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Direct Administrative Costs & Management Costs

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster1981
ApplicantNorth Dakota Department of Emergency Services
Appeal TypeSecond
PA ID#000-UGSDX-00
PW ID#PW 14
Date Signed2021-03-22T16:00:00

Summary Paragraph

On May 10, 2011, the President issued a major disaster declaration, authorizing Public Assistance for North Dakota.  FEMA developed Project Worksheet (PW) 14 as a Category Z project to document management costs.  On December 15, 2016, the latest PW performance period for the disaster expired, and the Period of Availability (POA) ended 180 days later, on June 13, 2017.  On April 19, 2017, the North Dakota Department of Emergency Services (Grantee) requested FEMA an extension to the POA.  However, FEMA’s Office of the Chief Financial Officer (OCFO) denied the extension.  The Grantee appealed the denial in a letter dated August 14, 2017.  On September 22, 2017, the OCFO denied the appeal.  The Grantee submitted a record of the management costs expended totaling $7,713,444.00 on November 19, 2019.  Of the total costs expended, $795,746.24 was beyond the POA.  FEMA denied funding for any management costs incurred after the POA end date.  The Grantee appealed FEMA’s determination in a letter dated July 31, 2020, arguing that it was overloaded with the disaster response and recovery efforts associated with multiple prior disasters.  Also, it argued that once a PW’s scope of work is finally completed, extensive time is still needed to complete administrative work, and completing the work associated with catastrophic disaster events within the rigid timeframes of Federal regulations is unrealistic.  On October 28, 2020, the FEMA Region VIII Regional Administrator denied the management costs incurred after the POA end date.  The Grantee submitted a second appeal, reiterating its first appeal arguments. 

Authorities and Second Appeals

  • Stafford Act § 324.
  • 44 C.F.R. §§ 207.8(b)(1), 207.8(b)(3).

Headnotes

  • FEMA is authorized to provide Public Assistance funding for management costs.  Management costs are only allowable to be expended for a maximum of eight years from the date of the major disaster declaration or 180 days after the latest performance period date of a non-management cost PA PW or HMGP project narrative, whichever is sooner.
    • The latest approved performance period end date of a non-management project was December 15, 2016.  Therefore, because June 13, 2017 (180 days after the performance period expiration) came before eight years from the date of the major disaster declaration, June 13, 2017 represents the initial POA's expiration date.
  • The POA for management cost may be extended only at the grantee's written request, with the recommendation of the Regional Administrator, and with the approval of the OCFO.
    • FEMA’s OCFO denied the extension.

Conclusion

Management costs in the amount of $795,746.24 expended after the POA end date, are ineligible for reimbursement under the Public Assistance program.  Accordingly, FEMA is denying this appeal.  Accordingly, the second appeal is denied.

Appeal Letter

Cody Schulz              

Director                                                                      

North Dakota Department of Emergency Services

5511 Fraine Barracks Lane, Building 35                                           

Bismarck, North Dakota 58504-5511

 

Re:  Second Appeal – North Dakota Department of Emergency Services, PA ID: 000-UGSDX-00, FEMA-1981-DR-ND, Project Worksheet (PW) 14, Direct Administrative Costs & Management Costs

 

Director Schulz:

This is in response to a letter from your office dated December 16, 2020, which transmitted the referenced second appeal.  The Grantee is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of funding in the amount of $795,746.24 for management costs.

As explained in the enclosed analysis, I have determined that management costs expended after the POA are ineligible for reimbursement under the Public Assistance program.  Accordingly, FEMA is denying this appeal.  Therefore, this appeal is denied. 

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

 

                                                                     Sincerely,

                                                                          /S/

                                                                      Ana Montero

                                                                      Director

                                                                      Public Assistance Division

 

Enclosure

cc:  Nancy Dragani  

Acting Regional Administrator

FEMA Region VIII

 

Appeal Analysis

Background

During the incident period of February 14 through July 20, 2011, flooding impacted the State of North Dakota, resulting in a May 10, 2011 presidential major disaster declaration authorizing Public Assistance (PA) for most of the state’s counties.  FEMA developed Project Worksheet (PW) 14 as a Category Z project to document management costs for the North Dakota Department of Emergency Services (Grantee).

On January 19, 2017, FEMA sent a letter to remind the Grantee that the Period of Availability (POA) deadline was approaching.  The Grantee requested an extension to the POA on April 19, 2017.  FEMA’s Office of the Chief Financial Officer (OCFO) denied the extension on June 7, 2017.  The Grantee appealed the denial in a letter dated August 14, 2017.  On September 22, 2017, the OCFO denied the appeal.

The Grantee provided a detailed record of its management costs incurred as a result of the disaster.  The total amount of management costs submitted by the Grantee equaled $7,713,444.00.  Of the total costs claimed, FEMA determined the Grantee incurred $795,746.24 beyond the POA.

On May 29, 2020, FEMA issued a determination memorandum denying the $795,746.24 in management costs incurred after the POA.[1]  FEMA found the POA ended on June 13, 2017 and concluded that without FEMA’s OCFO extension, any management costs incurred after the POA end date were ineligible for reimbursement under the PA program.

 

First Appeal

On July 31, 2020, the Grantee submitted the first appeal to FEMA, requesting FEMA reconsider the eligibility of its management costs.[2]  The Grantee acknowledged it incurred $795,746.24 in management costs beyond the POA.  The Grantee asserted that North Dakota was managing the recovery and closeout of 11 previous disaster declarations when the President declared this disaster, and expressed it was overloaded with the disaster response and recovery work efforts with all the disaster events.  Further, the Grantee argued that once a PW’s scope of work is finally completed, extensive time is still needed to complete administrative work before requesting a project closeout.  Finally, the Grantee stated that grantees need to incur management costs for projects under PA Program until FEMA officially closes a project.

On October 28, 2020, the FEMA Region VIII Regional Administrator responded to the first appeal.  FEMA found that the OCFO had considered and subsequently denied the Grantee’s request for an extension of the POA because there were no projects where the performance period remained open and the latest project performance period expired.  FEMA concluded that the management costs incurred after the POA end date were ineligible for reimbursement under the PA program.

 

Second Appeal

On December 16, 2020, the Grantee filed a second appeal.  The Grantee requests $795,746.24 in management costs.  In its appeal, the Grantee reiterates its first appeal arguments. 

 

Discussion

Pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act, FEMA may provide PA funding for management costs.[3]  However, Federal regulation places a limit on the POA.[4]  For major disaster declarations, the grantee may expend management cost funds for allowable costs for a maximum of 8 years from the date of the major disaster declaration or 180 days after the latest performance period date of a non-management cost PA PW or hazard mitigation grant program project narrative, respectively, whichever is sooner.[5] The POA for management costs may be extended only at the grantee’s written request, with the recommendation of the Regional Administrator, and with the approval of the OCFO.[6] 

Here, the Grantee does not dispute that the POA for management costs expired on June 13, 2017, and further, acknowledges that it incurred the $795,746.24 on appeal after that date.  The Grantee’s principal argument is that it was managing the recovery and closeout of 11 previous disasters and was overloaded with disaster response and recovery work efforts at the time this disaster occurred.  While the Grantee raises multiple arguments that rely on fairness as a basis for allowing costs after the expiration of the POA, Federal regulation is clear that costs after expiration of the initial POA are not allowable absent an extension from FEMA’s OCFO.[7]  Here, however, FEMA’s OCFO denied the Grantee’s request and subsequent appeal to extend the POA.  Therefore, pursuant to 44 C.F.R. § 207.8(b), any management costs expended after the initial POA of June 13, 2017, are ineligible for PA.

 

Conclusion

Management costs in the amount of $795,746.24 expended after the POA are ineligible for reimbursement under the PA program.  Accordingly, FEMA is denying this appeal.

 

 

 

[1] The Grantee received the determination memorandum on June 2, 2020.

[2] The Grantee also requested reimbursement of $88,000.00 in other costs unrelated to the management costs at issue on second appeal, which FEMA granted in the first appeal decision.

[3] Robert T. Stafford Disaster Relief and Emergency Assistance Act § 324, Title 42, United States Code § 5165b (2006).

[4] Title 44 Code of Federal Regulations § 207.8(b) (2010).

[5] Id. § 207.8(b)(1).

[6] Id. § 207.8(b)(3).

[7] Id. § 207.8(b).

Last updated March 26, 2021