Improved Project – Procurement – Direct Administrative Costs
|PW ID#||(PW) 575|
Conclusion: Joplin Schools (Applicant) failed to seek funding for additional damage in a timely manner, and failed to justify its request for adjustments to the Cost Estimating Format (CEF). The Applicant did not properly procure its administrative services contracts, and the Acting Regional Administrator exercised appropriate discretion in awarding Direct Administrative Costs (DAC) capped at $155 per hour, and denying travel costs or costs incurred when no contract was in place.
On May 22, 2011, a tornado damaged two of the Applicant’s schools. FEMA prepared PWs 575 and 449 to address damage to the exterior grounds. In 2012, FEMA approved an improved project to combine two schools, included PW 449 into PW 575, capped the project at estimated costs, and obligated funding. In 2014, the Applicant requested a change in the scope of work (SOW) to increase the improved project funding cap by $1,652,033.28, claiming additional damage and seeking a revision to the CEF. FEMA denied the SOW change request as untimely. The Applicant renewed its request at project closeout in 2016, also seeking DAC. FEMA again denied the SOW change request as untimely. FEMA found that the Applicant’s DAC contracts were not properly procured, but awarded costs capped at a maximum rate of $155 per hour, while denying travel costs and costs incurred when there was no contract in place. The Applicant appealed, reiterating its prior arguments. The Acting Regional Administrator denied the appeal, finding that the Applicant’s SOW change request was untimely and the requested CEF changes were unsupported. Regarding DAC, it determined that the $155 hourly cap was reasonable absent justification warranting a higher rate, so additional DAC funding was ineligible. The Applicant submitted a second appeal arguing that it could seek a revision in the SOW at any point before closeout. With respect to DAC, the Applicant argues its contracts were properly procured, its actual costs were reasonable, and the travel costs were reasonably apportioned.
Authorities and Second Appeals
- Stafford Act § 324.
- 2 C.F.R. pt. 225, app. A § (C)(2).
- 44 C.F.R. §§ 13.30, 13.36, 13.43, 206.201-202.203, 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 adjustments to the 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
Re: Second Appeal – Joplin Schools, PA ID: 097-U4T40-00, FEMA-1980-DR-MO, Project Worksheet (PW) 575 – Improved Project – Procurement – Direct Administrative Costs
Dear Mr. Rhodes:
This is in response to a letter from your office dated April 20, 2017, which transmitted the referenced second appeal on behalf of Joplin Schools (Applicant). The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $1,505,253.40 in costs, including a proposed change to the scope of its improved project, an increase in estimated costs, and Direct Administrative Costs (DAC) above those previously awarded.
As explained in the enclosed analysis, I have determined that the Applicant failed to seek funding for additional damage in a timely manner, and failed to justify its request for adjustments to the cost estimate. Regarding DAC, the Acting Regional Administrator took appropriate action in awarding costs capped at $155 per hour, as a remedy for the Applicant’s noncompliance with procurement regulations. It was also proper, in accordance with federal regulation, not to award travel costs or costs incurred during a period when no contract was in place. Accordingly, I am denying this second appeal.
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.
Public Assistance Division
cc: Paul Taylor
FEMA Region VII
On May 22, 2011, a catastrophic EF-5 tornado struck Joplin, Missouri. The accompanying high winds and flying debris damaged the East Middle and Irving Elementary Schools, which are owned and operated by Joplin Schools (Applicant). The schools were more than 50 percent damaged and warranted replacement. Work to replace the school buildings was addressed in other Project Worksheets (PWs). PWs 575 and 449 were prepared to address work on the school’s exterior, such as replacing light poles, handrails, signage, and other ground appurtenances. 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 449’s scope of work (SOW) and funding into PW 575, and obligated a combined PW that did not include a reference to DAC or a DAC estimate. FEMA amended PW 575 two additional times on October 11 and November 2, 2012, to revise and combine the cost estimating format (CEF) factors, but again did not include DAC. FEMA obligated PW 575 Version 3 with an improved project funding cap of $446,304.00 before any deduction for insurance proceeds. By a letter dated November 7, 2012, Missouri’s State Emergency Management Agency (Grantee) notified the Applicant of the obligation of the amended PW. It advised the Applicant that, if it wished to appeal the obligation, it had 60 days to do so. It also advised the Applicant that any damage that was not previously identified needed to be reported to the Grantee in writing within 60 days after the initial visit.
On June 30, 2014, the Applicant submitted a SOW change request to the 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. First, it argued that the East Middle School CEF did not consider damage to the asphalt during rebuilding and replacement of a parking and play area, along with sidewalks and curbs, and requested an additional $1,092,456.92. Second, it argued that its architectural firm had prepared a new CEF using a different City Adjustment Factor, resulting in an increase of $242,371.00, and including an additional 17% for cost escalation, resulting in an increase of $304,886.61. It asserted that these estimates better reflected costs for construction after the disaster. Finally, it requested $12,318.75 to pay for its architectural firm’s review, which represented the prorated cost for this PW. In total, the Applicant requested additional funding in the amount of $1,652,033.28. On August 7, 2014, FEMA denied the Applicant’s request as untimely, stating that the Applicant had 60 days from November 2, 2012, the date on which PW 575 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 renewed request came in two letters, both dated August 3, 2015, which were nearly identical to the 2014 request. The Applicant requested an increase of $1,027,527.28 for the additional damage, $459,322.28 for CEF factors, and $12,318.75 for its architectural firm’s review, for a total increase of $1,499,168.31. The Grantee communicated these requests to FEMA in a letter dated January 11, 2016.
At closeout, the Applicant also sought reimbursement in the amount of $21,868.01 for DAC, including force account labor and services contracted from Witt Associates (Witt). The Applicant had contracted 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 governed by the terms set forth in the HGAC agreement.
In response to these requests, FEMA prepared a determination memorandum on February 17, 2016. With respect to additional costs related to construction, it stated that the Applicant had 60 days from the obligation of PW 575 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 which equaled the entire cost of the combined schools. Finally, it stated that the Applicant had not separated the actual cost of completing the original scope of work 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, these costs were determined 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 incurred at lower hourly rates. It disallowed any DAC claimed for a period not covered by one of the contracts with Witt, as well as those travel expenses that had been allocated across various PWs. Accordingly, FEMA awarded funding for contracted DAC in the amount of $13,622.95. It also found that all claimed force account DAC was eligible, and awarded an additional $2,612.77.
In accordance with the determination memorandum, FEMA prepared PW 575 version 4, which included the additional $16,235.72 found to be eligible, and subtracted $77,045.95 in insurance receipts, for a final approved amount of $385,493.77.
First Appeal Letter
The Applicant appealed FEMA’s determination in a letter dated July 19, 2016. First, the Applicant argued that it could not have appealed FEMA’s obligation of PW 575 Version 3 because it agreed with the funding that was obligated in that version at the time. It acknowledged, however, that 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 project PWs. It clarified that it was not seeking any funding for work associated with the improved project, but only for estimated costs associated with the eligible repair project. The Applicant attached an email exchange in which it asked a FEMA employee 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.”
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 used its “internal procurement process,” although it did not specify what that process entailed. It stated 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 argues that, joining HGAC and signing a new agreement with Witt confirmed that the original procurement was compliant. It also states 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 what criteria it used in 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 October 26, 2016, FEMA sent the Applicant and Grantee, a final request for information (Final RFI), first noting that the Applicant had submitted over 9,000 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 identify specific claimed damages that were not reflected in PW 575 and the associated CEF, along with a specific location and dimensions, and supporting documentation to explain why the original project would need replacement of all asphalt surfaces, curbs, and paths in the pre-disaster design. It noted three photographs that showed cracking of concrete that was post-disaster damage from heavy equipment, as well as another nine pictures that showed no concrete damage, and asked the Applicant to explain why this was disaster related damage. It also requested an explanation as to why they fell within the category of errors or omissions; when they occurred; what caused them; whether they were caused by a third party; and if they were caused by a third party, whether that party had insurance and whether Applicant pursued a remedy against that party. The Final RFI also requested specific details regarding the Applicant’s failure to notify FEMA of its intention to commission an architectural firm to review the award, when the Applicant first anticipated claiming additional damages and budget revisions, and why the Applicant had failed to file appeals within 60 days of any of FEMA’s prior PW obligations or its 2014 scope change request. More specifically, FEMA asked why the Applicant delayed until 2015 to request increases in cost and SOW that had been denied in 2014. The Final RFI questioned whether the Applicant advised its insurance company about these claimed damages, whether it received any insurance proceeds for these damages, and whether any claim was contested. FEMA also pointed to a set of photographs in the record that purported to show damage, as well as others that did not show damage, and requested an explanation of how these photographs supported the Applicant’s appeal.
Regarding the CEF factors, the Final RFI asked that the Applicant give specific reasons for each of its requested changes to the CEF, identify specifically which of the individual factors it believed to be in error, and provide documentation for its cost escalation claims.
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 575.
On November 29, 2016, the Applicant responded to FEMA’s Final RFI. The Applicant first explained that the claimed damages to sidewalks and curbs around the school were due to the use of heavy equipment during an initial “false start” of repairs. It stated that, before it was determined that it would qualify for FEMA funding, the Applicant hired a contractor to make repairs. It stated that the process was halted shortly after it began when it learned that it would be eligible for FEMA funding. It stated that this accounted for the cracked concrete in FEMA’s three photos, but claimed that there were many other areas with the same damage. It then stated that it was not cost-effective to demolish the building in such a way so as to minimize such damage, and argued that FEMA’s guidance allowed for incidental and unavoidable damages to be reimbursed as part of permanent eligible work. According to the Applicant, its insurance company paid for these “false start” costs separately from the other tornado damages in the amount of $540,000.00. It stated that it did not know the quantity of these damages until its architectural firm completed its review of the PW. It explained that its architectural firm compared the original drawings for the school and compared them to FEMA’s SOW.
Next, the Applicant stated that, because it was an Improved Project PW, it did not track or separate costs for the original estimated SOW or the alleged errors and omissions, but it stated that it used the same RSMeans and CEF template that FEMA uses to develop estimated costs for SOWs. The Applicant noted, however, that it was not requesting the total cost of the improved project ($2,344,927.09), but rather only the amount associated with the estimated repair project ($2,015,524.39). In response to the question about the difference in its estimates, it argued that the 2011 Fourth Quarter RSMeans adjustment factor should have been used across all of Joplin’s PWs based on the obligation of PW 1980 for Joplin High School, and that the adjustment factor for Kansas City should have been used because it better reflected the Applicant’s costs. It also argued that RSMeans allowed for cost escalation for adverse economic conditions (maximum of 5 percent), a shortage of contractors (maximum of 12 percent), and a shortage of laborers (maximum of 10 percent) following a disaster. It argued that an increase of 3 percent for adverse economic conditions, 10 percent for shortage of contractors, and 4 percent for shortage of laborers, for a total of a 17 percent increase, was reasonable.
Regarding the question of why the Applicant had failed to inform FEMA of its intent to commission its architectural firm to conduct a review, or why the Applicant had failed to appeal or inform FEMA within 60 days of PW obligations or the denial of its 2014 SOW change request, the Applicant stated, first, that there was no legal or policy requirement that obligated it to apprise FEMA that it intended to commission the architectural report, or to conduct such a review within 60 days following PW obligation. The Applicant stated that it had ongoing concerns about the obligated SOW and associated costs. However, it asserted that until it hired an architectural firm it was not able to articulate a full and final request for additional costs. It acknowledged that it knew that PW 575 was a capped dollar amount, but believed that it could revise the SOW and related costs later, regardless of completion status of the improved project. Accordingly, it decided to focus on the rebuilding project and seek additional money for PW 575 at a later date. It argued that, while PW 575 Version 3 was a determination, it was one which could be changed at any time up to and including closeout. It provided an example from a related PW, in which FEMA increased the cap to add kitchen equipment and costs following obligation.
With respect to insurance, it explained that the insurance coverage sub-limit was $100,000.00 for all school grounds, which was distributed over four different PWs. Accordingly, the Applicant decided not to submit these additional damages to its insurer because there was no additional coverage available.
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. The Applicant further explained that it decided to enter into a three-year contract with Witt based on several private and governmental individuals who recommended it. 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, 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.
Regarding the hourly rate, the Applicant stated that the reason its rates exceeded $155 per hour was because they included travel-related expenses. Finally, it advanced its prior argument that travel expenses were allowable under the regulations.
On March 2, 2017, 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 November 2, 2012 obligation of PW 575 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 SOW changes at the point in the grant process when such changes are anticipated. FEMA found that the Applicant was requesting funding for damage that it asserted was caused during the demolition process but that the first request to increase the SOW and cost factors came nearly one and one half years after the obligation of PW 575. The Acting RA found that this request should have been made during the grant process before the grant was awarded.
FEMA then found that this conclusion was consistent with the denial of the Applicant’s August 7, 2014 request for additional funding. The August 2014 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 less than one month after obligation of PW 575. 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 was required to appeal within 60 days of obligation. All of these problems were exacerbated by the fact that the Applicant claimed this was damage caused during a “false start” repair project, and such damage would have been apparent from the beginning, as well as its acknowledgement that the delay was intentional so that it could focus on the rebuilding project. This kind of delay, the Acting RA found, was impermissible.
The Acting RA then addressed the Applicant’s assertion that FEMA was treating this PW differently from PW 1438, where FEMA increased the cap estimate to include a missing kitchen. The Acting RA distinguished this situation because FEMA had already determined in a prior CEF for PW 1438 that the kitchen was eligible for replacement. The later CEF was changed in that PW to reflect previously approved work. In PW 575, however, FEMA never determined that parking lot asphalt, curbing, and sidewalks were eligible for full replacement. Therefore, FEMA was not treating these two awards inconsistently. Regarding the email exchange that the Applicant attached to its first appeal, the Acting RA stated that FEMA did not give incorrect 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.
The first appeal decision also found that the Applicant had failed to document the claimed damages. While the Applicant pointed to certain photographs that showed small areas of damage, nothing indicated significant damage, and other photographs did not show any damage. Moreover, the Acting RA found that the Applicant did not demonstrate that the damage was disaster related because, even though it claimed that asphalt and concrete were damaged during the performance of repair work, it did not establish that it could not have prudently avoided such damage. The Acting RA also determined that the Applicant had failed to give FEMA the opportunity to inspect the site in order to verify the alleged damages because it did not make its request until more than one year after the demolition of the school.
The Acting RA also noted that this was not a situation where the Applicant was seeking additional funding for a cost overrun because this was an improved project with capped funding, and would not be closed out based on actual costs. Because the repair work was not actually performed and the Applicant’s architectural firm based its numbers on review of blueprints, the Acting RA determined that a conceptual cost estimate was insufficient to support the eligibility of work and costs claimed as a cost overrun.
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 standard practice, FEMA applied the adjustment factor 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. The Acting RA also rejected the Applicant’s argument that Kansas City should have been used in determining the city adjustment factor, given that there was an adjustment factor published for the City of Joplin. Regarding the requested 17 percent cost increase, the Acting RA determined that the Applicant had failed to provide documentation to support such an increase.
Turning to the issue of DAC, the Acting RA determined that the Applicant’s initial decision to procure Witt without competition was noncompliant with both 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 only emergencies. 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 vendors, 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 it was a noncompliant procurement either way. As a new procurement action, it was not competitive 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 other problems described above.
In light of these procurement deficiencies, 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 to federal entities 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, or was appropriate to the complexity of the work, the amount of time required to perform it, and the skill level of the people performing 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, and so were covered under the 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 April 13, 2017. It first states that, when formulating the SOW for PW 575, FEMA would submit a draft formulated 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 unattainable and it decided to interrupt this process so that it could begin construction. It states that, when PW Version 3 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 575 for either errors/omissions or the CEF factors and cost escalation. 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 notified the state as soon as its architectural firm had completed its review. It also argues that, because the architectural firm based its review on the original design documents for the school, 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 email exchange with a FEMA employee 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.
With respect to DAC, the Applicant first argues that Witt’s rates were reasonable, because they were the same or lower than 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 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 a noncompliant 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 because there was no DAC contract in place after that date, the Applicant characterizes the first appeal decision as stating that a contracting term beyond three years is not allowed, and argues that this is unreasonable. It then argues that it was irrelevant that Modification No. 1, with an effective date of June 1, 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 asserts that the RA’s decision that noncompliant procurement renders costs ineligible is prejudicial and punitive. 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 in procuring Witt’s services. 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 reasonable and allowable under federal regulations.
The Grantee forwarded the Applicant’s second appeal on April 20, 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 parts. The first relates to its request for items of work not included in PW 575’s SOW, consisting of $1,027,527.28 in construction costs and $12,318.75 for a review by its architectural firm, for a total of $1,039,846.03. The second relates to requested cost adjustments in PW 575’s CEF in the total amount of $459,322.28.
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 original SOW approved in PW 575. 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 seeks approval of additional work and costs well after it agreed to the funding cap calculated in the CEF. This is not a situation where the PW’s SOW omitted work that had already been determined to be eligible, nor where the Applicant demonstrated through bids or some other documentation that the CEF underestimated costs associated with an eligible item of work. Additionally, this was not a situation where the Applicant discovered hidden damage during the performance of eligible work. Rather, the Applicant asserts that extensive work to replace concrete and asphalt surfaces was required as a result of the “false start” repair project prior to FEMA approval of the improved project, or would have been required as a result of the FEMA approved project. It was incumbent upon the Applicant to identify these additional items of work and their associated 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 this request was based were available to the Applicant at the time that it agreed to the funding cap described in PW 575 Version 3. 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 for three reasons. First, it cannot establish that the alleged need for additional funding could not have been discovered earlier in the process. Second, it did not commission an architectural firm to review the PW until after it agreed to the funding cap in PW 575 Version 3. Finally, the Applicant did not previously inform FEMA that it needed additional time for an architectural firm to review the project, nor did it justify its decision to wait until 2013 to do so. The Applicant could not avoid the regulatory timeframe for reporting damage by delaying taking the measures required to identify damage. While the Applicant argued that it was not required to inform FEMA of its intent to commission a review of the project, FEMA’s regulations required the Applicant to gain prior approval before expending additional funds on an increased SOW, including the architectural review.
The Applicant’s argument that it could not have sought a revision of the SOW following the obligation of Version 3 of the PW is also contradicted by its other statements. The Applicant acknowledges in its second appeal that, when PW 575 Version 3 was obligated in 2012, it believed that there was additional damage not identified in the SOW and it knew that it intended to seek additional money. While the Applicant argues that FEMA did not give it enough time to review the formulated SOW, the administrative record does not demonstrate that it sought additional time to review it, or informed FEMA that it believed that additional damage would be identified later. It acknowledges in its second appeal that it did not request a revision to PW 575 Version 3 because it was eager to begin construction and FEMA had made it clear that the improved project needed to be approved prior to construction commencing.
Moreover, because the additional damage was not identified until after the original site was demolished, the Applicant’s claim was not based upon physical observations made of the site, and neither FEMA nor the Grantee was able to conduct a site inspection to verify the additional damage. This problem is not remedied by the three photos the Applicant references in its second appeal that depicted damage to concrete due to heavy machinery because it acknowledges that the damage was caused during the “false start” repair, before FEMA had approved any project. The Applicant asserted that FEMA’s inability to inspect the newly claimed damage was unimportant because its claim was based on its architectural firm’s review of blueprints. This argument is unconvincing, however, because FEMA would still need to inspect the site to determine whether damage to concrete and asphalt needed to be repaired or replaced, and if so, to what extent. Accordingly, the Applicant failed to report the additional damage in time for FEMA to conduct an inspection.
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 misplaced. 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.
In light of the foregoing, it was unreasonable for the Applicant to expect that FEMA, without being able to inspect the newly claimed damage, would approve a substantial increase in funding in 2014 when it first made the request, much less at closeout in 2016. The Applicant was responsible for identifying additional damage in a timely manner so that FEMA could conduct an inspection and determine whether to revise the SOW. 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. Because the Applicant failed to do so, 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, although it attaches copies of the arguments it raised previously. Specifically, the Applicant claimed that: 1) FEMA should have used locality adjustments based on Kansas City, rather than Joplin; 2) the Part A cost estimate should have been increased by an additional 17 percent because of cost escalations; and 3) RSMeans costs should have been drawn from 2011 Quarter 4 data, rather than from earlier quarters.
These requests were without merit. First, because there was city adjustment data for Joplin, it would have been improper to use the adjustment for Kansas City. 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.
Finally, the 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 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 575 was properly created. Accordingly, the Applicant did not demonstrate that any changes in the CEF estimate were justified.
The Applicant’s second appeal of the partial denial of DAC is for $6,085.09, 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 whether 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 costs for work outside the approved SOW to be ineligible because the Applicant failed to identify new damage 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.
 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, Planning & Disaster Recovery Branch, Mo. State Emergency Mgmt. Agency, to Chief Fin. Officer, Joplin School District, at 1-2 (Nov. 7, 2012).
 Id. at 2.
 Letter from Chief Fin. Officer, Joplin Sch. Dist., to Mo. State Emergency Mgmt. Agency, at 1-2 (June 30, 2014).
 Letter from Recovery Div. Dir., FEMA Region VII, to Dir., Mo. State 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. State Emergency Mgmt. Agency, at 1-3 (Aug. 3, 2015) (requesting additional funding for CEF factors and cost escalation); Letter from Chief Fin. Officer, Joplin Sch. Dist., to Mo. State Emergency Mgmt. Agency, at 1-2 (Aug. 3, 2015) (requesting additional funding for damage not originally included in the SOW). The Applicant’s calculation steps were different in these two letters than they were in its 2014 request, and it is not clear where the difference in numbers comes from. Additionally, the Applicant inadvertently included the request of $12,318.75 for its architectural firm’s review in both letters. The $1,499,168.31 figure given here includes that amount only once.
 Letter from Recovery Div. Manager, Mo. State Emergency Mgmt. Agency, to Recovery Div. Dir., FEMA Region VII, at 1-2 (Jan. 11, 2016).
 While the determination memorandum did not explicitly reference travel expenses, it disallowed the difference between the claimed hourly rate for a Witt employee and the contract hourly rate for that employee. That difference was comprised of the employee’s travel expenses that the Applicant had allocated to PW 575 by incorporating them in the hourly rate for each Witt employee.
 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.
 The header in the Applicant’s first appeal as well as the closing paragraph listed the appealed amount for CEF factors and cost escalation as $459,292.28. In the text, however, it listed the amount as $459,322.28, which matched the amount requested at closeout. Accordingly, FEMA considers the larger number to be the amount appealed.
 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 estimated improved project cap 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).
 RSMeans is a tool that provides cost estimation data.
 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 FEMA acknowledges, that the Applicant is claiming that these costs are alleged to have been part of the estimated repair projects, 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).
 44 C.F.R. § 13.30(c)(1)(i).
 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).
 CEF Guide App. E, at 5.
 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.