Allowable Costs & Reasonable Costs

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster	4129
Applicant	Office of Parks, Recreation, Historic Preservation
Appeal Type	Second
PA ID#	000-U0066-00
PW ID#	PW 641
Date Signed	2020-07-14T04:00:00

Summary Paragraph

During the incident period of June 16, 2013 to July 10, 2013, severe storms and flooding caused extensive damage in the State of New York.  The New York State Office of Parks, Recreation, Historic Preservation (Applicant) Canalway Trail (Facility) was inundated by vegetative debris from floodwater.  FEMA captured all debris removal costs in Project Worksheet (PW) 641 under the Public Assistance Alternate Procedure (PAAP) Debris Removal program for a total cost of $112,320.00.  FEMA subsequently deobligated all costs at closeout as the Applicant did not provide adequate documentation to support the costs.  On first appeal, the Applicant argued that the work was 100 percent complete and eligible under the PAAP program.  The FEMA Region II Regional Administrator partially approved the appeal, obligating $31,345.43, as the Applicant substantiated that portion of the original estimated costs.  On second appeal, the Applicant reiterated its eligibility claims from first appeal and requested reinstatement of the remaining $80,974.57 denied. 

Authorities and Second Appeals

• 44 C.F.R. § 206.205(b).
• PA Guide, at 40.
• PAAP Guide for Debris Removal, at 8-9.
• Chambers Cty., FEMA-1791-DR-TX, at 7.
• Binghamton Housing Auth., FEMA-4031-DR-NY, at 3

Headnotes

• To be eligible under FEMA regulation and policy, cost must be directly tied to the performance of eligible work. 
  • Here, the Applicant has not demonstrated through supporting documentation that costs incurred, beyond the $31,345.43 approved on first appeal, were directly tied to eligible debris removal work.

 

Conclusion

The Applicant has not demonstrated that the additional requested costs, beyond the $31,345.43 approved on first appeal, are directly tied to eligible work for PW 641.  Therefore, this appeal is denied.

 

Appeal Letter

Appeal Analysis

Background

 

From June 26, 2013 to July 10, 2013, severe storms and flooding caused extensive damage in the State of New York.  On July 12, 2013, the President declared a major disaster, authorizing Public Assistance (PA) in Herkimer County, where the New York State Office of Parks, Recreation, Historic Preservation's (Applicant) Canalway Trail (Trail) in Little Falls, NY is located.  FEMA captured damages to the Trail in three separate Project Worksheets (PW), including PW 641, which funded debris removal under the Public Assistance Alternative Procedures (PAAP) pilot program for days 0-30 after the start of the incident period. 

 

On August 8, 2014, FEMA obligated PW 641 for $112,320.00 under the PAAP program for accelerated debris removal.  PW 641 identified an estimated 2,496 cubic yards of woody debris, dirt, and small rocks removed, and calculated eligible funding based on a unit cost of $45.00 per cubic yard.[1]  The Applicant’s contractor completed debris removal work by the time FEMA prepared the PW, with FEMA noting in the PW that the work was completed by July 11, 2013.  However, FEMA obligated funding based on estimated costs, because the Agency had not yet completed a review of the contractor’s invoices. 

 

On January 14, 2019, the New York State Division of Homeland Security and Emergency Services (Grantee) submitted PW 641's Final Inspection Report (FIR) to FEMA with the contractor’s invoices.  The FIR included notes stating that the contractor completed some work that FEMA did not fund, but also acknowledged that the contract costs were not separated out by PW.  Regardless, it recommended that FEMA approve final payment for $112,320.00 under PW 641.

 

On April 24, 2019, FEMA issued a Request for Information (RFI) advising the Grantee and the Applicant that there was insufficient documentation to support the final accounting and payment for PW 641.  FEMA requested the Applicant provide documentation and actual costs only for work in the approved scope of work (SOW) for PW 641.  FEMA also requested that the Applicant provide a detailed cost summary showing the actual amount of debris removed and the contract costs for labor, equipment, and material supporting the work and costs claimed for the reimbursement period.

 

On June 7, 2019, the Applicant responded to FEMA's RFI.  The Applicant emphasized that in PW 641, FEMA stated the contractor completed the debris removal work on July 7, 2013, and included specific details of the work, such as the type of debris removed, quantity, and disposal methods.  The Applicant maintained that it supplied most of the documentation requested to support the total costs at the time FEMA prepared the PW, except for contract invoices and payments.  The Applicant affirmed that it had since provided the missing items and the administrative record contained the documents.  Furthermore, the Applicant claimed it had provided all information required by FEMA to support the costs claimed under the PAAP program. 

 

On July 9, 2019, FEMA notified the Grantee and the Applicant via a determination memorandum that it would deobligate funding for the project because the Applicant did not provide adequate documentation to clearly define the costs of the completed debris removal work.  FEMA memorialized this finding when it deobligated all previously awarded funding through a project amendment on August 19, 2019.

 

First Appeal

 

In a letter dated September 4, 2019, the Applicant appealed FEMA’s deobligation of PW 641 for $112,320.00, stating that FEMA approved the debris removal work under the PAAP for Debris Removal, and reviewed supporting documents at the time FEMA obligated the PW.  The Applicant stated that its contractor completed 100 percent of the work within the required timeframe and the work qualified for the accelerated debris removal at the 85 percent Federal share.  The Applicant requested that FEMA reinstate $112,320.00 under PW 641 or combine the this with the other two PWs awarded for the Trail to approve full funding.  On October 30, 2019, the Grantee forwarded the Applicant's appeal to FEMA, supporting the Applicant's arguments.

 

The FEMA Region II Regional Administrator partially approved the appeal on January 24, 2020.  FEMA granted $31,345.43 for disaster-related debris removal work, stating that the Applicant only provided documentation supporting a portion of its costs claimed for debris removal approved under PW 641

 

Second Appeal

 

The Applicant appealed the RA’s decision, reiterating its first appeal arguments and further states that it has satisfied FEMA’s Public Assistance eligibility requirements, noting: (1) it is an eligible applicant; (2) the facility and work are eligible for assistance; and (3) FEMA has indicated that the work is complete and the costs are eligible.  In support, it points to the originally obligated PW and the first appeal decision, which both noted the contractor completed the work.  The Applicant argues that FEMA contradicts itself by originally obligating PW 641 for the entire requested costs, only to later deobligate a large portion of them simply because certain costs were not separated out by PW.

 

Next, the Applicant urges FEMA to consolidate the three PWs awarded for the Trail into one project.  First, the Applicant states FEMA staff previously advised it this could be done, and for additional support, the Applicant cites to sections of FEMA’s Field Operations Pocket Guide that discuss instances of when it is appropriate to combine different work on a single PW for administrative efficiencies.[2]  Second, the Applicant notes combining the three PWs into one would provide a solution to the alleged lack of documentation clearly separating out the work for the PWs.  The Applicant emphasizes that FEMA prepared PW 641 close to a year after completion of debris removal work.  Therefore, the Applicant states it is disingenuous for the Agency to require the contractor to have separately tracked the costs when no PWs had yet been written at the time work was completed, especially knowing the contractor completed work under a single, lump sum contract.

 

Last, the Applicant states that the rationale FEMA used in its first appeal decision for one of the other two PWs for the Trail should be applied to this appeal to approve the original claimed costs.  FEMA approved the full costs stating “[w]hile the invoices do not include costs separated by PW, the daily labor, equipment and material logs support that the contractor completed the SOW … and the documentation supports that the Applicant incurred the costs claimed under appeal for the approved SOW.”[3]  The Applicant asserts that the estimated costs originally approved for this project were entirely accurate as evidenced by the same amount being claimed for actual costs. 

 

The Grantee supports the Applicant’s claim and states that the appeal either should be approved for the full amount, or the remaining two PWs should be adjusted to cover the denied amount under PW 641.    

 

Discussion

 

Pursuant to Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.205(b) the grantee shall certify that reported costs incurred were in the performance of eligible work.[4]  Although the process for closing projects was streamlined under the PAAP, FEMA still requires a final reporting of actual costs and documentation of compliance with all subgrant conditions for these grants.[5]  Generally, costs must be directly tied to the performance of eligible work to be eligible for funding.[6]  In considering the second appeal with respect to whether costs were reasonable and adequately documented, FEMA must rely exclusively on the documentation provided by the Applicant.[7]

 

Here, even though the invoices did not include costs separated out by PW, through FEMA’s review of the daily labor reports, equipment, and material logs, the Agency determined the Applicant provided documentation that established the contractor performed debris removal activities for PW 641 from July 2 through July 10, 2013.  It is important to note though that the daily labor reports provided by the Applicant only specify that debris removal was completed during that time.  The remaining logs that document work conducted by the contractor do not mention debris removal performed after July 10, 2013.  Therefore, the Applicant has not provided documentation that demonstrates the additional costs claimed beyond July 10, 2013 are directly tied to the performance of eligible work for PW 641 (i.e., debris removal).  Even if FEMA were to combine PWs, as suggested by the Applicant and Grantee, the costs would not be tied to the performance of eligible debris work and could not be considered for Public Assistance funding. [8]    

 

FEMA notes that this finding does not conflict with the Agency’s original obligation of funding for this project, as the notes in the PW make clear that FEMA’s obligation was based on estimated costs.  In the PW, FEMA commented that records of debris quantities and costs were with the OGS and as such, the Agency had not yet reviewed invoices.  Therefore, FEMA confirmed that payment would be based on actual approved invoices.

 

Conclusion

 

The Applicant has not demonstrated that the additional requested costs beyond the $31,345.43 approved on first appeal are directly tied to eligible work for PW 641.  Therefore, this appeal is denied.

 

 

[1] See Project Worksheet 641, Parks, Recreation, Historic Preservation, Version 0 (Aug. 8, 2014).  Specifically, FEMA included the following comments in the PW: Work is 100 percent complete.  Records regarding quantities and costs are in review in the NY State Office of General Services (OGS) who did the engineering, contracting, and supervision. The invoice documents from the contractor to the OGS have not been review[ed] yet.  This is a large project and payment will be based on actual approved invoices.  Therefore, this project is being written as 0 percent completed until required documentation has been reviewed and added to this project worksheet’s comments and attachments.

[2] Letter from Dir. of Emergency Mgmt., N.Y. State Office of Parks, Recreation and Historic Preservation, to Alternate Governor’s Authorized Representative, N.Y. State Div. of Homeland Security and Emergency Servs., at 4 (Mar. 24, 2020) [hereinafter Applicant Second Appeal Letter], (citing Public Assistance Program, Field Operations Pocket Guide, FEMA-P-1011, at 13-14 (Apr. 2014)) [hereinafter Field Operations Pocket Guide].

[3] Applicant Second Appeal Letter, at 5 (quoting FEMA First Appeal Analysis, Parks, Recreation, Historic Preservation, FEMA-4129-DR-NY, PW 642, at 3 (Mar. 10, 2020)).

[4] Title 44 Code of Federal Regulations (44 C.F.R.) § 206.205(b) (2012).

[5] Public Assistance Alternative Procedures Pilot Program Guide for Debris Removal, Version 1, at 8-9 (June 28, 2013).

[6] See Public Assistance Guide, FEMA 322, at 40 (June 2007); FEMA Second Appeal Analysis, Binghamton Housing Auth., FEMA-4031-DR-NY, at 3 (June 6, 2019) (“To be eligible, costs must be . . . directly tied to the performance of eligible work”).

[7] FEMA Second Appeal Analysis, Chambers Cty., FEMA-1791-DR-TX, at 7 (May 26, 2017). 

[8] PW 641 is a PAAP Debris Removal project funded at an 85 percent Federal cost share, and PWs 639 and 642 are standard PA grants funded at a 75 percent Federal cost share.  Cf., Field Operations Pocket Guide, at i, footnote 1 (While the Guide “provides guidelines for implementing the PA program[,] [t]hese guidelines should not be interpreted as regulatory requirements or law.”).