earlier in the process.  It argues that FEMA did not give it enough time to review the formulated SOW, but the administrative record does not demonstrate that it sought additional time or informed FEMA that it believed additional work or costs needed to be identified.  On the contrary, it acknowledges in its second appeal that it did not request revisions to the PW because it was eager to begin construction and FEMA had made it clear that the improved project needed to be approved prior to construction commencing.  The Applicant could not avoid the timeframe for reporting damage or the need for additional funding by delaying taking the measures required to identify the additional work or costs.
The Applicant argues that it relied upon the email from a FEMA employee discussed above for its belief that it could continue to expand the SOW even after the funding had been capped.  A review of this email exchange, however, shows that such reliance was unreasonable.  The Applicant asked a very specific question: whether FEMA would approve additional funding if competitive bids for an item of work came in higher than estimated in the PW.  FEMA responded that additional funding could be approved if the higher cost was related to an approved SOW.  This was a correct statement of FEMA’s practice, and as noted above, FEMA has previously approved cap increases in such circumstances.  In this email exchange, FEMA did not tell the Applicant that it would later fund new work that was not previously approved, nor that it would approve additional costs that were not based on documentation such as higher bids.  
In light of the foregoing, it was unreasonable for the Applicant to expect that FEMA would approve a substantial increase in funding in 2014 when it first made the request, much less at closeout in 2016.  When FEMA obligated the PW, the Applicant knew that the funding was capped and if it believed additional funding was eligible, it needed to inform the Grantee and FEMA as soon as practicable.  Here, it failed to do so.  Moreover, the requests for increased costs associated with the approved SOW were not substantiated by documentation.  Therefore, the Acting RA properly denied the first appeal with respect to the claimed errors and omissions.
CEF Factors
The CEF provides a uniform method of estimating costs for large projects.[44]  The first part of the CEF is Part A, and it is designed to capture the detailed construction costs required to complete the eligible SOW.[45]  These base costs can be derived from cost estimating resources, such as RSMeans.[46]  When using national industry standard cost data, city cost indices are used to adjust national unit prices to the nearest city.[47]  Then, a series of factors (Parts B through H) are applied that represent potential additional eligible project costs that can reasonably be expected to be incurred because they are usually encountered during the course of a construction project.[48]  It is the applicant’s burden to substantiate its appeal.[49]
In its second appeal, the Applicant does not directly address FEMA’s first appeal analysis regarding the CEF factors, although it attaches copies of the arguments it raised previously.  Specifically, the Applicant claimed that RSMeans data should have been drawn from 2011 Quarter 4 data, rather than from earlier quarters, and the Part A cost estimate should have been increased by an additional 17 percent because of cost escalations. 
These requests were without merit.  First, the Acting RA properly found that the Applicant had not demonstrated that 2011 Quarter 4 data should have been used.  Those numbers were unavailable when the estimate was originally created, and the Applicant has not provided any documentation showing that the estimate was inaccurate.  The Applicant argued that FEMA used the 2011 Quarter 4 data in the CEF for another project, but the Acting RA correctly rejected this argument because that other CEF was created after the 2011 Quarter 4 data became available, and thus has no bearing on whether the CEF for PW 1684 was properly created.
Second, the Acting RA correctly determined that the Applicant had not substantiated its request for a 17 percent increase in funding.  The Applicant provided no basis for this increase other than to say that its construction company had recently completed a different project in a different city at a lower cost.  This was not a sufficient reason to adjust the CEF.  Accordingly, the Applicant did not demonstrate that any changes in the CEF factors were justified.
Procurement
The Applicant’s second appeal of the partial denial of DAC is for $40,966.28, which encompasses costs incurred after June 8, 2014, costs incurred in excess of $155 per hour, and costs associated with travel expenses.
Funding under the PA program is available for management costs, which are administrative expenses and any other expense not directly chargeable to a specific project under a major disaster.[50]  In addition to these management costs, FEMA will reimburse DAC incurred by applicants that are properly documented and can be tracked, charged, and accounted for directly to a specific project.[51]  Such costs must be reasonable for the work performed and accounted for in accordance with applicable federal regulations.[52]  Costs that are not tracked to a specific project, but are instead indirect costs are not DAC and may be reimbursed as management expenses.[53]  Where an applicant uses a contractor to perform administrative services, FEMA will consider certain factors when evaluating DAC, such as the method for contracting the services, the skill level of the people performing the activities, and the amount of time to perform an activity.[54]  In determining whether DAC are reasonable, FEMA considers whether contractors utilized appropriate skill level for the work, which for most PA projects is a junior or mid-level technical or program specialist (or equivalent), although, for complex projects, staff with a higher level of technical proficiency or experience may be appropriate.[55]  Travel and per diem costs for contractor employees are eligible as direct costs only if such costs can be attributed to individual projects.[56]  Travel expenses not tied to one specific project are indirect expenses, and may be reimbursable as § 324 management costs, not DAC.[57]
When choosing a vendor to provide administrative services, applicants must comply with all procurement requirements.[58]  Accordingly, a contract award must comply with both federal procurement standards, and an applicant’s own procurement standards.[59]  For large projects, this generally means that the contract must provide for full and open competition, for example, by receiving sealed bids or competitive proposals from a number of vendors following a public solicitation.[60]  Under federal regulations, noncompetitive procurement, whereby a proposal is received from only one source, may only be used when it is not feasible to use a competitive procedure and a specific justification exists, such as when a public exigency or emergency will not permit a delay resulting from competitive solicitation.[61] 
Typically, FEMA finds an exigency when lives or property are at stake, where the contract is for actual work to restore critical services, or where the contract is for work that is not permanent in nature.[62]  By contrast, the administrative services that can be funded as DAC are activities such as identifying damage, attending briefings, establishing files and oversight procedures, providing documentation, preparing for audits, working with federal and state authorities to monitor projects, developing cost estimates, and collecting cost data.[63]  Even if administrative services are performed during the exigency period, FEMA does not generally view them as critical services or as activities that protect life or property.[64]
Where an applicant materially fails to comply with a term of a federal grant, such as complying with local and federal procurement standards, FEMA has discretionary enforcement authority, which it exercises on a case-by-case basis.[65]  FEMA’s range of authorized actions includes disallowing all or part of the cost of the activity or action not in compliance.[66]  In exercising this discretionary authority, the selected action must be appropriate to the circumstances and, to the extent that FEMA allows funding, FEMA must consider the reasonableness of the costs.[67]  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.[68]
Here, the Applicant’s contract award to Witt was a noncompetitive procurement.[69]  The Applicant contends that a noncompetitive procurement was allowable under its own procurement guidelines as well as federal procurement standards under a public exigency or emergency exception to the competition requirement. 
The Applicant has stated that the initial Witt contract was necessary, but it has consistently failed to explain why it was necessary to enter into a multi-year, multi-million dollar contract for administrative services without the benefit of competition within ten days of the disaster.  It has not explained why it was not feasible to use a competitive procurement process under the circumstances.  Even accepting that there was a public exigency that required Witt’s services, the Applicant has not explained why such an exigency would not allow it to take the time for a competitive solicitation, particularly where the contract was for an extended period of time and in excess of $3 million.  Additionally weighing against the Applicant’s argument is the fact that this procurement was for administrative services.  As noted above, FEMA does not generally view an administrative services contract as one which is necessary to meet an emergency need or resolve an exigency.  Even if there were hypothetical circumstances in which noncompetitive procurement of such a contract could be justified under an emergency exception, here, the Applicant’s three-year contract clearly exceeded any exigency, and so would not qualify for an emergency exception.
The Applicant’s second contract with Witt entered into through HGAC, Task Order No. 1, does not change this result, regardless of whether it is viewed as a new contract or modification to the original agreement.[70]  If viewed as a new contract, Task Order No. 1 was executed in December 2011, and the Applicant has not explained why noncompetitive procurement was necessary at that point, which was seven months removed from the disaster.  If viewed as a contract modification, as the Acting RA correctly explained, a later modification could not remedy the initial noncompliant procurement. 
Finally, the Applicant has also attempted to justify its decision to use noncompetitive procurement by emphasizing that Witt’s price schedule was reasonable.  Even accepting for the sake of argument that the contract costs were reasonable, it would not change the result because this is a separate issue.  The fact that costs are reasonable does not excuse noncompliance with procurement regulations. 
Accordingly, the Acting RA correctly determined that the Applicant’s DAC contract with Witt was noncompliant.
Because of the procurement noncompliance, FEMA had discretionary enforcement authority to award reasonable costs or to disallow all costs.  Here, the Acting RA elected to award certain costs determined to be reasonable.  Specifically, the Acting RA awarded actual DAC for those hours billed at less than $155 per hour through June 8, 2014.  This represented the majority of DAC hours, which were billed at approximately $133 per hour.  What the Acting RA disallowed were: (1) hourly costs billed above $155 per hour, (2) costs for hours billed after June 8, 2014, and (3) costs associated with travel expenses for Witt staff.  These costs are the subject of this second appeal, and each of these will be addressed in turn.
Regarding hours billed above $155 per hour, two things should be noted at the outset.  First, the Acting RA did not disallow those costs in their entirety, but rather awarded costs at a rate of $155 per hour.  Second, the Acting RA did not determine that $155 per hour was the only reasonable hourly rate.  Rather, the Acting RA acted in accordance with prior regional communication about the issue which stated that, where an applicant sought reimbursement for DAC over the $155 per hour rate, it needed to provide a justification for the higher rate being reasonable under the circumstances.[71]  The Applicant had the opportunity to provide such justification, but only argued that Witt’s rates were the same as those offered to other federal and state entities.  It failed to offer a justification of why staff members billing at an hourly rate higher than $155 for a number of hours was appropriate to the work and required for this project, which is what is required for reimbursement of DAC.  In light of the lack of justification for a higher rate, it was within the Acting RA’s discretion to limit the award to $155 per hour as part of the enforcement action for the procurement noncompliance.
Regarding costs for hours billed after June 8, 2014, the Acting RA disallowed these costs because they were not incurred pursuant to an active contract between the Applicant and Witt.[72]  To clarify the timeline, the Applicant’s initial contract with Witt ran until June 8, 2014.  The Applicant’s second contract with Witt (Task Order No. 1) ran until May 31, 2013.  The Applicant did not execute a new contract with Witt (Modification No. 1) until January 15, 2016.  The 2016 contract purported to be retroactive to June 1, 2013.  That the contract was backdated, however, does not change the fact that there was no contract in place during the period in which the disallowed costs were incurred.  If, as the Applicant has maintained, Task Order No. 1 replaced the initial contract with Witt, then there was no contract in place between June 1, 2013, and January 15, 2016.  In the past, FEMA has determined that DAC incurred without a contract are ineligible for PA funding.[73]  Despite this, the Acting RA decided to allow costs incurred up to June 8, 2014, because that was the period of the original contract.  The Acting RA’s exercise of discretion was an appropriate enforcement action to address the procurement noncompliance.
Finally with respect to Witt’s travel costs, it should be noted that, although the Applicant and First Appeal decision discussed these costs separately, these were also DAC which were disallowed following a procurement noncompliance.  As the Acting RA correctly noted, in order to reimburse travel costs, FEMA requires that they be tied to one single project.[74]  Notwithstanding any other federal cost attribution guidelines, where travel costs are incurred for the benefit of multiple projects, FEMA does not treat them as DAC.  Accordingly, the Acting RA’s decision to disallow these costs as part of the enforcement action was appropriate.
Conclusion
The Acting RA properly determined the Applicant’s request for funding for work outside the approved SOW, as well as higher costs associated with items in the approved SOW, to be ineligible because the Applicant failed to identify new work and request additional funding in a timely manner.  Moreover, the Applicant did not substantiate its claim that the project’s CEF was incorrect or the estimate was improper.  With respect to DAC, the Applicant’s contract award to Witt was the result of an impermissible noncompetitive procurement.  The Acting RA exercised appropriate discretion by awarding partial costs as an enforcement measure.  The Acting RA also acted appropriately by declining to award hourly costs billed above $155 per hour, costs for hours billed after June 8, 2014, and costs associated with travel expenses for Witt staff.  Accordingly, this second appeal is denied.
 
 
[1] A “take-off” is a list of materials and quantities required to build a structure.
[2] Letter from Chief Fin. Officer, Joplin Schools, to Dir., Mo. State Emergency Mgmt. Agency, at 1 (July 5, 2012). 
[3] Letter from Dir., Recovery Div., FEMA Region VII to Dir., Mo. State Emergency Mgmt. Agency (Aug. 6, 2012).
[4] Letter from Chief, Planning & Disaster Recovery Branch, Mo. State Emergency Mgmt. Agency to Chief Fin. Officer, Joplin School District, at 1-2 (Sept. 28, 2012).
[5] Id. at 2.
[6] Letter from Chief Fin. Officer, Joplin Sch. Dist. to Mo. State Emergency Mgmt. Agency, at 1-2 (June 30, 2014).
[7] These items specifically were: concrete footings and foundations, excavation and backfill, foundation walls, windows, base flashing, limestone coping, aluminum flashing, and toilet partitions.
[8] Letter from Chief Fin. Officer, at 1.
[9] Id. at 2.
[10] The Applicant’s request stated that these costs were higher, but in context it is clear that it meant to say that the Kansas City project costs were lower than the equivalent projects in Joplin.
[11] Letter from Recovery Div. Dir., FEMA Region VII to Dir., Mo. State Emergency Mgmt. Agency (Aug. 7, 2014).  The Applicant has argued that this letter did not actually deny its full request because it referenced CEF factors but not the alleged errors and omissions.  This assertion is without merit.  The letter specifically denies the Applicant’s request for a change in the SOW.  Accordingly, it fully addressed the Applicant’s request.
[12] Letter from Chief Fin. Officer, Joplin Sch. Dist. to Mo. State Emergency Mgmt. Agency, at 1-3 (Mar. 11, 2016) (requesting additional funding for increased line item costs, additional work and square footage, and architectural firm review); Letter from Chief Fin. Officer, Joplin Sch. Dist. to Mo. State Emergency Mgmt. Agency, at 1-2 (Mar. 11, 2015) (requesting additional funding for CEF factors and cost escalation).
[13] The Applicant also claimed $22,847.47 in DAC for contract work performed by National Fire Adjustment Co., Inc. incurred in making its insurance claim.  FEMA denied reimbursement for these costs, and the Applicant did not challenge this denial on appeal.
[14] While the determination memorandum did not explicitly reference travel expenses, it disallowed the difference between the claimed hourly rate for a Witt employee and the contract hourly rate for that employee.  That difference was comprised of the employee’s travel expenses that the Applicant had allocated to PW 1684 by incorporating them in the hourly rate for each Witt employee.
[15] The determination memorandum inadvertently stated that this $43,367.67 was limited to Witt DAC expenses, whereas PW 1684 Version 2 made it clear that this was the total eligible DAC amount, including force account DAC.  The Applicant raised this issue in its final RFI, and FEMA clarified in the first appeal decision that this was a typographical error.  The Applicant does not challenge this decision on second appeal, so further discussion of the issue will be omitted for the sake of clarity.
[16] Due to the complexity of this appeal, in summarizing the various documents below, some of the contents have been reorganized or regrouped for the sake of clarity.
[17] Email from Chief Fin. Officer, Joplin Sch. to FEMA, at 1 (Apr. 20, 2012, 6:05 PM).
[18] Email from FEMA to Chief Fin. Officer, Joplin Sch., at 1 (April 21, 2012, 9:55 AM).
[19] Both of these statements were in the same sentence on page three of the RFI response, and it is unclear how they are to be reconciled.
[20] See email from Chief Fin. Officer, Joplin Sch. to FEMA, at 1 (Apr. 20, 2012 6:05 PM).
[21] Further explanation of these conclusions can be found in the first appeal decisions for PWs 575 and 1438, which the Acting RA incorporated by reference.
[22] The Acting RA denied the first appeal, in part, based on the Applicant’s untimely submission of the appeal.  FEMA’s August 7, 2014 denial of the Applicant’s request for the additional funding, however, did not inform the Applicant of their appeal right, and the format, content, and timeframe requirements outlined in 44 C.F.R. § 206.206.  See Recovery Directorate Manual, Public Assistance Program Appeal Procedures, Version 3, at 11 (Apr. 4, 2014).  Accordingly, FEMA will consider the Applicant’s second appeal.
[23] 44 C.F.R. §§ 206.201(j)-(k), 206.226 (2010); Public Assistance Guide, FEMA 322, at 79 (June 2007) [hereinafter PA Guide].
[24] 44 C.F.R. § 206.202(d)(1); PA Guide at 96.
[25] 44 C.F.R. § 206.202(d)(1)(ii); PA Guide at 96.
[26] FEMA Second Appeal Analysis, Los Angeles Dep’t of Water and Power, FEMA-1577-DR-CA, at 2 (Mar. 29, 2010) (denying request to expand SOW to correct alleged errors and omissions because the new damage was not identified within the regulatory timeframe).
[27] PA Guide at 139-140.
[28] PA Guide at 140.
[29] Id.
[30] 44 C.F.R. § 13.30(c)(1)(i), (c)(2), (d)(1).
[31] 44 C.F.R. § 206.203(d)(1); PA Guide at 110.
[32] PA Guide at 111.
[33] PA Guide at 110.
[34] Id.
[35] Id.
[36] FEMA Second Appeal Analysis, Nashville-Davidson Cty., FEMA-1909-DR-TN, at 4 (Sept. 25, 2015) (approving cap increase where it was discovered during performance of eligible work certain items could not be repaired and required replacement).
[37] FEMA Second Appeal Analysis, Clarke Elec. Coop., FEMA-1737-DR-IA, at 3-4 (Jan. 12, 2015) (approving cap increase where applicant submitted new estimating methodology for a complex project and a FEMA engineer agreed).
[38] FEMA Second Appeal Analysis, Town of Killington, FEMA-4022-DR-VT, at 7-8 (Dec. 7, 2017).
[39] Id. at 4, 7-8.
[40] FEMA Second Appeal Analysis, Los Angeles Cty., FEMA-1577-DR-CA, at 4-5 (Sept. 11, 2012).
[41] FEMA Second Appeal Analysis, Trenton Special Sch. Dist., FEMA-1909-DR-TN, at 3 (Aug. 5, 2016).
[42] FEMA Second Appeal Analysis, Spring Twp., FEMA-4230-DR-KS, at 3 (Nov. 27, 2017) (denying cap increase where applicant should have been aware of alleged errors or omissions but did not submit modification request until after work was completed).
[43] See, e.g., FEMA Second Appeal Analysis, St. Tammany Parish, FEMA-1603-DR-LA, at 6-7 (Aug. 1, 2017) (granting increase where applicant established that certain additional code-driven work was related to approved work and could be tracked separately).
[44] CEF for Large Projects Instructional Guide V2.1, at 1-2 (Sept. 2009) [hereinafter CEF Guide].
[45] Id. at 3-3.
[46] Id. at 4-8.
[47] Id. App. E, at 5.
[48] Id. at 1-2.
[49] 44 C.F.R. § 206.206(a); FEMA Second Appeal Analysis, Vill. of Waterford, FEMA-4020-DR-NY, at 4 (Sept. 4, 2014).
[50] The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 324(a), 42 U.S.C. § 5165b(a) (2011); Disaster Assistance Policy DAP 9525.9, Section 324 Management Costs and Direct Administrative Costs, at 2-5 (Nov. 13, 2007).
[51] DAP 9525.9, at 2, 5.
[52] Id. at 5.
[53] Id.
[54] Memorandum from Assistant Adm’r, Disaster Assistance Directorate, FEMA, to Reg’l Adm’rs, FEMA, at 2 (Sept. 8, 2009) [hereinafter DAP 9525.9 Guidance Memo].
[55] Id.; see also FEMA Second Appeal Analysis, City of Cedar Rapids, FEMA-1763-DR-IA, at 4-5 (May 19, 2014) (finding that an hourly rate of $285 for administrative services was unreasonable absent evidence that the tasks performed were particularly complex).
[56] DAP 9525.9 Guidance Memo, at 3.
[57] Id., attach. at 1-3.
[58] DAP 9525.9 Guidance Memo, at 2.
[59] 44 C.F.R. § 13.36(b)(1); PA Guide, at 51.
[60] 44 C.F.R. § 13.36(c)(1), (d)(1)-(3); PA Guide, at 51-52.
[61] 44 C.F.R. § 13.36(d)(4)(i); PA Guide, at 52.
[62] FEMA Second Appeal Analysis, Martinsville CUSD, FEMA-1771-DR-IL, at 4 (July 19, 2016); FEMA Second Appeal Analysis, Columbus Reg’l Hosp., FEMA-1766-DR-IN, at 7-8 (Dec. 27, 2017).
[63] Columbus Reg’l Hosp., FEMA-1766-DR-IN, at 8; see also DAP 9525.9 Guidance Memo, attach. at 1-3;
[64] Columbus Reg’l Hosp., FEMA-1766-DR-IN, at 8; see also FEMA Second Appeal Analysis, City of Pierre, FEMA-1984-DR-SD, at 11 (May 27, 2015) (defining exigency as “something that is necessary to a particular situation that requires or demands immediate aid or action”)
[65] 44 C.F.R. § 13.43(a); FEMA Second Appeal Analysis, City of Nome, FEMA-4050-DR-AK, at 5 (Sept. 28, 2016).
[66] 44 C.F.R. § 13.43(a).
[67] City of Nome, FEMA-4050-DR-AK, at 5-6.
[68] 2 C.F.R. Part. 225, App. A § (C)(2).
[69] In its first appeal, the Applicant appeared to argue that Task Order No. 1 was a competitive procurement because of how HGAC identified vendors.  In its second appeal, however, the Applicant’s position is that HGAC simply confirmed the reasonableness of the original procurement.  Accordingly, it does not dispute that it never competed the DAC contract.
[70] While the identification of Task Order No. 1 as a new contract or a contract modification is not important to the question of compliant procurement, it will be important to the question of reasonable costs, which will be addressed later.
[71] Letter from Reg’l Adm’r, FEMA Region VII, to Dir., Mo. State Emergency Mgmt. Agency, at 1‑2 (June 23, 2011). 
[72] Contrary to the Applicant’s assertion on second appeal, the Acting RA did not determine that a three-year contract was impermissible.  These costs were denied because there was not an active contract in place at the time.
[73] See, e.g., City of Cedar Rapids, FEMA-1763-DR-IA, at 4-5 (finding that DAC incurred without a contract in place was ineligible for PA funding); City of Nome, FEMA-4050-DR-AK, at 5 (finding that without a written contract, the documentation required by federal regulations cannot exist).
[74] DAP 9525.9 Guidance Memo, attach. at 1-3.
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