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Second Appeal Brief
PA ID# 059-99059-01; Nassau County Public Works
PW ID# Project Worksheets 3559, 3657, 3724, 3998 ; Direct Administrative Costs – Project Management Costs
Conclusion: Nassau County Public Works’ (Applicant) contractor’s employees did not incur travel expenses associated with specific projects; rather, such expenses benefitted more than one Project Worksheet (PW). Under FEMA Disaster Assistance Policy (DAP) 9525.9, Section 324 Management Costs and Direct Administrative Costs, these expenses are indirect costs and are not eligible for reimbursement as Direct Administrative Costs (DAC).
From October 27, 2012, to November 9, 2012, Hurricane Sandy caused damage in the State of New York. The Applicant hired project management contractors, including Camp Dresser McKee & Smith (CDM Smith), to assist with the administration of multiple Public Assistance grants. CDM Smith’s employees often traveled to the Applicant’s jurisdiction and worked on multiple projects during each trip or billing period. CDM Smith allocated these expenses on a pro rata basis according to the eligible hours worked by a given employee (Expense Allocation Methodology). By letter dated January 6, 2017, FEMA informed the Applicant that CDM Smith’s travel expenses associated with direct administrative and project coordination tasks and allocated across multiple PWs on a pro rata basis were not eligible for reimbursement as Direct Administrative Costs (DAC). At closeout, FEMA adjusted the PWs to include DAC that it found the Applicant had substantiated, but denied funding for indirect travel costs in each PW, in accordance with its prior letter. The Applicant appealed FEMA’s determinations, arguing that CDM Smith’s Expense Allocation Methodology was permissible under its interpretation of applicable regulations and FEMA policy, and that the travel costs so allocated were eligible for reimbursement as either DAC or contract costs. On first appeal, FEMA’s Regional Administrator (RA) upheld the denial of indirect costs as either DAC or contract costs. The Applicant appeals the RA’s decision, reiterating its arguments from its first appeals.
Authorities and Second Appeals
- Stafford Act § 324
- 44 C.F.R. §§ 207.2, 207.6;
2 C.F.R. § 200.110
- DAP 9525.9, Section 324 Management Costs and Direct Administrative Costs; Memo., DAC Guidance; DAP 9525.11, Payment of Contractors for Grant Management Tasks
- FEMA-4069-DR-MN, City of Duluth, Mult. PWs, at 5
- FEMA policy provides that travel expenses related to one specific PW qualify as DAC, while travel expenses “related to general support and not directly tied to one specific project” are indirect costs, and therefore ineligible as DAC. By extension, expenses allocated to every task for all PWs in proportion to the hours worked on the task are not eligible as DAC.
- CDM Smith utilized its Expense Allocation Methodology to divide travel expenses incurred by its employees to benefit multiple PWs across said PWs on a prorated basis. Accordingly, the costs are not eligible DAC.