August 27, 2012

Bryan Koon

Director

Florida Division of Emergency Management

2555 Shumard Oak Boulevard

Tallahassee, Florida 32399

Re:  Second Appeal–Village of Key Biscayne, PA ID 086-36300-00, Ineligible Contract - Debris Removal, FEMA-1602-DR-FL, Project Worksheet (PW) 385

Dear Mr. Koon:

This letter is in response to a letter from your office dated September 20, 2011, which transmitted the referenced second appeal on behalf of the Village of Key Biscayne (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) decision to deobligate $208,522 for debris removal performed under a Time and Materials (T&M) contract.   

Background

On August 25, 2005, high velocity winds generated from Hurricane Katrina produced large amounts of vegetative debris throughout the Village of Key Biscayne.  FEMA approved two Project Worksheets (PWs), in the amount of $739,214 for village-wide debris removal operations.  The Applicant entered into a T&M contract with All Florida Tree and Landscape, Inc. (contractor) from August 26 through September 27, 2005, to remove hazardous trees, tree limbs, and stumps within its jurisdiction.  FEMA prepared PW 385 in the amount of $208,522 to document the contract costs for this work. 

During project closeout, FEMA determined that the work performed under the T&M contract extended beyond the initial 70-hour period that FEMA allows for emergency debris clearance.  It was also determined that the contractor’s equipment rates were unreasonably high when compared to established FEMA equipment rates for applicant owned equipment.  FEMA allowed the contractor’s equipment rates for the first 70-hours of emergency debris clearance but adjusted the rates – for five (5) different pieces of equipment – to match FEMA equipment costs for the remainder of the contract.  This resulted in a reduction of $37,817 with adjusted total funding of $170,705.

First Appeal

The Applicant submitted a first appeal on March 26, 2010, which was forwarded by the Florida Division of Emergency Management (State) to FEMA on May 14, 2010, requesting that FEMA

reinstate debris removal costs in the amount of $37,817.  The State, in support of the first appeal, cited FEMA 325 - Debris Management Guide dated July 2007, stating that T&M contracts are allowable beyond the initial 70-hour timeframe so long as the costs are reasonable for the type of work required.  The State questioned FEMA’s assessment that the contractor’s equipment rates for the five pieces of equipment were unreasonably high.   The State argued that although the Applicant’s average debris management cost of $39.38 per cubic yard (CY) is higher than that of the neighboring jurisdiction, City of Miami Beach ($32.76 per CY), it is a reasonable cost when accounting for economies of scale.  The State argues that the City of Miami Beach collected almost ten times the amount of debris than the Applicant, which results in a lower unit cost for the City of Miami Beach.  Because the Applicant’s average unit cost is within 20 percent of the City of Miami Beach’s cost, it should be considered reasonable. 

In a letter dated September 22, 2010, the Regional Administrator denied the first appeal for $37,817 and advised that the remaining funding of $170,705 on PW 385 would be deobligated.  The Regional Administrator stated that the Applicant did not fully comply with Federal procurement regulations at 44 CFR §13.36, Procurement when it entered into the T&M contract.  The Regional Administrator explained that the Applicant did not demonstrate that other contract types were not suitable; that the terms of the T&M contract did not include a ceiling price; and that a cost/price analysis was not conducted in connection with the contract.  The Regional Administrator also stated that the Applicant did not provide documentation to establish that the removal of hanging limbs, leaning trees, and stumps eliminated an immediate threat to life, public health, and safety, or of significant damage to improved public or private property.

Second Appeal

The State transmitted the Applicant’s second appeal to FEMA on September 20, 2011.  The Applicant is requesting reconsideration of FEMA’s decision to withdraw funding in the amount of $208,522.  The Applicant reiterates its first appeal arguments that the T&M costs are both eligible and reasonable in accordance with 44 CFR §206.224(a), Debris removal, Public interest, OMB Circular A-87, and by direct comparison to contracts let by surrounding local governments.   

Second appeal documentation includes a DVD showing disaster-generated vegetative debris throughout the Applicant’s jurisdiction, a copy of a September 1, 2005, Revised Tree Debris Removal Contract, copies of daily worksheets and work orders listing contract personnel hourly rates and equipment hourly rates, and cancelled checks.  Load tickets with debris quantities were not provided with the second appeal.

Discussion

On April 10, 2012, FEMA Headquarters requested additional documentation from the Applicant regarding its second appeal documentation.  The Applicant was asked to provide a copy of its hourly rate contract for hazardous tree limbs, hangers and stump removal.  Also requested was a copy of the original Tree Debris Removal Contract so that FEMA could compare it with the Revised Tree Debris Removal Contract that was provided with the second appeal.  The Applicant did not submit the requested documentation for FEMA to consider during the second appeal review.

FEMA may provide assistance for emergency debris removal work completed under T&M contracts for work that is necessary immediately after the disaster has occurred and when a clear scope of work cannot be developed.  In accordance with FEMA Publication 325 – Debris Management Guide dated April 1999, which was in effect for Hurricane Katrina, FEMA typically limits funding for T&M contracts to a maximum of 70 hours of actual emergency debris clearance work.  The scope of work for PW 385 entailed the removal of hazardous trees, limbs, and stump removal operations from August 24 through September 27, 2005.

Applicants who seek reimbursement under the Public Assistance Program must comply with the Federal procurement requirements contained in 44 CFR §13.36, Procurement.  In accordance with 44 CFR §13.36(b)(2), Procurement, Procurement Standards, “… subgrantees will maintain a contract administration system which ensures that contractors perform in accordance with the terms, conditions, and specifications of their contracts…”   The Revised Tree Debris Removal Contract identifies the existence of a separate hourly-rate contract between the Applicant and the contractor for hazardous tree limbs and hangers removal.  The Applicant, however, did not provide the hourly-rate contract for FEMA to review. 

The Debris Management Guide stipulates that supervision of T&M contracts is extremely important.    The reports should clearly state the amount of work accomplished daily in quantitative terms, such as the number of cubic yards of debris hauled, the number of hazardous trees, limbs, hangers, and stumps removed, etc.   The Applicant did not provide sufficient documentation, such as load tickets or photographs of the debris removal operation, to validate the number of trees, hangers, and stumps cut or removed, nor did the Applicant identify the exact locations of where the work was performed.   

In the absence of a contract with a defined scope of work and documentation to quantify the amount of debris the Applicant’s contractor removed, FEMA cannot calculate eligible costs for debris removal services nor compare the contract with other contracts from surrounding jurisdictions. 

Furthermore, as determined by the Regional Administrator, the Applicant did not provide documentation demonstrating that other non-T&M contract types were not suitable, that the

terms of the contract included a ceiling price, or that a cost/price analysis was conducted.  The Applicant did not meet Federal procurement requirements prior to executing the contract. 

Finally, the State submitted the second appeal approximately one year after the Regional Administrator decided the first appeal.  In accordance with 44 CFR §206.206(c) Appeals, Time Limits, applicants must file its second appeal within 60 days after being notified of the first appeal decision.  The State must review and forward appeals from an applicant, with a written recommendation, to the Regional Administrator within 60 days of receipt of the appeal.  The Applicant’s second appeal is undated, but the State’s transmittal occurred nearly eight months after the regulatory deadline elapsed.

Conclusion

I have reviewed the information submitted with the appeal and have determined that the Regional Administrator’s decision in the first appeal is consistent with Public Assistance regulations and policy.  The Applicant did not meet the Federal requirements for procurement of its T&M contract or provide documentation of the quantity of work performed by the contractor.  Finally, the appeal was submitted well after the regulatory deadline.  Accordingly, I am denying the second appeal.

Please inform the Applicant of my decision.  This determination is the final decision on this matter pursuant to 44 CFR §206.206, Appeals.

Sincerely,

/s/

Elizabeth A. Zimmerman

Deputy Associate Administrator

Office of Response and Recovery

cc:  Major P. May

       Regional Administrator

       FEMA Region IV