Improved Project – Procurement – Direct Administrative Costs
|PW ID#||(PW) 1438|
- Stafford Act § 324.
- 2 C.F.R. pt. 225, app. A § (C)(2).
- 44 C.F.R. §§ 13.30, 13.36, 13.43, 206.201-206.203, 206.206.
- DAP 9529.9, at 2-5.
- PA Guide, at 51-52, 79, 96, 110-111, 139-140.
- PA Policy Digest, at 71.
- Los Angeles Dep’t of Water and Power, FEMA-1577-DR-CA, at 2.
- City of Cedar Rapids, FEMA-1763-DR-IA, at 7, 11.
- Columbus Reg’l Hosp., FEMA-1766-DR-IN, at 7-8.
- City of Nome, FEMA-4050-DR-AK, at 5-6.
- Vill. of Waterford, FEMA-4020-DR-NY, at 4.
- The PA Guide requires applicants to submit damage within 60 days of the kickoff meeting, submit new damage as soon as possible, and obtain approval when the need for additional funding or a revision in scope is anticipated.
- The Applicant did not identify the damage until more than a year after the PW was obligated, and did not obtain approval when it anticipated the need for additional funds.
- Under 44 C.F.R. § 206.206, the burden is on the Applicant to substantiate its appeal with documented justification.
- The Applicant failed to justify its request for increased costs and CEF factors.
- 44 C.F.R. § 13.36 requires full and open competition unless public exigency or emergency makes competition infeasible.
- The Applicant did not demonstrate that any public exigency or emergency made noncompetitive procurement necessary.
- Following a procurement noncompliance, 44 C.F.R. § 13.43 authorizes FEMA to award reasonable costs as an enforcement action.
- Awarding hourly costs capped at $155 per hour, but disallowing, travel costs and costs incurred when no contract was in place, was an appropriate exercise of discretion.
Ernie Rhodes, Director
Missouri Department of Public Safety
State Emergency Management Agency
2302 Militia Drive
P.O. Box 116
Jefferson City, MO 65102
On May 22, 2011, a catastrophic EF-5 tornado struck Joplin, Missouri. The accompanying high winds and flying debris damaged East Middle and Irving Elementary Schools, which are owned and operated by Joplin Schools (Applicant). FEMA determined that the schools were more than 50 percent damaged and warranted replacement. For East Middle School, this determination was based upon an analysis by two registered architects and one construction manager who visited the school, determined its size to be 130,000 square feet, and prepared a modified RSMeans square foot model to estimate replacement costs. The total cost derived from this model became the base cost for the cost estimating format (CEF) for East Middle School. The CEF for Irving Elementary School was based on a square foot model, modified by detailed take-off of plans supplied by the Applicant, and with additions of an elevator, fire sprinkler, alarm system, and accessible bathrooms for codes and standards compliance. Project Worksheets (PWs) 1332 and 1438 were prepared to address the required work for these schools. Version 0 of these PWs further provided that eligible Direct Administrative Costs (DAC) would be captured in a subsequent amendment.
On July 3, 2012, the Applicant requested an improved project, seeking to combine the East Middle and Irving Elementary Schools into a single facility. On August 2, 2012, FEMA approved the request. Accordingly, on September 27, 2012, it incorporated PW 1332’s scope of work (SOW) and funding into PW 1438 Version 1, and obligated the combined PW that did not include a reference to DAC or a DAC estimate. FEMA obligated Version 2 of PW 1438 on November 2, 2012, to combine the CEF factors. FEMA prepared PW 1438 Version 3 to include a kitchen and food preparation equipment that had been included in PW 1332, but which was omitted from the combined CEF. In total, Version 3 included estimated construction costs of $28,661,762.00 and an approved hazard mitigation proposal for $1,016,800.00, less anticipated insurance proceeds in the amount of $20,153,771.00. Accordingly, on March 4, 2013, FEMA obligated the PW at a total capped funding amount of $9,524,791.00.
On June 30, 2014, the Applicant submitted a request to the Missouri State Emergency Management Agency (Grantee) seeking additional funding for what it called errors and omissions. It stated that it hired an architectural firm to compare drawings of the East Middle and Irving Elementary Schools to the FEMA CEF estimate. It first stated that it was submitting new cost estimates using a city adjustment factor for 2011 Quarter 4, rather than the 2011 Quarters 2 and 3 factors that FEMA had used. It also stated that it used a different factor to estimate additional soft costs for the project, although it did not explain how it arrived at the revised factor. It then provided an itemized list of its specific requests.
First, for certain building components for Irving Elementary School, it stated that its architectural firm’s “estimated cost using consistent RSMeans costing with approved CEF add-on factors” was higher than the estimate in the PW. The Applicant attached a spreadsheet, which compared the CEF estimate with its own revised estimate for each of these line items. This spreadsheet showed that in various places the Applicant utilized different cost codes, unit prices, or unit quantities, as well as the different city adjustment and soft cost factors discussed above.
Second, the Applicant argued that the Irving Elementary School CEF had omitted a stage floor. Third, it asserted that the CEF estimate for East Middle School should have been based on 131,165 square feet, rather than the 130,000 that was used. It also estimated a new cost per square foot based on “the lesser of 2 models (one story Jr[.] High and one story elementary school).” Fourth, it argued that an additional 663 square feet should have been added to the Irving Elementary School estimate, because that would be needed to add more water closets, lavatories, and an elevator to ensure compliance with the American’s With Disabilities Act (ADA). Based on the attached spreadsheet, its increased cost estimate was based on an RSMeans square foot model, applied only to the additional 663 square feet. Fifth, the applicant asserted that current standards in Joplin required an investigation as to whether the building foundation goes over an old mine shaft, and requested funding to fill a shaft that it asserted was located at the Irving Elementary School site.
Next, the Applicant argued that its construction management firm had recently completed two Kansas City schools, whose final construction costs were 24% higher than FEMA’s estimates for comparable Joplin schools. Accordingly, it noted that RSMeans allows for cost increases based on adverse economic conditions, shortage of sub-contractors, and shortage of labor, and it requested a cost increase of 17%. Finally, it requested funding for the pro-rated cost of its architectural firm’s review. Altogether, the Applicant requested an increase of $15,365,985.64.
On August 7, 2014, FEMA denied the Applicant’s request as untimely, stating that the Applicant had 60 days from March 4, 2013, the date on which PW 1438 Version 3 was obligated, to appeal the amount of the grant. Rather than appeal FEMA’s determination, the Applicant renewed its request for additional funding above the approved improved project cap at closeout. Its request came in two letters, both dated May 4, 2015, which were nearly identical to the 2014 request. In this request, the Applicant’s arguments were the same, but it used a smaller factor for CEF soft costs, bringing its total request down to $14,065,893.49.
At closeout, the Applicant also sought reimbursement in the amount of $154,009.48 for DAC services contracted from Witt Associates (Witt), and $14,772.47 for force account DAC. The Applicant had contracted with Witt to provide professional services for a term to run from June 9, 2011, through June 8, 2014. Prior to its expiration, the Applicant signed a Cooperative Purchasing Agreement with the Houston-Galveston Area Cooperative (HGAC) which authorized the purchasing of services from certain designated contractors, including Witt. The Applicant then signed a second agreement with Witt, designated Task Order No. 1, with a term beginning January 1, 2012, and continuing through May 31, 2013, and with minor changes from the original agreement.
In response to these requests, FEMA sent the Applicant a determination memorandum on March 4, 2016. With respect to additional costs related to construction, it stated that the Applicant had 60 days from the obligation of PW 1438 Version 3 to appeal the amount obligated. It also noted that the improved project was capped at the amount associated with restoring the facility to its predisaster design, but that the Applicant was requesting an amount that equaled the entire cost of the combined school. Finally, it stated that the Applicant had not separated the actual cost of completing the original SOW from the cost to complete the improved project, and that these costs could not be tracked separately because of the alterations to the facilities’ predisaster design. Accordingly, FEMA determined these costs to be ineligible.
With respect to DAC, the determination memorandum concluded that the Applicant’s procurement of Witt’s services did not comply with federal regulations because the contract was awarded based on a recommendation, and not through full and open competition. It further found that, while there may have been a public exigency warranting an exception to the competitive bidding at some point, the exigency did not continue through February 2015, the period through which DAC was claimed. It determined, however, that FEMA could award reasonable costs, which it fixed at $155 per hour, except where actual costs were lower than that figure. It disallowed any DAC costs claimed for a period not covered by one of the contracts with Witt, as well as those not directly related to a specific project, which referenced Witt employee travel expenses that had been allocated across various PWs. Accordingly, FEMA awarded funding for contracted DAC in the amount of $88,343.88. It also found that all claimed force account DAC was eligible, and awarded an additional $14,772.47.
In accordance with the determination memorandum, FEMA prepared PW 1438 Version 4, which included the additional $103,116.35 found to be eligible for DAC, and adjusted insurance receipts to actual proceeds of $20,305,600.00, for a final approved amount of $9,476,078.35.
First Appeal Letter
The Applicant appealed FEMA’s determination in a letter dated April 29, 2016. First, the Applicant argued that it could not have appealed FEMA’s obligation of PW 1438 Version 3 because it agreed with the funding that was obligated in that version at the time. It acknowledged, however, that even at that point in time it believed that additional funding was required. It argued that PWs could be continuously amended until closeout, and did not need to be appealed through the formal process within 60 days. It asserted that such a requirement conflicted with Title 44 Code of Federal Regulations (44 C.F.R.) § 206.204(e), specifically the portion of that regulation which states that when there is a significant overrun in the total of an Applicant’s small projects, it may submit an appeal for additional funding within 60 days following the completion of its small projects. It interpreted this to mean that a formal appeal was not required unless the need for additional funding pertained to a net shortfall within small PWs. The Applicant then clarified that it was not seeking any funding for work associated with the improved project, but only to estimated costs associated with repairs.
With respect to DAC, the Applicant explained that on May 26, 2011, Witt submitted a proposal to provide disaster recovery administrative services, and the Applicant stated that it entered into a three-year agreement with Witt on June 1, 2011, that included a not-to-exceed cost. On December 22, 2011, the Applicant joined HGAC, and replaced the existing agreement with Witt with Task Order No. 1, reflecting its selection of Witt through HGAC, but leaving the rate schedule and reimbursable expenses unchanged. Later in 2016, the Applicant agreed to Task Order No. 1, Modification No. 1, which extended the agreement to May 31, 2016, but left the rate schedule and reimbursable expenses unchanged from Task Order No. 1. The Applicant asserted that it originally entered into the agreement with Witt because it had confidence, based upon Witt’s technical skills and reputation, that the cost was reasonable. It argued that, joining HGAC and signing a new agreement with Witt confirmed that the original procurement was compliant. It also stated that HGAC, which the Applicant characterized as its agent, met the requirements for compliant procurement in its selection of Witt as a vendor.
Next, the Applicant argued that, apart from the procurement issue, Witt’s contract rates were reasonable and that FEMA should not have set $155 per hour as the reasonable rate. It argued that Witt’s contract rates for the Applicant were the same as those provided for other HGAC members and for other government entities using U.S. General Services Administration (GSA) rates. It stated that it determined that Witt’s proposed prices and services more closely met its needs compared to alternatives, although it did not specify what alternatives were considered or by what criteria it conducted its evaluation.
Regarding travel costs, the Applicant explained that these costs were for travel activities that allowed Witt’s employees to provide services under the contract. It argued that it was reasonable to take these costs and apportion them among the various projects that the particular Witt employee worked on, distributed according to the time utilized for each project. It argued that the 2014 regulations in 2 C.F.R. Part 200 clarified the older regulations that were in effect at the time of the disaster, and that the later regulation stated that if a cost benefitted two or more projects or activities in proportions that can be determined without undue effort, the cost should be allocated to the projects based on proportional benefit. If the proportional benefit could not be determined, then the costs could be allocated or transferred between the projects on any reasonable documented basis.
Finally, the Applicant argued that contracts were in place for the entire duration of the period during which Witt charged the Applicant for disaster recovery services. It again recounted the series of contracts that it entered into with Witt, and asserted that the agreements were confirmed to extend from the initial date through May 31, 2016. On July 21, 2016, the Grantee forwarded the Applicant’s appeal to FEMA without a recommendation.
Final Request for Information
On August 16, 2016, FEMA sent the Applicant and Grantee, a final request for information (Final RFI), first noting that the Applicant had submitted over 16,000 pages of documents that were unindexed and unnumbered, with multiple duplicates. The Final RFI stated that it was unclear which, if any, of the documents supported the Applicant’s claims. Accordingly, it stated that FEMA was returning the exhibits so that they could be identified and their relevance explained.
Next, with respect to the claimed additional damages, the Final RFI requested that the Applicant provide a copy of its architectural firm’s CEF review, along with any source documents used to conduct the analysis. FEMA also requested the specific sources on which the Applicant relied in order to calculate its comparison figures, unit prices and quantities, square footage, and RSMeans data. It requested specific reasons why the 2011 Quarter 4 RSMeans factor should have been used, why the current CEF adjustment factor was incorrect and why Applicant’s CEF adjustment factor should be used instead. The Final RFI requested specific reasons why the Applicant failed to notify FEMA of its intent to commission an architectural review, why it had failed to appeal within 60 days of the obligation of PW 1438 Version 3, and why the Applicant did not appeal FEMA’s first denial of its SOW change request in 2014.
The Final RFI also noted that the Applicant’s requested funding exceeded the actual cost of the improved project by over $1 million, and requested an explanation. The Final RFI then asked for certain insurance information, including whether the Applicant had notified its insurance carrier of the additional errors and omissions it now claimed on first appeal.
With respect to DAC, the Final RFI requested documentation showing that the Applicant considered submissions of vendors other than Witt, that the Applicant was a member of HGAC and why it joined, that Witt’s services were registered with HGAC and listed with GSA, that the Applicant properly approved Task Order No. 1 and Modification No. 1, when the agreement was terminated or amended, and whether Task Order No. 1 was substituted for the original Witt contract. It further asked how Witt was recommended to the Applicant and by whom; whether the Applicant competitively bid any of the contracts it awarded to Witt; whether it conducted a cost analysis of Witt’s contract at any point, and if it did not competitively bid the contract, what the rationale was for using non-competitive procurement. The Final RFI also requested documentation that the Applicant complied with its own procurement policy, and a justification for any departure from it.
Finally, regarding reasonable costs and travel expenses, FEMA requested documentation supporting the claim that costs in excess of $155 per hour were reasonable, and accounting for Witt’s travel costs that were specifically tracked to PW 1438.
The Applicant responded to the Final RFI in a letter dated September 15, 2016. It first stated that the formulation of PW 1438 was an “unusually lengthy and difficult ordeal” because it met with FEMA continuously for nearly two years modifying and revising the SOW and CEFs because of FEMA’s “errors and omissions.” It stated that it decided to begin construction on the new combined school even though it was not happy with the SOW in the PW, and then resolve the scope and cost issues at a later date. It argued that FEMA’s guidance permits a revision to correct an error or omission in the original SOW or cost estimate, and that there was no time limit as to when a request for an adjustment could be made, up through closeout. It also stated that it relied on an email exchange with a FEMA employee described above, in which it asked the following.
I understood you to say a project could be declared an Improved Project and a subsequent Request for Version Change could be approved for any error or omissions or single line item within that PW, including approval of this scenario: a version change to the PW line item estimate of cost/sq ft, if competitive bid costs come in higher than the estimate listed in the PW. Is this correct?
The FEMA employee responded, “If the cost per square foot is related to approved FEMA scope and in line with appropriate codes and standards, your statement is correct.”
The Applicant further argued that it did not need to file an appeal following obligation of PW 1438 Version 3, even though it felt that the SOW was not correct. It asserted that it was not able to list exactly what was missing until its architectural firm conducted a review. It argued that there was no requirement that it apprise FEMA of its intent to commission a review of the PW, or to conduct such a review within 60 days of obligation. It attached a number of drawings of the two schools and some other pages that appear to go along with the drawings, but which are illegible.
Regarding the amount on appeal, the Applicant stated that it wanted to make FEMA aware of all of the error and omissions it was claiming, but agreed that it would only be entitled to funding equal to the total amount of the improved project. Accordingly, it revised its request for additional funding to a total of $13,111,524.29. It also attached a number of insurance documents to respond to FEMA’s request.
Regarding DAC, the Applicant stated that it entered into the agreement with Witt under its authority to quickly contract in an emergency situation without using competitive processes. In support, it attached a portion of its purchasing policy that provided for the following under the heading Emergency Situations:
Unless otherwise required by law, the superintendent may waive the requirement for competitive bids or proposals when he or she has determined that there exists a threat to life, property, public health or public safety or when immediate expenditure is necessary in order to protect against further loss of or damage to property, or to prevent or minimize a serious disruption in services. Emergency purchases shall be made with as much competition as is practical under the circumstances and will only be utilized for purchases that are necessary to alleviate the emergency.
It further explained that it decided to enter into a three-year contract with Witt based on several private and governmental individuals who recommended it. It stated that, after entering into the contract, it became aware of HGAC and was attracted to it because it allowed for easy comparison of various vendors. After becoming an HGAC member six months after originally contracting with Witt, the Applicant compared the services and prices of various disaster-recovery vendors and decided to keep Witt and executed Task Order No. 1, which terminated the original agreement. Later, Modification 1 further extended the time for Witt’s provision of services. The Applicant argued that because of its comparison of vendor pricing through HGAC, no further cost analysis was necessary. It maintained that Witt’s rates were reasonable, because they were the same or lower than those offered through HGAC or the GSA. It also advanced its prior argument that travel expenses were allowable under the regulations because they were allocated to various PWs.
Finally, regarding the hourly rate, the Applicant stated that the reason its rates exceeded $155 was because they included travel-related expenses. It also argued that the base rate should not have been capped at $155 per hour unilaterally because it has the effect of reducing disaster aid without public notice and comment. Regarding the one individual whose base rate was above $155 per hour, the Applicant stated that this individual oversaw other Witt personnel and required broad technical and subject matter expert skills. It stated that this individual’s hours were limited, but also stated that this individual billed more hours than his subordinates because PW 1438 was disputed for nearly five years. The Applicant did not offer any specifics as to what this individual’s work was, but asserts that the hourly rate was reasonable.
First Appeal Decision
On December 19, 2016, FEMA’s Region VII Acting Regional Administrator (RA) denied the first appeal. The first appeal decision noted that the Applicant had opportunities to seek revised estimates and to appeal the amount of funding throughout the process of formulating the estimate up to and including the March 4, 2013 obligation of PW 1438 Version 3. It determined that the Applicant should not have assumed that it could continue to seek additional money through closeout, particularly if it was aware of the need for additional funding earlier in the process and had already agreed to a SOW and funding cap for an improved project. The first appeal decision then noted that the Applicant has the responsibility to identify all eligible work and submit costs for funding within 60 days from the first substantive meeting. Additionally, it was the Applicant’s responsibility to request inspections or changes to the PW at the point in the grant process when such changes are anticipated.
The Acting RA specifically addressed the request for an increased square footage for East Middle School, noting that the initial estimate used 130,000 square feet, an estimate that the Applicant did not challenge until 2014. The Acting RA also stated that the architectural plans that the Applicant utilized in the improved and mitigation projects to demonstrate equivalent square footage gave East Middle School’s size as 128,628 square feet. Despite this, FEMA decided not to revise the estimate, and kept the original higher estimate. The Applicant was aware of the need to document the square footage it was seeking, and to the extent that it alleged the square footage was incorrect, it had failed to identify all eligible work and submit all costs. Accordingly, the Acting RA found that this request should have been made during the grant process before the grant was awarded. The Acting RA additionally noted that the Final RFI requested that the Applicant specifically explain how it arrived at all of the various changes to quantities, unit costs, and RSMeans data that it requested, but found that the Applicant had only provided various architectural drawings with no explanation for how these supported its appeal. Accordingly, the Applicant had failed to sufficiently document its claim for additional funding.
The first appeal decision then found that this conclusion was consistent with the August 7, 2014 denial of the Applicant’s request for additional funding. This denial also presented the Applicant another opportunity to appeal the funding decision, but instead, the Applicant waited approximately another nine months before renewing its request. The Acting RA also found that the Applicant was aware of its opportunity to seek timely changes to the project estimate based on the fact that it had sought such changes in the past, and had commissioned its architectural firm the same day PW 1438 Version 3 was obligated. Contrary to the Applicant’s assertion that it had no obligation to inform FEMA of its intent to commission a review of the SOW, the Acting RA determined that the Applicant was required to obtain approval whenever a change in the SOW or the need for additional funds is anticipated. Moreover, if the Applicant did not agree with the approved cap, it could not intentionally delay informing FEMA that it intended to seek additional funding. Regarding the email exchange that the Applicant attached to the Final RFI, the Acting RA stated that FEMA did not give wrong advice because, at no time during the grant process, did the Applicant make a request for a budget revision based on a bid that came in higher than estimates. The Applicant’s inquiry to FEMA did not address requests for SOW increases late in the process.
Regarding the CEF Factors, the Acting RA explained that because nationwide, rather than local, data was used, an adjustment factor was applied. RSMeans releases the adjustment factors quarterly. Following its standard practice, FEMA applied the adjustment factor for the City of Joplin that was published at the time that the estimate was created. There was no reason to go back and change this factor simply because a different number was used in a separate CEF for an unrelated PW that was prepared at a later date. Regarding CEF cost escalation factors, the Applicant had failed to establish why FEMA’s estimate was incorrect or explain how it came up with different numbers. Regarding the requested 17 percent cost increase, the Acting RA determined that the Applicant had failed to provide any documentation to support such an increase.
Turning to the issue of DAC, the Acting RA determined that the Applicant’s initial decision to contract with Witt without competition was a noncompliant procurement, both under federal standards and the Applicant’s own guidance. It did not meet federal standards because the Applicant did not establish that a competitive procurement was not feasible or that any public exigency would not have permitted a delay from competitive selection. Moreover, the Applicant did not comply with its own procurement standards because it did not establish that non-competitive procurement was required to protect against loss of property or minimize a serious disruption in services, that it used as much competition as was practical under the circumstances, or that the contract was limited to a purchase necessary to alleviate the emergency. The Acting RA noted that, even if there had been an emergency that justified non-competitive procurement, this was a three-year contract and was not limited to meeting any exigency. Finally, the Acting RA determined that the Applicant did not perform the required cost analysis for its contract with Witt. While it claimed to have reviewed the prices given from other HGAC vendor, it did not document this assertion, and, in any event, that was not a sufficient cost analysis.
With respect to Task Order No. 1, the RA discussed whether this represented an amendment to or a termination of the original contract, but ultimately concluded that was a noncompliant procurement either way. As a new procurement, it was not competitively procured because selecting from a list of HGAC vendors was not free and open competition. As an amendment it could not cure the original non-competitive procurement with a second non-competitive process and created the additional problem that it reduced the covered period from 2014 to 2013. Modification No. 1 was also noncompliant because it was not accepted until after the request for closeout and well after the expiration of the prior contract. The Applicant could not retroactively extend the prior contract in this manner and, even if it could, it still did not remedy the problems described above.
In light of these procurement violations, the Acting RA determined that FEMA had discretion to award costs that it determined to be reasonable through June 8, 2014. The Acting RA determined that using a top rate of $155 per hour was appropriate, particularly where it provided the Applicant an opportunity to justify a higher rate. The Applicant’s only proffered justification was that Witt offered the same fee schedule to other HGAC members and through a GSA contract. The Acting RA explained that these facts could not establish that a higher rate was reasonable for market conditions for this particular disaster and location. For the individual who billed above $155 per hour, the Acting RA found that the Applicant had not demonstrated that such a rate was appropriate to the complexity of the work, the amount of time required to perform it, and the skill level required to perform the activities. Finally, with respect to travel-related DAC, the Acting RA found that these were indirect costs that could not be readily attributable to specific PWs. Thus, they were reimbursable as project management costs that FEMA already funded, and were not reimbursable as DAC.
Accordingly, the Acting RA denied the Applicant’s first appeal on all of the issues raised.
The Applicant filed a second appeal in a letter dated March 1, 2017. It first states that, when formulating the SOW for PW 1438, FEMA would submit a draft SOW for the PW, and then give the Applicant five working days to review the SOW and propose any corrections and revisions, which would then be incorporated into a new SOW. It argues that this timeline was unreasonable and it decided to interrupt this process so that it could begin construction. It states that, when Version 3 of the PW was obligated, it still was not confident that the SOW was correct, and claims that was why it decided to commission an architectural firm. It argues that it submitted its 2014 request for a revision as soon as the firm completed its review.
The Applicant then argues that it was not required to file an appeal in order to obtain an increase in the funding cap for PW 1438. It acknowledges that the PA Guide states that if an applicant disagrees with the obligated amount it may file an appeal, but argues that “appeal” here only indicates that a change could be requested and does not mean a formal appeal. It argues that this is analogous to the PA Guide’s guidance for large projects, which states that when a change in scope or need for additional funding is discovered applicants should notify the state as soon as possible. The Applicant argues that it had no basis to appeal the PW before its architectural firm had completed its review, and it notified the state as soon as the review was complete. It also argues that, because the architectural firm based its review on the original design documents for the school, and because FEMA project specialists had conducted multiple site visits prior to demolition, it did not matter that the original facilities were demolished before the review was complete. The Applicant also asserts that it received advice supporting its position from a FEMA employee, referencing the 2012 email exchange that questioned whether the PW estimate could be revised after formulation. It states that it took FEMA’s reply to mean that such changes could be made without great difficulty, and that it could request such changes at any point in the grant process. It argues that this belief was confirmed because FEMA revised Version 3 of the PW to add the missing kitchen to the SOW.
With respect to DAC, the Applicant first argues that Witt’s rates were reasonable, because they were the same or lower rates offered through HGAC and the GSA. It states that, after receiving a proposal outlining Witt’s rates, it used its internal procurement processes to enter into a three year agreement. It argues that this was undertaken in accordance with 44 C.F.R. § 13.36(d)(4)(i)(B), which permits for non-competitive procurement in cases of an emergency. The Applicant argues that this was allowable based upon its need to restore critical services, the fact that it could not perform the required tasks, Witt’s reputation, and the reasonableness of Witt’s prices. It asserts that the comparison of Witt’s offered rates to Witt’s GSA rates was a sufficient cost analysis, citing Federal Acquisition Regulation (FAR) § 8.404(d), which it characterizes as stating that rates offered on a GSA schedule are fair and reasonable. It argues that this initial decision was later confirmed when it joined HGAC and re-contracted with Witt at the same or lower rates, which it states were favorable compared to other HGAC vendors. It clarifies that its re-contracting through HGAC was not an attempt to remedy an invalid initial procurement, but rather a confirmation that the original pricing to which it agreed was reasonable. It also explains at length that Task Order No. 1 replaced the original agreement with Witt, and that Modification No. 1 further extended the agreement in Task Order No. 1.
Concerning the Acting RA’s determination that DAC incurred after June 8, 2014, was ineligible, the Applicant asserts that the first appeal decision suggests that a contracting term beyond three years should be disallowed, and argues that it is unreasonable to expect that the need for disaster recovery services would not extend beyond that time. It then argues that it was irrelevant that Modification No. 1, with an effective date of May 31, 2013, was not executed until January 15, 2016, because both parties intended to continue their relationship through 2016. It argues that the work and rates were the same before and after June 8, 2014, making it reasonable. It notes that FEMA has awarded costs notwithstanding noncompliant procurement in other instances.
The Applicant also argues that, because Witt’s rates were the same or lower than the rates in its GSA contract, the Acting RA should not have applied a $155 per hour rate when awarding reasonable costs. It states that it was unreasonable for such a fixed cap to be applied to all disasters and argues that, under the circumstances, it acted reasonably. Finally, with respect to travel costs, the Applicant argues that it was reasonable to take Witt’s employee’s travel expenses and divide them proportionally among the PWs that that individual worked on. It reiterates the argument it previously raised that this method is allowable under federal regulations and reasonable.
The Grantee forwarded the Applicant’s second appeal on March 7, 2017, and requested that FEMA review the issues raised, but made no comments as to its merits.
The Applicant’s request for an increase to the capped funding for its improved project can be separated into two categories. The first seeks $6,465,011.13 for items of work not included in PW 1438’s SOW, or higher costs for items that were included in the SOW, as well as the cost of the review by its architectural firm. The second relates to requested cost adjustments in PW 1438’s CEF factors in the total amount of $7,600,882.36.
Errors, Omissions, and Architectural Review
FEMA provides Public Assistance (PA) funding for work to restore damaged eligible facilities to their predisaster design, function, and capacity in accordance with applicable codes and standards. It is the applicant’s responsibility to identify and report all damage and submit all costs for disaster-related funding. The applicant has 60 days from the first substantive meeting, usually the kickoff meeting, to provide this information. Failure to report damage within the required timeframe can jeopardize funding. If an applicant discovers hidden damage, additional work that is necessary to complete a project, or costs that are higher than estimated, the applicant should notify the state as soon as possible. It should not be assumed that such costs can be reported at the end of the project and that additional funds will be approved. The timing must be such that the newly claimed damage can be inspected before it is covered up or repaired. Federal regulations require that an applicant must obtain FEMA’s prior approval whenever it is anticipated that additional funding or any revision of the scope of the project will be required.
When performing permanent restoration work, if an applicant decides to make improvements to the facility while still restoring its predisaster function, it may request an improved project. It must obtain this approval prior to the start of construction. PA funding for improved projects is limited to the costs that would be associated with repairing or replacing the damaged facility to its predisaster design. This limit represents a funding cap, and the balance of the funds required to complete the project is the applicant’s responsibility. If an applicant believes that eligible costs exceed the estimate, and those costs can be tracked and documented separately from the improvements, then the applicant may appeal the amount of the grant.
There are certain instances where FEMA may adjust the funding cap of an improved project for errors and omissions, for example, where additional costs are necessary to complete the original SOW, when the applicant demonstrated that the PW underestimated the costs required to complete the original SOW, or where it was later discovered that the PW’s CEF contained a calculation error. However, FEMA has denied requests to adjust funding caps in situations where the additional funding requested was associated with work FEMA did not approve, the costs were inappropriate to the original SOW, the work was not required as a direct result of the disaster, or when the applicant should have been aware of damage but did not report it until it was too late for FEMA to perform an inspection.
While the Applicant has characterized its request as a correction of “errors and omissions,” it actually seeks funding for work outside the SOW approved in PW 1438, and additional funding for specific line items that were included in the CEF. The CEF contained a specific, detailed description of the Applicant’s claimed damages and the work and associated costs required to address those damages. The Applicant sought approval for additional work and costs well after it agreed to the funding cap calculated in the CEF.
This is not a situation where the Applicant discovered hidden damage during the performance of eligible work or where the PW’s SOW omitted work that had already been determined to be eligible. The Applicant’s request for funding for its architectural firm’s review and investigating and filling mine shafts was work that had never been determined to be eligible. By contrast, the stage floor that the Applicant asserted was missing in the Irving Elementary School CEF was determined to be eligible. It is true that FEMA may adjust a CEF if it inadvertently omits an item previously determined to be eligible, but it was the Applicant’s responsibility to identify this additional required work in a timely matter, which it failed to do here. In any event, the CEF did not omit the stage. PW 1332, which contained the CEF for Irving Elementary School before the schools were combined, described the room as consisting of an auditorium of 1,608 square feet and a stage of 562.67 square feet, for a total size of 2,170.67 square feet. This description matches the drawings that the Applicant submitted. The entirety of this was captured in the 2,171 square feet of floor for the auditorium and stage. As an aside, this was estimated at $8.29 per square foot, which was higher than the $6.20 per square foot estimate for the East Middle School stage floor. The Applicant also requested additional funding for work it asserted to be required to ensure ADA compliance. While FEMA may increase the funding cap if additional work is required due to codes and standards, here, the Applicant did not provide any documentation showing how the CEF estimate was not ADA compliant, it simply asserted that additional square footage was necessary. All of the information these requests were based on was available to the Applicant when it agreed to the funding cap, and there was no hidden damage.
This was also not a situation where the Applicant demonstrated through bids or some other documentation that the CEF underestimated costs associated with an eligible item of work. The Applicant’s request for additional funding for line items already included in the CEF stated that its architectural firm provided a higher take-off estimate. The Applicant included a spreadsheet showing that it created its estimates using different cost codes, different unit prices, different unit quantities, or a combination of these. However, it did not provide any documentation showing that the CEF underestimated unit prices, used incorrect cost codes, or underestimated the required amount of materials. The Final RFI requested that the Applicant provide any source documentation or data for how it arrived at its figures, but the Applicant only provided the letters that it previously submitted, which stated that its architectural firm had arrived at different numbers. Without additional justification, the Applicant did not provide a basis for the Acting RA to increase funding.
The Applicant also did not demonstrate that the PW underestimated the cost for replacing East Middle School. That request had two components: an increase square footage from 130,000 square feet to 131,165 square feet, and an increased cost per square foot. The 130,000 square feet model used to create the CEF was carefully created in 2011 by two registered architects and a construction manager who visited the school and created a customized RSMeans model to estimate replacement costs when determining whether the school was eligible for replacement. In 2012, the Applicant based its improved project request on a size of 128,628 square feet, but FEMA elected to keep the cap at the original 130,000 square feet. The Applicant consistently accepted this square footage until 2014, after the original school had been demolished and FEMA could no longer perform an inspection. The Applicant did not establish that this new estimate was more reliable than the previous two determinations regarding the square footage of the school. Similarly, the Applicant provided no reason to explain why FEMA’s estimate of costs per square foot was unreliable, other than to say that its architectural firm came up with a different estimate. This was insufficient for the Acting RA to adjust the funding cap.
It was incumbent upon the Applicant to identify all of the additional work and costs before it agreed to a funding cap, which it knew represented the limit of available federal funding for the project. All of the facts upon which its request was based were available to the Applicant at the time that it agreed to the funding cap. While the Applicant argues that it could not have made the request for additional funding until it received a report from its retained architectural firm, this argument is unpersuasive. The Applicant states that, during the process of formulating PW 1438, it believed that there were additional damages and costs not identified in the CEF, and it knew that it intended to seek additional money. However, it did not previously inform FEMA that it needed additional time for an architectural firm to review the project, nor did it justify its decision not to involve its architects earlier in the process. It argues that FEMA did not give it enough time to review the formulated SOW, but the administrative record does not demonstrate that it sought additional time or informed FEMA that it believed additional work or costs needed to be identified. On the contrary, it acknowledges in its second appeal that it did not request revisions to the PW because it was eager to begin construction. The Applicant could not avoid the timeframe for reporting damage or the need for additional funding by delaying taking the measures required to identify the additional work or costs.
The Applicant argues that it relied upon the email from a FEMA employee discussed above for its belief that it could continue to expand the SOW even after the funding had been capped. A review of this email exchange, however, shows that such reliance was unreasonable. The Applicant asked a very specific question: whether FEMA would approve additional funding if competitive bids for an item of work came in higher than estimated in the PW. FEMA responded that additional funding could be approved if the higher cost was related to an approved SOW. This was a correct statement of FEMA’s practice, and as noted above, FEMA has previously approved cap increases in such circumstances. In this email exchange, FEMA did not tell the Applicant that it would later fund new work that was not previously approved, nor that it would approve additional costs that were not based on documentation such as higher bids.
In light of the foregoing, it was unreasonable for the Applicant to expect that FEMA would approve a substantial increase in funding in 2014 when it first made the request, much less at closeout in 2015. When FEMA obligated the PW, the Applicant knew that the funding was capped and if it believed additional funding was eligible, it needed to inform the Grantee and FEMA as soon as practicable. Here, it failed to do so. Moreover, the requests for increased costs associated with the approved SOW were not substantiated by documentation. Therefore, the Acting RA properly denied the first appeal with respect to the claimed errors and omissions.
The CEF provides a uniform method of estimating costs for large projects. The first part of the CEF is Part A, and it is designed to capture the detailed construction costs required to complete the eligible SOW. These base costs can be derived from cost estimating resources, such as RSMeans. When using national industry standard cost data, city cost indices are used to adjust national unit prices to the nearest city. Then, a series of factors (Parts B through H) are applied that represent potential additional eligible project costs that can reasonably be expected to be incurred because they are usually encountered during the course of a construction project. It is the applicant’s burden to substantiate its appeal.
In its second appeal, the Applicant does not directly address FEMA’s first appeal analysis regarding the CEF factors, although it attaches copies of the arguments it raised previously. Specifically, the Applicant claimed that RSMeans data should have been drawn from 2011 Quarter 4 data, rather than from earlier quarters, and the Part A cost estimate should have been increased by an additional 17 percent because of cost escalations.
These requests were without merit. First, the Acting RA properly found that the Applicant had not demonstrated that 2011 Quarter 4 data should have been used. Those numbers were unavailable when the estimate was originally created, and the Applicant has not provided any documentation showing that the estimate was inaccurate. The Applicant argued that FEMA used the 2011 Quarter 4 data in the CEF for another project, but the Acting RA correctly rejected this argument because that other CEF was created after the 2011 Quarter 4 data became available, and thus has no bearing on whether the CEF for PW 1438 was properly created.
Second, the Acting RA correctly determined that the Applicant had not substantiated its request for a 17 percent increase in funding. The Applicant provided no basis for this increase other than to say that its construction company had recently completed a different project in a different city at a lower cost. This was not a sufficient reason to adjust the CEF. Accordingly, the Applicant did not demonstrate that any changes in the CEF factors were justified.
The Applicant’s second appeal of the partial denial of DAC is for $65,665.60, which encompasses costs incurred after June 8, 2014, costs incurred in excess of $155 per hour, and costs associated with travel expenses.
Funding under the PA program is available for management costs, which are administrative expenses and any other expense not directly chargeable to a specific project under a major disaster. In addition to these management costs, FEMA will reimburse DAC incurred by applicants that are properly documented and can be tracked, charged, and accounted for directly to a specific project. Such costs must be reasonable for the work performed and accounted for in accordance with applicable federal regulations. Costs that are not tracked to a specific project, but are instead indirect costs are not DAC and may be reimbursed as management expenses. Where an applicant uses a contractor to perform administrative services, FEMA will consider certain factors when evaluating DAC, such as the method for contracting the services, the skill level of the people performing the activities, and the amount of time to perform an activity. In determining whether DAC are reasonable, FEMA considers if contractors utilized appropriate skill level for the work, which for most PA projects is a junior or mid-level technical or program specialist (or equivalent), although, for complex projects, staff with a higher level of technical proficiency or experience may be appropriate. Travel and per diem costs for contractor employees are eligible as direct costs only if such costs can be attributed to individual projects. Travel expenses not tied to one specific project are indirect expenses, and may be reimbursable as § 324 management costs, not DAC.
When choosing a vendor to provide administrative services, applicants must comply with all procurement requirements. Accordingly, a contract award must comply with both federal procurement standards, and an applicant’s own procurement standards. For large projects, this generally means that the contract must provide for full and open competition, for example, by receiving sealed bids or competitive proposals from a number of vendors following a public solicitation. Under federal regulations, noncompetitive procurement, whereby a proposal is received from only one source, may only be used when it is not feasible to use a competitive procedure and a specific justification exists, such as when a public exigency or emergency will not permit a delay resulting from competitive solicitation.
Typically, FEMA finds an exigency when lives or property are at stake, where the contract is for actual work to restore critical services, or where the contract is for work that is not permanent in nature. By contrast, the administrative services that can be funded as DAC are activities such as identifying damage, attending briefings, establishing files and oversight procedures, providing documentation, preparing for audits, working with federal and state authorities to monitor projects, developing cost estimates, and collecting cost data. Even if administrative services are performed during the exigency period, FEMA does not generally view them as critical services or as activities that protect life or property.
Where an applicant materially fails to comply with a term of a federal grant, such as complying with local and federal procurement standards, FEMA has discretionary enforcement authority, which it exercises on a case-by-case basis. FEMA’s range of authorized actions includes disallowing all or part of the cost of the activity or action not in compliance. In exercising this discretionary authority, the selected action must be appropriate to the circumstances and, to the extent that FEMA allows funding, FEMA must consider the reasonableness of the costs. A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances.
Here, the Applicant’s contract award to Witt was a noncompetitive procurement. The Applicant contends that a noncompetitive procurement was allowable under its own procurement guidelines as well as federal procurement standards under a public exigency or emergency exception to the competition requirement.
The Applicant has stated that the initial Witt contract was necessary, but it has consistently failed to explain why it was necessary to enter into a multi-year, multi-million dollar contract for administrative services without the benefit of competition within ten days of the disaster. It has not explained why it was not feasible to use a competitive procurement process under the circumstances. Even accepting that there was a public exigency that required Witt’s services, the Applicant has not explained why such an exigency would not allow it to take the time for a competitive solicitation, particularly where the contract was for an extended period of time and in excess of $3 million. Additionally weighing against the Applicant’s argument is the fact that this procurement was for administrative services. As noted above, FEMA does not generally view an administrative services contract as one which is necessary to meet an emergency need or resolve an exigency. Even if there were hypothetical circumstances in which noncompetitive procurement of such a contract could be justified under an emergency exception, here, the Applicant’s three-year contract clearly exceeded any exigency, and so would not qualify for an emergency exception.
The Applicant’s second contract with Witt entered into through HGAC, Task Order No. 1, does not change this result, regardless of whether it is viewed as a new contract or modification to the original agreement. If viewed as a new contract, Task Order No. 1 was executed in December 2011, and the Applicant has not explained why noncompetitive procurement was necessary at that point, which was seven months removed from the disaster. If viewed as a contract modification, as the Acting RA correctly explained, a later modification could not remedy the initial noncompliant procurement.
Finally, the Applicant has also attempted to justify its decision to use noncompetitive procurement by emphasizing that Witt’s price schedule was reasonable. Even accepting for the sake of argument that the contract costs were reasonable, it would not change the result because this is a separate issue. The fact that costs are reasonable does not excuse noncompliance with procurement regulations.
Accordingly, the RA correctly determined that the Applicant’s DAC contract with Witt was noncompliant.
Because of the procurement noncompliance, FEMA had discretionary enforcement authority to award reasonable costs or to disallow all costs. Here, the Acting RA elected to award certain costs determined to be reasonable. Specifically, the Acting RA awarded actual DAC for those hours billed at less than $155 per hour through June 8, 2014. This represented the majority of DAC hours, which were billed at approximately $133 per hour. What the Acting RA disallowed were: (1) hourly costs billed above $155 per hour, (2) costs for hours billed after June 8, 2014, and (3) costs associated with travel expenses for Witt staff. These costs are the subject of this second appeal, and each of these will be addressed in turn.
Regarding hours billed above $155 per hour, two things should be noted at the outset. First, the Acting RA did not disallow those costs in their entirety, but rather awarded costs at a rate of $155 per hour. Second, the Acting RA did not determine that $155 per hour was the only reasonable hourly rate. Rather, the Acting RA acted in accordance with prior regional communication about the issue which stated that, where an applicant sought reimbursement for DAC over the $155 per hour rate, it needed to provide a justification for the higher rate being reasonable under the circumstances. The Applicant had the opportunity to provide such justification, but only argued that Witt’s rates were the same as those offered to other federal and state entities. It failed to offer a justification of why staff members billing at an hourly rate higher than $155 for a number of hours was appropriate to the work and required for this project, which is what is required for reimbursement of DAC. In light of the lack of justification for a higher rate, it was within the Acting RA’s discretion to limit the award to $155 per hour as part of the enforcement action for the procurement noncompliance.
Regarding costs for hours billed after June 8, 2014, the Acting RA disallowed these costs because they were not incurred pursuant to an active contract between the Applicant and Witt. To clarify the timeline, the Applicant’s initial contract with Witt ran until June 8, 2014. The Applicant’s second contract with Witt (Task Order No. 1) ran until May 31, 2013. The Applicant did not execute a new contract with Witt (Modification No. 1) until January 15, 2016. The 2016 contract purported to be retroactive to June 1, 2013. That the contract was backdated, however, does not change the fact that there was no contract in place during the period in which the disallowed costs were incurred. If, as the Applicant has maintained, Task Order No. 1 replaced the initial contract with Witt, then there was no contract in place between June 1, 2013, and January 15, 2016. In the past, FEMA has determined that DAC incurred without a contract are ineligible for PA funding. Despite this, the Acting RA decided to allow costs incurred up to June 8, 2014, because that was the period of the original contract. The Acting RA’s exercise of discretion was an appropriate enforcement action to address the procurement noncompliance.
Finally with respect to Witt’s travel costs, it should be noted that, although the Applicant and First Appeal decision discussed these costs separately, these were also DAC which were disallowed following a procurement noncompliance. As the Acting RA correctly noted, in order to reimburse travel costs, FEMA requires that they be tied to one single project. Notwithstanding any other federal cost attribution guidelines, where travel costs are incurred for the benefit of multiple projects, FEMA does not treat them as DAC. Accordingly, the Acting RA’s decision to disallow these costs as part of the enforcement action was appropriate.
The Acting RA properly determined the Applicant’s request for funding for work outside the approved SOW, as well as higher costs associated with items in the approved SOW, to be ineligible because the Applicant failed to identify new work and request additional funding in a timely manner. Moreover, the Applicant did not substantiate its claim that the project’s CEF was incorrect or the estimate was improper. With respect to DAC, the Applicant’s contract award to Witt was the result of an impermissible noncompetitive procurement. The Acting RA exercised appropriate discretion by awarding partial costs as an enforcement measure. The Acting RA also acted appropriately by declining to award hourly costs billed above $155 per hour, costs for hours billed after June 8, 2014, and costs associated with travel expenses for Witt staff. Accordingly, this second appeal is denied.
 RSMeans is a tool that provides cost estimation data.
 A “take-off” is a list of materials and quantities required to build a structure.
 Letter from Alt. State Coordinating Officer, Mo. State Emergency Mgmt. Agency to Dir., Infrastructure Branch, FEMA Region VII, at 1 (July 3, 2012).
 Letter from Dir., Recovery Div., FEMA Region VII to Dir., Mo. State Emergency Mgmt. Agency (Aug. 2, 2012).
 Letter from Chief Fin. Officer, Joplin School Dist. to State Emergency Mgmt. Agency, at 1-4 (June 30, 2014).
 These items specifically were: concrete footings and foundation, concrete slab on grade, foundation walls, windows, base flashing, roof edges, smoke hatches, wall partitions, doors, electrical lines, plumbing, and vinyl composition tile.
 Letter from Recovery Div. Dir., FEMA Region VII to Dir., Mo. St. Emergency Mgmt. Agency (Aug. 7, 2014). The Applicant has argued that this letter did not actually deny its full request because it referenced CEF factors but not the alleged errors and omissions. This assertion is without merit. The letter specifically denies the applicant’s request for a change in the SOW. Accordingly, it fully addressed the Applicant’s request.
 Letter from Chief Fin. Officer, Joplin Sch. Dist. to Mo. St. Emergency Mgmt. Agency, at 1-3 (May 4, 2015) (requesting additional funding for CEF factors and cost escalation); Letter from Chief Fin. Officer, Joplin Sch. Dist. to St. Emergency Mgmt. Agency, at 1-2 (May 4, 2015) (requesting additional funding for damage not originally included in the SOW).
 At closeout, the Applicant also sought DAC reimbursement for services contracted from National Fire Adjustment Company, Inc. to adjust the loss for insurance purposes. FEMA denied reimbursement for these costs, and the Applicant has not challenged this denial on first or second appeal.
 Due to the complexity of this appeal, in summarizing the various documents below, some of the contents have been reorganized or regrouped for the sake of clarity.
 It is unclear why the Applicant thought this regulation was in conflict with the requirement to appeal the amount of capped funding within 60 days of obligation. The Applicant’s projects were not small projects, nor was there any cost overrun, given the Applicant used the funding to build a new school and the work that formed the basis for the estimate was not actually done.
 Email from Chief Fin. Officer, Joplin Sch., to FEMA, at 1 (Apr. 20, 2012, 6:05 PM).
 Email from FEMA, to Chief Fin. Officer, Joplin Sch., at 1 (Apr. 21, 2012, 9:55 AM).
 This entire document is not in the record, but the relevant excerpts were included in Exhibit X to the Applicant’s RFI Response.
 See email from Chief Fin. Officer, Joplin Sch. to FEMA, at 1 (Apr. 20, 2012 6:05 PM).
 The Applicant also argues that the determination memorandum and first appeal decision misunderstood that the costs for which it was requesting funding had nothing to do with the improvements and were related exclusively to the eligible repair project. The first appeal recognized, and on second appeal it is clearly understood, that the Applicant is claiming that these costs are alleged to have been part of estimated repair project, not the combined school that was ultimately built.
 The Acting RA denied the first appeal, in part, based on the Applicant’s untimely submission of the appeal. FEMA’s August 7, 2014 denial of the Applicant’s request for the additional funding, however, did not inform the Applicant of their appeal right, and the format, content, and timeframe requirements outlined in 44 C.F.R. § 206.206. See Recovery Directorate Manual, Public Assistance Program Appeal Procedures, Version 3, at 11 (Apr. 4, 2014). Accordingly, FEMA will consider the Applicant’s second appeal.
 44 C.F.R. §§ 206.201(j)-(k), 206.226 (2010); Public Assistance Guide, FEMA 322, at 79 (June 2007) [hereinafter PA Guide].
 44 C.F.R. § 206.202(d)(1); PA Guide at 96.
 44 C.F.R. § 206.202(d)(1)(ii); PA Guide at 96.
 FEMA Second Appeal Analysis, Los Angeles Dep’t of Water and Power, FEMA-1577-DR-CA, at 2 (Mar. 29, 2010) (denying request to expand SOW to correct alleged errors and omissions because the new damage was not identified within the regulatory timeframe).
 PA Guide at 139-140.
 PA Guide at 140.
 44 C.F.R. § 13.30(c)(1)(i), (c)(2), (d)(1).
 44 C.F.R. § 206.203(d)(1); PA Guide at 110.
 PA Guide at 111.
 PA Guide at 110.
 FEMA Second Appeal Analysis, Nashville-Davidson Cty., FEMA-1909-DR-TN, at 4 (Sept. 25, 2015) (approving cap increase where it was discovered during performance of eligible work certain items could not be repaired and required replacement).
 FEMA Second Appeal Analysis, Clarke Elec. Coop., FEMA-1737-DR-IA, at 3-4 (Jan. 12, 2015) (approving cap increase where applicant submitted new estimating methodology for a complex project and a FEMA engineer agreed).
 FEMA Second Appeal Analysis, Town of Killington, FEMA-4022-DR-VT, at 7-8 (Dec. 7, 2017).
 Id. at 4, 7-8.
 FEMA Second Appeal Analysis, Los Angeles Cty., FEMA-1577-DR-CA, at 4-5 (Sept. 11, 2012).
 FEMA Second Appeal Analysis, Trenton Special Sch. Dist., FEMA-1909-DR-TN, at 3 (Aug. 5, 2016).
 FEMA Second Appeal Analysis, Spring Twp., FEMA-4230-DR-KS, at 3 (Nov. 27, 2017) (denying cap increase where applicant should have been aware of alleged errors or omissions but did not submit modification request until after work was completed).
 Project Worksheet 1332, Joplin Schools, Version 1, at 4 (Sept. 24, 2012).
 See, e.g., FEMA Second Appeal Analysis, St. Tammany Parish, FEMA-1603-DR-LA, at 6-7 (Aug. 1, 2017) (granting increase where applicant established that certain additional code-driven work was related to approved work and could be tracked separately).
 CEF for Large Projects Instructional Guide V2.1, at 1-2 (Sept. 2009) [hereinafter CEF Guide].
 Id. at 3-3.
 Id. at 4-8.
 Id. App. E, at 5.
 Id. at 1-2.
 44 C.F.R. § 206.206(a); FEMA Second Appeal Analysis, Vill. of Waterford, FEMA-4020-DR-NY, at 4 (Sept. 4, 2014).
 The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 324(a), 42 U.S.C. § 5165b(a) (2011); Disaster Assistance Policy DAP 9525.9, Section 324 Management Costs and Direct Administrative Costs, at 2-5 (Nov. 13, 2007).
 DAP 9525.9, at 2, 5.
 Id. at 5.
 Memorandum from Assistant Adm’r, Disaster Assistance Directorate, FEMA, to Reg’l Adm’rs, FEMA, at 2 (Sept. 8, 2009) [hereinafter DAP 9525.9 Guidance Memo].
 Id.; see also FEMA Second Appeal Analysis, City of Cedar Rapids, FEMA-1763-DR-IA, at 4-5 (May 19, 2014) (finding that an hourly rate of $285 for administrative services was unreasonable absent evidence that the tasks performed were particularly complex).
 DAP 9525.9 Guidance Memo, at 3.
 Id., attach. at 1-3.
 DAP 9525.9 Guidance Memo, at 2.
 44 C.F.R. § 13.36(b)(1); PA Guide, at 51.
 44 C.F.R. § 13.36(c)(1), (d)(1)-(3); PA Guide, at 51-52.
 44 C.F.R. § 13.36(d)(4)(i); PA Guide, at 52.
 FEMA Second Appeal Analysis, Martinsville CUSD, FEMA-1771-DR-IL, at 4 (July 19, 2016); FEMA Second Appeal Analysis, Columbus Reg’l Hosp., FEMA-1766-DR-IN, at 7-8 (Dec. 27, 2017).
 Columbus Reg’l Hosp., FEMA-1766-DR-IN, at 8; see also DAP 9525.9 Guidance Memo, attach. at 1-3;
 Columbus Reg’l Hosp., FEMA-1766-DR-IN, at 8; see also FEMA Second Appeal Analysis, City of Pierre, FEMA-1984-DR-SD, at 11 (May 27, 2015) (defining exigency as “something that is necessary to a particular situation that requires or demands immediate aid or action”)
 44 C.F.R. § 13.43(a); FEMA Second Appeal Analysis, City of Nome, FEMA-4050-DR-AK, at 5 (Sept. 28, 2016).
 44 C.F.R. § 13.43(a).
 City of Nome, FEMA-4050-DR-AK, at 5-6.
 2 C.F.R. Part. 225, App. A § (C)(2).
 In its first appeal, the Applicant appeared to argue that Task Order No. 1 was a competitive procurement because of how HGAC identified vendors. In its second appeal, however, the Applicant’s position is that HGAC simply confirmed the reasonableness of the original procurement. Accordingly, it does not dispute that it never competed the DAC contract.
 While the identification of Task Order No. 1 as a new contract or a contract modification is not important to the question of compliant procurement, it will be important to the question of reasonable costs, which will be addressed later.
 Letter from Reg’l Adm’r, FEMA Region VII, to Dir., Mo. State Emergency Mgmt. Agency, at 1‑2 (June 23, 2011).
 Contrary to the Applicant’s assertion on second appeal, the Acting RA did not determine that a three-year contract was impermissible. These costs were denied because there was not an active contract in place at the time.
 See, e.g., City of Cedar Rapids, FEMA-1763-DR-IA, at 4-5 (finding that DAC incurred without a contract in place was ineligible for PA funding); City of Nome, FEMA-4050-DR-AK, at 5 (finding that without a written contract, the documentation required by federal regulations cannot exist).
 DAP 9525.9 Guidance Memo, attach. at 1-3.