In 2009, severe storms inundated the City of Atlanta’s (Applicant) R.M. Clayton Water Reclamation Center (Plant). Several feet of floodwater remained for weeks, causing contamination and damage to buildings and equipment. At closeout of Project Worksheet (PW) 594, FEMA deobligated funding for all but the first 14 days of emergency work completed under a Time and Materials (T&M) contract. In PW 1883, FEMA initially allowed the work and costs as quoted by the Applicant’s licensed elevator expert under its maintenance contract to repair the disaster damage to one freight and four passenger elevators in three buildings. FEMA later disallowed partial funding upon determining the Applicant replaced the flooded cabs of the three passenger elevators (in Buildings 7 and 64) with steel instead of preexisting wood/laminate paneling. To do this, FEMA used the scope of work (SOW) and estimate for the freight elevator, which did not identify significant interior cab damage or repairs, as the approved SOW and estimate for the passenger elevators. FEMA also denied all but $100.00 claimed to repair Building 54’s damaged elevator system, related controls, and equipment, determining the damage was minimal and confined to a single switch in the basement, and that the other repairs were unnecessary upgrades quoted by the contractor. For PW 594, the Applicant appealed and argued: that regulations do not provide a strict time limitation for work under a T&M; no other contract was suitable due to the nature and urgency of the work; it carefully monitored the work; and the costs claimed were reasonable and not questioned by FEMA. For PW 1883, it argued that FEMA failed to consider variations in damage, design, function, and elements required to repair each elevator; and that using the freight elevator quote as the SOW for the passenger elevators was improper due to those important variations. The Applicant argued the flood damaged Building 54’s passenger elevator control panel, hydraulic system, and electrical components, requiring major repairs and code-mandated work. The Regional Administrator (RA) partially granted the appeal, extending the allowable T&M period but limiting costs as an enforcement action to remedy the Applicant’s noncompliance with procurement requirements. However, the RA upheld the field determination for PW 1883. The second appeal reiterates and expands previous arguments.
Authorities and Second Appeals
- Stafford Act § 406.
- 44 C.F.R. §§ 13.36(b)-(d) and (f), 13.43(a), 206.201(j)-(k), 206.202(d)(1), 206.203(c)(1), 206.205(b), 206.223(a)(1), and 206.226(d).
- PA Guide, at 27, 29-33, 79, 96, 101, 125-126.
- FEMA Second Appeal Analyses: Cmty. Action Program Comm., Inc., FEMA-1551-DR-FL, at 4 (Feb. 27, 2018); Columbus Reg’l Hosp., FEMA-1766-DR-IN, at 5 (Dec. 27, 2017), and Clarksville Gas & Water, FEMA-1909-DR-TN, at 6-7 (Nov. 20, 2017).
- Applicants must comply with 44 C.F.R. § 13.36’s federal standards for costs of contract work to be reimbursable. Section 13.36(b)(10) requires T&M contracts to include a cost ceiling and § 13.36(f)(4) prohibits use of a cost plus a percentage of cost method of contracting (CPPC). Additionally, § 13.43(a) authorizes FEMA to take an enforcement action to remedy each instance of procurement noncompliance.
- For PW 594, the T&M contract under which all work was performed lacks a cost ceiling and incorporates a prohibited CPPC provision. Therefore, the RA had the authority to deny partial funding which was reasonable based on the circumstances. Additionally, the Applicant did not supply a cost analysis or other documentation describing the work and reasonableness of costs for FEMA to grant additional funding.
- Stafford Act § 406 and 44 C.F.R. §§ 206.201(j)-(k), 206.226, permit funding for necessary work to restore damaged eligible facilities to predisaster design, function, and capacity and current codes and standards. The PW’s scope of eligible permanent work must correspond directly to disaster damage.
- For PW 1883, there is a direct relationship between documented disaster damage and the additional work claimed. Since the PW is inadequate to restore the damaged facilities, it will be revised to include the damage detail and eligible repairs as indicated on the contractor’s quotations for each elevator. Additionally, replacing the cabs with steel is more cost-effective than salvaging and retrofitting the existing cabs
- Pursuant to 44 C.F.R. §§ 206.203(c)(1) and 206.205(b), the amount of final funding for eligible work and costs as clarified in this decision must be determined upon reconciliation of actual costs at closeout.
Conclusion: The appeal of PW 594 is denied. However, FEMA will obligate $104,169.81 to correct the final accounting of costs throughout the eligible T&M period. For PW 1883, the appeal for additional work is granted, and the Applicant will retain appeal rights for the Agency’s cost determination.