Allowable Costs & Reasonable Costs, Immediate Threat

Appeal Brief

Appeal Letter

Appeal Analysis

Background

The coronavirus (COVID-19) pandemic resulted in a major disaster declaration for the state of Florida on March 25, 2020, with an incident period of January 20, 2020, to May 11, 2023. The City of Niceville (Applicant) requested Public Assistance (PA) for various costs related to emergency protective measures, including the December 15, 2020 purchase of three disinfectant foggers used for cleaning and disinfecting the interior surfaces of the Applicant’s police and fire facilities and vehicles, and the Applicant’s community center’s meeting rooms. On September 14, 2022, FEMA issued a Determination Memorandum, denying $38,787.00 in costs for the disinfectant foggers[1] as well as costs for the installation of a glazed partition wall and customer counter (partition system).[2] Regarding the disinfectant foggers, FEMA explained that the Applicant did not provide documentation, such as a cost analysis, demonstrating that the foggers were cost-effective versus any other lesser cost alternative.

First Appeal

The Applicant submitted a first appeal in a letter dated November 15, 2022. The Applicant provided a cost analysis showing that the disinfectant foggers were the least cost alternative compared to manual cleaning or using ultraviolet (UV) light for disinfection. The Applicant also asserted that the partition system was temporary and could be removed as soon as the COVID-19 pandemic was over. On January 13, 2013, the Florida Division of Emergency Management (Recipient) transmitted the first appeal to FEMA, expressing its support.

On April 27, 2023, the FEMA Region 4 Regional Administrator partially granted the appeal, approving costs for the partition system but denying costs for the disinfectant foggers. FEMA found that the Applicant did not demonstrate that the cost of the disinfectant foggers was reasonable when compared to alternatives such as contracted or in-house manual cleaning. FEMA explained that the Applicant’s cost analysis was unclear, noting disparities in the hourly labor rates used for the cost alternatives.

Second Appeal

In a second appeal dated May 30, 2023, the Applicant states that the disinfectant foggers were used to decontaminate police department, fire department, and public meeting facilities when no other method would be as efficient and cost-effective. The Applicant provides an updated cost analysis and reiterates that the disinfectant foggers provide a significant savings versus two alternatives: manual cleaning or using UV light for disinfecting. The Applicant adds that the disinfectant foggers also reduced potential exposure to COVID-19 by eliminating the need for direct contact during disinfection procedures. On July 26, 2023, the Recipient transmitted the appeal to FEMA, expressing its support.

On September 28, 2023, FEMA sent the Applicant a Request for Information (RFI), requesting that the Applicant provide: (1) documentation that the work was done in accordance with applicable Centers for Disease Control and Prevention (CDC) guidance or that of an appropriate public health official available at the time the work was completed; (2) documentation demonstrating that the purchase of the disinfectant foggers was in excess of the Applicant’s regularly budgeted costs for cleaning and disinfection; (3) documentation to support the assumption that the disinfectant foggers were three times more efficient than manually cleaning; (4) a cost analysis comparing all costs associated with the disinfectant foggers from the initial purchase through the end of the incident period, with all costs associated with manual cleaning and disinfection for the same time period; and (5) documentation demonstrating the current fair market value (FMV) of each disinfectant fogger.

On October 27, 2023, the Applicant responded to the RFI. First, the Applicant states that it used the disinfectant foggers in compliance with CDC guidance. The Applicant explains that although the CDC now states that fogging is not recommended as a primary method of surface disinfection, the Aeroclave system was specifically designed for this work, thus complying with the CDC’s exception for their use. Second, the Applicant confirms that its regularly budgeted cost for general cleaning services for the police department, fire department, and community center was a combined total of $14,000.00. Third, the Applicant explains that it did not previously assert that the disinfectant foggers were specifically three times more efficient than manual cleaning, instead that they provide a significant savings. Fourth, the Applicant provides a cost analysis, showing that it would have spent 23.7 percent more on cleaning and disinfecting using the manual process. Finally, the Applicant estimates the three disinfectant foggers to have a current FMV of $2,500.00 each and provides documentation of a similar unit currently on the used market for $2,950.00.

Discussion

FEMA is authorized to provide assistance for emergency protective measures to save lives and protect public health and safety.[3] In response to COVID-19 declarations, FEMA may provide assistance for measures implemented to facilitate the safe opening and operation of all eligible facilities in response to COVID-19.[4] Eligible work includes cleaning and disinfection in accordance with CDC guidance or that of an appropriate public health official available at the time the work was completed, including the purchase and provision of necessary supplies and equipment in excess of the applicant’s regularly budgeted costs.[5] To be eligible, costs must be reasonable to accomplish the work properly and efficiently.[6] A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the Applicant makes the decision to incur the cost.[7] FEMA may evaluate whether a claimed cost is comparable to the current market price for similar goods or services to determine cost reasonableness.[8]

There are certain disposition requirements when equipment is no longer needed for response to or recovery from the incident.[9] Local governments must calculate the current FMV of each individual item of equipment and applicants must then provide the current FMV to FEMA for any items that have a current FMV of $5,000.00 or more.[10] FEMA reduces eligible funding by this amount.[11] 

Here, the Applicant states that the three disinfectant foggers were purchased to clean and disinfect the interior surfaces of police and fire facilities and vehicles, and the community center’s meeting rooms, to facilitate the safe opening and operation of those eligible facilities. Notably, at the time the Applicant purchased the disinfectant foggers, CDC guidance recommended the use of disinfectants, including certain disinfectants registered with the Environmental Protection Agency (EPA), for cleaning and disinfecting of surfaces.[12] In accordance with that guidance, the Applicant purchased the foggers to apply an EPA-registered disinfectant to the interior surfaces of the aforementioned facilities[13] With regard to the use of foggers, CDC guidance at the time recommended that users follow manufacturer’s instructions for fogging and make sure that the product used is intended for this type of application.[14] Accordingly, the Applicant’s fire and police chiefs certified that the foggers were used in compliance with CDC guidance.[15] Additionally, the Applicant’s purchase of the foggers to be used in police vehicles was in line with other CDC guidance that discussed using newer disinfecting technologies in situations where their use could be more practical.[16] Furthermore, the Applicant has demonstrated its regularly budgeted cleaning costs for the police and fire departments and community center was $14,000.00. Therefore, the Applicant has established the $38,787.00 purchase of the disinfectant foggers to clean and disinfectant police and fire vehicles and the community center’s meeting rooms was in excess of its regularly budgeted costs. 

Next, the Applicant has also demonstrated through its second appeal RFI response that the purchase of disinfectant foggers was reasonable to facilitate the safe opening and operation of the eligible facilities in response to COVID-19. In the cost analysis transmitted on second appeal, the Applicant established that the foggers provided a significant savings, 23.7 percent, over other cleaning and disinfection methods for the same time period. Therefore, given the circumstances prevailing at the time, FEMA determines that the Applicant incurred the costs at issue as a necessary and reasonable response to the COVID-19 pandemic.[17]

Finally, the Applicant estimates the FMV of each fogger as $2,500.00, which is reasonable since the Applicant provides documentation of an identical unit for sale on the used market for $2,950.00. Since the FMV of each fogger is estimated at less than $5,000.00, FEMA does not reduce project funding for equipment disposition.

Conclusion

FEMA finds that the Applicant has demonstrated that the purchase of disinfectant foggers was an eligible emergency protective measure and that the costs were reasonable to facilitate the safe opening and operation of eligible facilities in response to COVID-19. Therefore, this appeal is granted.