|Applicant||City of Pascagoula|
|PW ID#||PWs 7633, 8113, 8247|
Thomas M. Mike Womack
Governors Authorized Representative
Mississippi Emergency Management Agency
Post Office Box 5644
Pearl, Mississippi 39208-5644
Re: Second AppealCity of Pascagoula, PA ID 059-55360-00, Contract Labor,
FEMA-1604-DR-MS, Project Worksheets (PWs) 7633, 8113, and 8247
Dear Mr. Womack:
This letter is in response to your letter dated June 26, 2008, which transmitted the referenced second appeal on behalf of the City of Pascagoula (Applicant). The Applicant is appealing the Department of Homeland Securitys Federal Emergency Management Agencys (FEMA) denial of funding for regular time costs for contract employees.
Following Hurricane Katrina, the Applicant used labor from the Public Works Department to perform emergency repairs and debris removal operations. The Public Works Department was comprised of employees from Operations Technologies, Inc. (Optech), a company to which the Applicant outsourced operations of the Public Works Department in 2003. FEMA determined that Optech employees were the functional equivalent of force account labor. Accordingly, FEMA reduced funding by a total of $238,035 on PWs 7633, 8113, and 8247, to account for the cost of regular-time salaries and benefits for Optech employees who performed emergency work.
The Applicant submitted its first appeal to the Mississippi Emergency Management Agency (MEMA) on August 28, 2007. In its appeal, the Applicant claimed that a FEMA Project Officer who prepared the original PW stated that regular-time wages of Optech employees are eligible because they were not employees of the Applicant. The Regional Administrator denied the appeal in a letter dated February 15, 2008, stating that the Applicant regularly budgeted for contract labor from Optetch prior to the disaster and the associated costs were incurred as the equivalent of force account labor.
The Applicant submitted its second appeal on May 1, 2008. In its second appeal, the Applicant asserted that FEMA established a precedent under FEMA-1550-DR-MS by obligating PWs that funded regular-time costs for Optech employees who performed emergency work.
I have concluded that, for purposes of the Public Assistance Program, Optechs employees are contract labor. FEMAs regulation at 44 CFR §206.228(a)(2), Force Account Labor Costs, restricts funding for straight time to a subgrantees permanently employed personnel. This provision does not apply to contract labor. Therefore, the straight-time pay of Optech employees who performed emergency work is eligible for reimbursement. I have reviewed the information submitted with the appeal and have determined that the Applicants second appeal should be granted in full. By this letter, I am requesting the Regional Administrator to take the appropriate actions to implement my decision.
Please inform the Applicant of my decision. This determination constitutes the final decision on this matter pursuant to 44 CFR §206.206, Appeals.
James A. Walke
Acting Assistant Administrator
Disaster Assistance Directorate
cc: Major P. May
FEMA Region IV
Project Worksheets (PWs) 7633, 8113, and 8247