FMAG – Force Account Labor – Regular Time Costs – Mutual Aid Agreements

Appeal Brief

Appeal Letter

Appeal Analysis

Background

In July 2014, the Lake Spokane fire in Stevens County encompassed approximately 1,106 acres of grass and shrubs, threatening 158 homes, surrounding timber supplies, water quality and wildlife habitat.  The Washington Department of Natural Resources (Applicant) engaged the fire and requested assistance from FEMA.  The Region X Regional Administrator (RA) approved a Fire Management Assistance Grant (FMAG).  FEMA obligated Project Worksheet (PW) 7 to cover costs incurred during the execution of emergency operations. 

FEMA identified issues when reviewing the Applicant’s documentation and in a Determination Memo, dated August 7, 2017, it explained that permanent employees’ straight time costs and benefits were ineligible.  In this instance, the three permanent employees the Applicant was claiming straight time costs for worked for an agency that was neither external nor of a separate political subdivision. Accordingly, FEMA deducted $1,446.36 from PW 7, and also denied costs for seasonal employees, finding they were covered by an existing budget, and deducted an additional $8,728.48.  On August 24, 2017, FEMA awarded PW 7 in the amount of $722,447.11. 

First Appeal

The Applicant appealed in a letter dated November 3, 2017, and requested funding be reinstated totaling $10,174.84.  The Applicant disputed FEMA’s determinations that costs associated with straight time salaries of seasonal employees were not eligible for reimbursement under the FMAG program, and that costs associated with straight time salaries of the Applicant’s own workforce were not eligible for reimbursement.[1]  With regard to the costs associated with straight time work of employees of another state agency being eligible, the Applicant explained it entered into an IAA with another state agency throughout the wildfire season.  The Applicant argued that this IAA established a contractual framework authorized under the Revised Code of Washington (RCW) and FEMA had misinterpreted the agreement to disallow eligible straight-time salaries of the employees of the Naselle Youth Camp (NYC) operated under the Department of Social and Health Services, as NYC is a separate and distinct state agency. 

The Washington Emergency Management Division (Grantee) forwarded the Applicant’s appeal on January 2, 2018, as well as its recommendation that FEMA grant the appeal.  The Grantee argued that the Applicant’s IAA was a contract between two distinct and separate state agencies.  As such, the costs for straight time are contracted costs and eligible for reimbursement.  The Grantee claimed the RCW allowed for the creation of a contract supported by an IAA, as was the case with NYC so that supervisors from NYC could work at the fire base camps.  Finally, because the Applicant is the Commissioner of Public Lands and a member of the Executive Department of the State of Washington, it was autonomous from the general operating government of the State. 

FEMA Region X sent a Final Request for Information (RFI) on April 30, 2018, and noted that the current administrative record did not contain enough evidence to establish that the straight time labor costs for seasonal and permanent state employees were eligible costs under the FMAG Program.  The Agency requested the Applicant further explain how it was legally and financially separated from the State of Washington, and asked the Applicant to provide an updated IAA with NYC.  The Grantee responded to the Final RFI on June 8, 2018, arguing that the IAA with NYC should be treated as a contract under State law and accordingly, NYC personnel under the IAA are hired as contractors.   

FEMA Region X denied the appeal on August 3, 2018.  The Regional Administrator (RA) found that the Applicant had an IAA with another State agency, and this relationship or agreement is not considered a contract and as such does not exclude employees of those agencies from FEMA regulations (the requirements under Title 44 of the Code of Federal Regulations (44 C.F.R.) § 204.42(c)(1)).  The RA noted that eligible costs under the FMAG program include overtime for permanent or reassigned state and local employees, as well as regular time and overtime for temporary or contract employees hired to perform fire related activities. The RA explained that permanent employees may include reassigned, backfilled, temporary and seasonal employees, when covered under an existing budget, and when used for a disaster during the season of employment.  The cost of straight time salaries and benefits for permanent employees are not eligible under the PA mutual aid agreements or FMAG program. 

With regard to determining if the IAAs were mutual aid agreements, the RA explained that while the State determines the makeup of individual governing bodies and separate agencies, these separate agencies are still part of State.  Thus, any person working for a state agency is an employee of the state, regardless of which agency that employee works for.  The RA therefore found that the Applicant had not demonstrated that the costs associated with employees of a different agency are financially or legally separated to establish that federal funds did not duplicate state general fund programs, and FEMA could not reimburse those costs.  In addition, as the requesting agency and the providing entity are both departments of the State of Washington, the RA determined FEMA could not view this arrangement as a procurement contract as defined and governed by Federal regulations.  The RA finally found that FEMA’s grant eligibility is not governed by State laws and federal funds could not be used to pay NYC personnel; and though FEMA could not provide funding, that did not in turn mean that the Applicant did not have an obligation to make payment to NYC.[2]

Second Appeal

The Applicant appeals the RA’s decision in an October 2, 2018 letter and requests $1,446.36 in funding.  The Applicant asserts the costs are in concert with its IAAs with the NYC, which states that those employees of “each party who are engage[d] in performing this agreement shall continue to be employees or agents of that party and shall not be considered for any purpose to be employees or agents of the other party.”[3]  The Applicant argues that the payment of DSHS personnel is a contract cost as described in the IAA.  The Grantee transmitted the Applicant’s appeal on December 1, 2018, along with its analysis supporting the appeal.  The Grantee explains that the RA based his decision, that any person working for a state agency is an employee of the state regardless of which agency that employee works for, on FEMA’s Recovery Policy, RP 9523.6 Mutual Aid Agreements for Public Assistance and Fire Management.  However, the Grantee argues this policy is inapplicable to the IAA, which is a contract agreement between separate state agencies under Washington State law, and satisfies FEMA’s definition of a contract as outlined in 44 C.F.R. § 13.36.  Accordingly, the Grantee concludes that the employees in question were contractors and their shift time, both regular and overtime, is eligible.   

Discussion

FMAG – Force Account Labor – Regular Time Costs

Section 420 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act and its implementing regulations vest FEMA with the authority to offer fire management assistance to state and local governments.[4]  Costs for overtime for permanent or reassigned state and local employees, and costs for regular time and overtime for temporary and contract employees hired to perform fire-related activities are eligible for funding.[5]  However, emergency work straight time salaries and benefits for an applicant’s permanently employed personnel are ineligible for federal funding.[6]  FEMA only pays overtime for emergency work, because regular or straight time is already funded in the state budget, and therefore employees performing such work would be paid whether or not a disaster occurred.  If the Agency paid regular time, the Applicant would be supplanting its approved funds with federal funds.

Costs for contract labor, mutual aid in accordance with an existing agreement, or temporary hires needed to accomplish emergency work are eligible for reimbursement.[7]  Under FEMA RP 9523.6 – Mutual Aid Agreements, a providing entity’s force account labor will be considered contract labor, with regular time, overtime, and benefits eligible for reimbursement.[8]  In addition, this policy states that straight time salaries and benefits for the requesting entity’s permanent employees are not eligible expenses.[9]  RP 9523.6 also states that when a requesting entity is a state, the force account labor costs of the providing entity will not be treated as contract labor if the force account labor is employed by a governmental subdivision (such as an agency) within that requesting entity.[10]

The State’s agencies and bodies of government are all part of the State government and therefore, any permanent, full time employee of  a state agency is an employee of the state, regardless of which agency employees the person.  As the RA stated on first appeal, the State can determine the makeup of its individual governing bodies and separate agencies, but these are all part and parcel to the State.  Accordingly, per 44 C.F.R. § 204.42(c)(1), only the cost of overtime for permanent and reassigned state and local employees is an eligible expense. 

Although the Grantee argued that the budget of the Applicant is separate from other agencies, its budget partially comes from funds authorized by the State Legislature.[11]  The Applicant has not demonstrated the funds were separate to establish that federal funds did not duplicate state funding used to pay the straight-time costs of permanent employees. 

Mutual Aid Agreements vs. Procurement Contracts

Mutual aid agreements are agreements between jurisdictions or agencies to provide services across jurisdictional boundaries during an emergency or disaster.[12]  FEMA reimburses costs for eligible emergency work under mutual aid agreements in accordance with FEMA policy.[13]  FEMA’s grant regulations define a “contract” as “a procurement contract under a grant or subgrant [and also a] procurement subcontract under a contract.”[14]  Accordingly, an agreement between subdivisions within a state would not qualify as a procurement contract under Federal regulations.

The IAA does not meet the definition of a contract under FEMA’s regulations because it is not a procurement contract under a grant or subgrant, nor did the Applicant procure the services of the other state agency.  In addition, the IAA with NYC was not in effect at the time of the disaster, and although FEMA requested an updated agreement, the Applicant did not provide one.  Rather, these employees were employed by a state government subdivision within the requesting entity.  Thus, the claimed labor costs remain ineligible for reimbursement.

Conclusion    

The costs at issue are for permanent, full time employees of a state agency and therefore, are ineligible for reimbursement under a mutual aid contract.  In addition, while the IAA qualifies as a mutual aid agreement under FEMA policy, it is not a contract procured under a subgrant.  Accordingly, the second appeal is denied.