Fringe Benefits
Appeal Brief
Appeal Letter
PURPOSE: Respond to third appeal submitted by the Pennsylvania Department of Transportation (PennDOT) concerning eligible fringe benefit costs under FEMA-1138-DR-PA.
DISCUSSION: The Pennsylvania Department of Transportation used force account labor to perform disaster recovery work in declared disaster DR-1138. PennDOT was reimbursed for force account overtime (only) per FEMA regulation. PennDOT is requesting reimbursement for a payroll additive rate of 61.4287 percent, which they contend represents fringe benefit costs as a percentage of overtime labor costs. PennDOT's First and Second appeals were denied by FEMA Region III because the fringe benefit percentage did not reflect the applicant's actual additional fringe benefit costs for overtime labor. The applicant has incorrectly calculated an overtime fringe benefit rate as a percentage of payroll costs using total benefit costs and total payroll costs (regular and overtime) for an entire year. PennDOT has then applied this percentage to force account overtime labor costs and has requested reimbursement of this higher percentage for the overtime labor used in the snow disasters. In their third appeal, the County restates its second appeal arguments. A fringe rate of 22.5 percent reflects actual additional fringe benefit costs when overtime is worked. That is the rate to be used for the eligible overtime in this disaster.
RECOMMENDATION: Sign the letter denying the third appeal.
Appeal Brief
| Disaster | FEMA-1138-DR |
| Applicant | Pennsylvania Department of Transportation |
| Appeal Type | Third |
| PA ID# | 000-92003 |
| PW ID# | N/A |
| Date Signed | 1999-01-18T05:00:00 |
DISCUSSION: The Pennsylvania Department of Transportation used force account labor to perform disaster recovery work in declared disaster DR-1138. PennDOT was reimbursed for force account overtime (only) per FEMA regulation. PennDOT is requesting reimbursement for a payroll additive rate of 61.4287 percent, which they contend represents fringe benefit costs as a percentage of overtime labor costs. PennDOT's First and Second appeals were denied by FEMA Region III because the fringe benefit percentage did not reflect the applicant's actual additional fringe benefit costs for overtime labor. The applicant has incorrectly calculated an overtime fringe benefit rate as a percentage of payroll costs using total benefit costs and total payroll costs (regular and overtime) for an entire year. PennDOT has then applied this percentage to force account overtime labor costs and has requested reimbursement of this higher percentage for the overtime labor used in the snow disasters. In their third appeal, the County restates its second appeal arguments. A fringe rate of 22.5 percent reflects actual additional fringe benefit costs when overtime is worked. That is the rate to be used for the eligible overtime in this disaster.
RECOMMENDATION: Sign the letter denying the third appeal.
Appeal Letter
January 18, 1999
Mr. Charles F. Wynne
Governor's Authorized Representative
Pennsylvania Emergency Management Agency
Post Office Box 3321
Harrisburg, Pennsylvania 17105
Dear Mr. Wynne:
This letter is in response to your June 26, 1998 submittal of the Pennsylvania Department of Transportation's (PennDOT's) third appeal of the allowable rate for eligible overtime fringe benefit costs to the Federal Emergency Management Agency (FEMA) for FEMA-DR-1138-PA. PennDOT is requesting reimbursement for a payroll additive rate of 61.4287 percent, which it contends represents the eligible fringe benefit rate required by Office of Management and Budget (OMB) Circular A-87. In the denial of PennDOT's first and second appeals, FEMA stated that PennDOT's calculated percentage did not reflect the applicant's actual fringe benefit costs as a percentage of overtime labor costs. The applicant has calculated the fringe benefit rate as a percentage of payroll costs (regular and overtime), including costs that do not increase when employees work overtime. PennDOT is requesting reimbursement for overtime fringe benefits at this rate. In their third appeal, PennDOT has restated its second appeal arguments.
FEMA policy authorizes reimbursement of an applicant's fringe benefit costs for eligible force account overtime. FEMA does not reimburse applicants for additional costs that were not incurred. In this case, the 61.4287% fringe benefit rate represents PennDOT's overall fringe benefit rate as a percentage of total labor costs for an entire year. PennDOT has not refuted the fact that a number of the fringe benefit costs are fixed per employee per month (leave, insurance, etc.), thus there is less additional cost to the applicant for additional force account overtime salary costs. FEMA will only reimburse the overtime labor and the actual additional fringe benefit costs incurred by PennDOT for that overtime labor, which has been calculated to be 22.5% of the overtime salary cost. In addition, OMB Circular A-87 represents only a guideline for calculating a fringe benefit rate. It does not supercede FEMA policy and federal regulations, which require FEMA to reimburse applicants only for force account overtime and fringe benefit costs actually incurred while conducting eligible work. Therefore, as further detailed in the enclosed second appeal response, I am denying this appeal.
Please inform the applicant of my determination, which constitutes the final level of appeal in accordance with 44 CFR 206.206(e).
Sincerely,
/S/
James L. Witt
Director
Enclosure
cc: Rita A. Calvan
FEMA Regional Director
Region III
Mr. Charles F. Wynne
Governor's Authorized Representative
Pennsylvania Emergency Management Agency
Post Office Box 3321
Harrisburg, Pennsylvania 17105
Dear Mr. Wynne:
This letter is in response to your June 26, 1998 submittal of the Pennsylvania Department of Transportation's (PennDOT's) third appeal of the allowable rate for eligible overtime fringe benefit costs to the Federal Emergency Management Agency (FEMA) for FEMA-DR-1138-PA. PennDOT is requesting reimbursement for a payroll additive rate of 61.4287 percent, which it contends represents the eligible fringe benefit rate required by Office of Management and Budget (OMB) Circular A-87. In the denial of PennDOT's first and second appeals, FEMA stated that PennDOT's calculated percentage did not reflect the applicant's actual fringe benefit costs as a percentage of overtime labor costs. The applicant has calculated the fringe benefit rate as a percentage of payroll costs (regular and overtime), including costs that do not increase when employees work overtime. PennDOT is requesting reimbursement for overtime fringe benefits at this rate. In their third appeal, PennDOT has restated its second appeal arguments.
FEMA policy authorizes reimbursement of an applicant's fringe benefit costs for eligible force account overtime. FEMA does not reimburse applicants for additional costs that were not incurred. In this case, the 61.4287% fringe benefit rate represents PennDOT's overall fringe benefit rate as a percentage of total labor costs for an entire year. PennDOT has not refuted the fact that a number of the fringe benefit costs are fixed per employee per month (leave, insurance, etc.), thus there is less additional cost to the applicant for additional force account overtime salary costs. FEMA will only reimburse the overtime labor and the actual additional fringe benefit costs incurred by PennDOT for that overtime labor, which has been calculated to be 22.5% of the overtime salary cost. In addition, OMB Circular A-87 represents only a guideline for calculating a fringe benefit rate. It does not supercede FEMA policy and federal regulations, which require FEMA to reimburse applicants only for force account overtime and fringe benefit costs actually incurred while conducting eligible work. Therefore, as further detailed in the enclosed second appeal response, I am denying this appeal.
Please inform the applicant of my determination, which constitutes the final level of appeal in accordance with 44 CFR 206.206(e).
Sincerely,
/S/
James L. Witt
Director
Enclosure
cc: Rita A. Calvan
FEMA Regional Director
Region III
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