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Second Appeal Brief
PA ID# 059-99059-01 ; Nassau County Public Works
PW ID# (PW) 4100 ; Direct Administrative Costs – Project Management Costs
Conclusion: Nassau County Public Works’ (Applicant) contractor’s employees travel 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 therefore 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 (PA) 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). In 2015, the Applicant, the New York State Division of Homeland Security and Emergency Services (Grantee), and FEMA agreed to a process that would allow for further review of certain contractor expenses without delaying reimbursement for other work done on the various PWs. On December 27, 2016 the Grantee submitted a Large Project Final Accounting (LPFA) request for PW 4100. Shortly thereafter, FEMA informed the Applicant by letter dated January 6, 2017 that as a general matter, many of CDM Smith’s travel expenses associated with direct administrative and project coordination tasks were not eligible for reimbursement as DAC. The Applicant, via the Grantee, submitted two additional LPFA requests, dated November 29, 2017 and January 3, 2018 (Final LPFA). On March 14, 2018, following its inspection of the Final LPFA, FEMA adjusted PW 4100 to include DAC that it found the Applicant had substantiated, but denied funding for indirect travel, in accordance with its January 6, 2017 letter. The Applicant appealed FEMA’s LPFA determination, arguing that the Expense Allocation Methodology was permissible under the Applicant’s 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 Region II’s Regional Administrator (RA) upheld the denial of costs either as DAC or as contract costs. The Applicant filed a second appeal, reiterating its arguments from its first appeal.
Authorities and Second Appeals
- Stafford Act § 324
- 2 C.F.R. § 200.110
- 44 C.F.R. §§ 207.2, 207.6
- DAP 9525.9 (Nov. 13, 2007); Memo., DAC Guidance (Sept. 8, 2009);
DAP 9525.11 (Apr. 22, 2001)
- FEMA-4069-DR-MN, City of Duluth, Mult. PWs, at 5 (June 15, 2015)
- 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.