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Second Appeal Brief
PA ID# 045-78200-00; City of Waveland
PW ID# PW 4916 and 4917 ; Contract Administration
Between August 29 and October 14, 2005, storm surge and flooding from Hurricane Katrina damaged a large portion of the sewer collection system in the City of Waveland, Mississippi (Applicant). FEMA prepared Project Worksheet (PW) 4916 for costs associated with replacing the Applicant’s sewer collection system, and PW 4917 for related architectural and engineering (A/E) costs. As a result of a complaint received in 2011 regarding the Applicant’s project, the Office of Inspector General (OIG) for the Department of Homeland Security conducted an audit of PW 4916 and PW 4917, issuing a report on April 15, 2014. The OIG recommended that FEMA deobligate $1,419,000.00 from PW 4916, finding that by not monitoring its contract adequately, the Applicant had allowed the contractor to bill more tanks than the contract’s two-per-dwelling limit. FEMA concurred with the OIG’s findings, but not with the quantity of improperly billed tanks. As a result, FEMA deobligated $1,370,215.00 from PW 4916, and $43,022.00 from PW 4917 for a proportional reduction in A/E costs. In its first appeal, the Applicant argued that the costs were reasonable because FEMA allowed the project to proceed through closeout. In the alternative, the Applicant argued that FEMA should grant an exception under 44 C.F.R. § 13.6 because it acted in good faith. The Grantee forwarded the Applicant’s appeal, echoing the Applicant’s argument that FEMA should grant an exception under 44 C.F.R. § 13.6. In addition, the Grantee argued that the OIG may have miscalculated the number of improperly billed tanks. Region IV issued a Final Request for Information asking the Applicant to provide information showing why FEMA should grant an exception. In its response, the Grantee stated that the exception applied to all of Part 13, and therefore, FEMA had the authority to grant an exception in this case. Region IV issued its first appeal determination on August 18, 2017, denying the Applicant’s appeal. The Regional Administrator (RA) found that contrary to the requirements of 44 C.F.R. § 13.30(d)(1), the Applicant had changed the scope of work without prior approval from FEMA. In addition, the RA found that granting an exception under 44 C.F.R. § 13.6(c) was not appropriate, given that the Applicant was responsible for ensuring the costs corresponded to the contract’s terms under 44 C.F.R. § 13.36(b). On second appeal, the Applicant renews its first appeal arguments and also contends that FEMA was aware of the changes to the scope of work.
Authorities and Second Appeals
- 44 C.F.R. §§ 13.6, 13.36, 13.52.
- Per 44 C.F.R. § 13.36(b)(2), applicants and grantees must maintain a contract administration system to ensure that contractors adhere to the terms, conditions, and specifications of their contracts and purchase orders.
- The RA properly determined that the Applicant did not maintain its contract administration system properly, which led to its Contractor’s overbilling and unreasonable project costs.
- FEMA may grant exceptions to procurement requirements under 44 C.F.R. § 13.6(c) on a case-by-case basis.
- Neither the Applicant nor the Grantee have demonstrated that FEMA should grant an exception in this case, where the Applicant did not monitor its contract appropriately, leading to deobligation of funding in an OIG audit.
The Applicant failed to maintain an adequate contract administration system and has not provided justification for an exception to this procurement requirement. Accordingly, FEMA is denying the second appeal.