Change in Scope of Work, Appeals

Appeal Brief

Appeal Letter

Appeal Analysis

Background

Severe storms and flooding from June 26-July 10, 2013 caused damage in New York State. The Mohawk Valley Collective, Incorporated[1] (Applicant), a Private Nonprofit (PNP), claimed damages to the basement of Unity Hall (Facility). FEMA used damage assessment and repair estimates generated by the Applicant’s structural engineering firm and an architectural planner to document damage to foundation walls, windows, floor joists, tongue and groove flooring, sewer pipes, multiple roof drains, an organ blower motor, concrete front stoop, and hot water heaters. FEMA obligated $231,749.00 in August 2014 to fund repairs and/or replacements.

The New York State Division of Homeland Security and Emergency Services (Recipient) submitted a scope of work (SOW) change request on behalf of the Applicant on March 30, 2016. The Applicant had provided a revised SOW for the repairs of the Facility, which included additional estimated costs dated October 2015 and February 2016. The Recipient’s request stated that even after the initial cleanup, the Applicant could not determine the extent of the damage as some damages remained hidden until the Applicant removed certain damaged components. FEMA denied the request on February 7, 2017, stating that documentation did not make clear whether the additional work was required due to the disaster, rather than historic restoration or maintenance issues, and that damages above floodwater height such as ceiling damage could not have been caused by the flood. FEMA also found the documentation did not include photographs or professional inspection reports, and did not support the claim that additional damages were either latent or hidden during the original inspections. The Applicant did not appeal this denial.

The Applicant submitted a second SOW change request on August 19, 2021, which the Recipient forwarded with a letter in support. FEMA sent a request for information (RFI) asking how the Applicant protected the Facility from mold since the 2013 event, why the Facility was condemned in 2017, and detailed questions regarding each item of newly claimed damage. The Applicant responded to every question, listed measures it took to prevent mold infiltration, noted the condemnation was improper and later rescinded, and referred to supporting documentation, including a response from its engineer. In that response, its engineer described damages, such as a significant loss of mortar from the joints between the bricks and stones and irreparable window frames, that were concealed, unknown, or overlooked when the original SOW was developed, which the engineer stated were not to the result improper maintenance or neglect. 

FEMA denied the SOW change request on May 20, 2022. FEMA stated the second request was similar to the March 30, 2016 request which was denied and not appealed in accordance with FEMA’s regulatory requirements, and noted damages and associated repair costs denied in the first request would not be reviewable thereafter. FEMA also stated the Applicant did not demonstrate that damage detailed in the second request was the direct result of the declared event, rather than deferred maintenance, negligence, or deterioration typical of the Facility’s age. 

First Appeal

The Applicant appealed on July 19, 2022, requesting $239,951.00 associated with the SOW change request and additional estimated costs. The Applicant explained it believed its claim was valid and argued each item should be considered by itself on its merits. The Recipient supported the appeal in its September 15, 2022 transmittal. The FEMA Region 2 Regional Administrator (RA) denied the first appeal. FEMA evaluated the first and second SOW change requests and found that, with two exceptions, the components and work identified in the second request were broadly captured in the first request, with variations in verbiage and quantities. FEMA reiterated that the Applicant’s appeal rights expired when it did not appeal the first SOW change denial for those items, and it could not resurrect the claim as a second SOW change request. Regarding the two exceptions for plumbing lines and temporary services, FEMA noted that costs were captured in the original project worksheet (PW) and did not warrant a SOW change, and that instead, any increased actual costs could be captured at project closeout. Finally, FEMA found the Facility was in a state of disrepair for years before the disaster, the Applicant stated other factors not related to the disaster caused water leakage, and the Applicant provided no documentation of predisaster restoration or predisaster condition. 

Second Appeal

The Applicant’s March 4, 2023 second appeal states that the first SOW change request should be withdrawn as invalid because it was prematurely submitted by the Recipient on the Applicant’s behalf, and it did not meet the minimum requirements in FEMA policy for a valid SOW change request. The Applicant states that, contrary to FEMA’s findings on first appeal that the Facility was vacant and in a state of disrepair prior to the Applicant’s purchase of it in 2011, the Facility served as a church, a senior center and a warehouse for a medical equipment company after 1990, and would have needed to be in sufficient condition to support such regular occupancy. The Applicant further addresses what it claims are errors about the Facility’s water leakage and condemnation. 

The Recipient’s May 2, 2023 transmittal letter states the Applicant’s 2016 SOW change request was based primarily on a contractor’s observations of a small but representative sampling of damaged spaces, and it did not have sufficient support documentation to appeal the denial of that request until work commenced in 2019. The Recipient also claims that the second SOW change request includes numerous additional items that were only discovered after 2019, and that these additional damages justify FEMA in evaluating the 2021 SOW change request on its own merits.

Discussion

FEMA may reimburse eligible applicants for the repair, restoration, reconstruction, or replacement of certain public and private nonprofit facilities damaged or destroyed by a major disaster on the basis of their pre-disaster design, function, and capacity in conformity with other provisions.^[2] The applicant must establish that all work items for which funding is requested are required as a result of the disaster, and must provide documentation differentiating those disaster-related work items from work to repair damage caused by a pre-disaster event, a post-disaster event, negligence, or inadequacies that existed prior to the disaster.^[3] 

During the performance of work, the applicant may discover hidden damage, additional work that is necessary to properly complete the project, or certain costs that are higher than those used to make the PW’s original cost estimate.^[4] For large projects, when a change in scope or a need for additional funding is discovered, the applicant should notify the recipient as soon as possible.[5] The recipient forwards the request to FEMA with a written recommendation.[6] Applicants may appeal any decision regarding eligibility for assistance within 60 days after receipt of a notice of the action that is being appealed.[7]

Based on the documentation available in the administrative record, the items the Applicant lists in its second SOW change request, and second appeal, i.e., doors, framing, joists, foundation walls, rough stone masonry and dressed stone, basement window wells and finished carpentry, match those in the Applicant’s first SOW change request with variations in verbiage and quantities. The claimed damage and associated SOW change and repair costs were denied in the original SOW change request. This denial was never appealed. Here, the Applicant does not provide documentation to distinguish the second SOW change request from the first, nor documentation such as repair/maintenance records or photographs, in either of the SOW change requests or with the first or second appeal of the second SOW change request, to allow FEMA to verify the predisaster condition of the items in dispute. In addition, the Applicant does not account for the Facility’s post-disaster condition during the years between the event and the SOW change requests to demonstrate the claimed damages were a direct result of the disaster, rather than post-disaster damage or negligence. 

Conclusion

FEMA finds the documentation the Applicant provided does not demonstrate that the claimed damages to the Facility occurred as a direct result of the disaster; furthermore, the Applicant’s appeal rights concerning this claim have lapsed. Therefore, the appeal is denied.