In July 2014, the Mills Canyon fire in Chelan County, Washington, encompassed approximately 22,000 acres of privately and publicly owned lands. The Washington State Department of Natural Resources (Applicant) applied for a Fire Management Assistance Grant. FEMA prepared Project Worksheet 6 to document costs for labor, equipment, materials, contracts, travel and other miscellaneous work. However, the Agency subsequently determined, in part, that certain claimed contract costs submitted were actually ineligible force account labor costs – specifically straight time costs for employees of other state agencies. The Applicant appealed and argued that its Interagency Agreements (IAA) with other state agencies were contracts that allowed for the reimbursement of straight time for those employees and that the contracts stipulated these personnel were not considered employees of the state. The Regional Administrator denied the appeal as the employees from the other state agencies were considered permanent employees under FEMA policy and thus costs for straight time were ineligible for reimbursement, regardless of how the State classified the employees. The Applicant submitted its second appeal and reiterates its prior arguments.
Authorities and Second Appeals
- Stafford Act § 420.
- 44 C.F.R. §§ 13.3, 13.36, 204.1-204.64.
- FEMA Recovery Policy 9525.7, Labor Costs – Emergency Work (Nov. 16, 2006).
- FEMA Recovery Policy 9523.6, Mutual Aid Agreements for Public Assistance and Fire Management (Nov. 10, 2012).
- FEMA Second Appeal Analysis, Washington State Patrol, FEMA-5059-FM-WA, at 3-4 (May 14, 2018).
- RP 9523.6 states that when a requesting entity is a state, the force account labor costs of the providing entity will not be treated as contract labor if the force account labor is employed by a governmental subdivision, such as a state agency, within that requesting entity.
- The State of Washington’s agencies and bodies of government are all part of the State government and therefore, any person working for a state agency is an employee of the state, regardless of which agency the employee works for. Accordingly, per 44 C.F.R. § 204.42(c)(1), only the cost of overtime labor for permanent and reassigned state and local employees is an eligible expense.
- FEMA’s grant regulations define contract as a procurement contract under a grant or subgrant and also a procurement subcontract under a contract. Accordingly, an agreement between subdivisions within a state would not qualify as a procurement contract under Federal regulations.
- The IAAs do not meet the definition of a contract under FEMA’s regulations because they are not procurement contracts under a grant or subgrant, nor did the Applicant procure the services of the other state agencies.
Conclusion: The Applicant has not demonstrated that the straight time labor costs are eligible. Moreover, the IAAs were not procurement contracts between the Applicant and other state agencies, and regardless of how the state classifies the employees reassigned from the other state agencies, FEMA policy does not allow for reimbursement of the employees’ straight time costs.