Binghamton Housing Authority (Applicant) seeks reimbursement for actual costs of interior repairs to nine first-floor apartment units in its North Shore Campus, Building 5, which were damaged by Tropical Storm Lee flooding in September 2011. The Applicant used force account labor (FAL) and contract labor (“Homer Gow” and “Keystone”) to complete the repairs. FEMA prepared Project Worksheet (PW) 2082 to document these repairs, alongside 25 other PWs for the North Shore Campus. All work was complete before the development of the PWs. However, due to the lack of clear descriptions of the work performed, FEMA used its Cost Estimating Format (CEF) to develop a cost estimate of $114,218.74 in PW 2082. On January 5, 2018, New York State Homeland Security and Emergency Services (Grantee) submitted the Applicant’s Large Project Final Accounting (LPFA) totaling $637,905.71 in actual costs based on FAL ($111,248.42), contract labor ($521,085.46), materials, and direct administrative costs (DAC). FEMA partially approved the LPFA, bringing total approved costs to $369,688.50, but denied labor costs that could not be validated or which were already funded or deemed ineligible in other PWs, and continued to rely on CEF estimates. The Applicant appealed on May 22, 2018. In response to a Final Request for Information, the Grantee conceded that the Applicant did not keep contemporaneous records of FAL work assignments, but proposed allocating FAL costs to PWs based on approximations. The Applicant also explained that, due to exigent circumstances, it did not conduct a cost analysis before engaging its contractors. On December 26, 2018, the Regional Administrator (RA) partially granted the appeal and increased funding to $433,913.00 after expanding the PW’s eligible scope of work. However, the RA denied FAL costs and based eligible funding on estimates rather than actual costs because the Applicant’s documentation did not adequately distinguish costs directly tied to the eligible disaster-related work in PW 2082. The RA also identified multiple procurement violations (based on non-competitive procurement and Time & Materials (T&M) contracts) but awarded reasonable costs (CEF estimates) as an enforcement action.
Authorities and Second Appeals
- 44 C.F.R. §§ 206.206(a), 206.223(a)(1), 13.36(b)-(d), 13.43.
- PA Guide, at 40, 52-53.
- Dep’t of Transp., FEMA-4068-DR-FL, at 5.
- To be eligible under FEMA regulation and policy, costs must be, among other things: directly tied to the performance of eligible work and necessary and reasonable to accomplish the work. 44 C.F.R. § 206.206(a) requires documented justification supporting an applicant’s appeal. The burden of producing documentation and explaining how it supports the appeal falls exclusively on the applicant.
- Here, the Applicant has not demonstrated through supporting documentation that its FAL and Keystone costs are necessary, reasonable, and directly related to the eligible work in PW 2082, because it did not properly distinguish the disaster related work that its FAL and contract employees performed in PW 2082.
- FEMA’s 44 C.F.R. § 13.36 procurement regulations require a cost or price analysis for every procurement action and prohibit T&M contracts without a cost ceiling provision, while 44 C.F.R. § 13.43 grants FEMA broad discretion to select an enforcement remedy for procurement violations.
- Here, the Applicant did not conduct a cost or price analysis in connection with its procurement of Homer Gow and entered into prohibited T&M agreements without a cost ceiling provision, and the RA permissibly limited costs to CEF estimates as a discretionary enforcement action.
The Applicant has not demonstrated through supporting documentation that its FAL or Keystone contract costs were necessary, reasonable, and directly tied to the eligible work in PW 2082. The Applicant also violated multiple provisions of FEMA’s procurement regulations, and the RA’s enforcement remedy limiting costs to CEF estimates was an appropriate exercise of his discretionary authority. Therefore, the appeal is denied.