Improved Project – Procurement – Direct Administrative Costs –Insurance
|PW ID#||(PW) 1336|
Conclusion: Joplin Schools (Applicant) failed to seek additional funding 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 (RA) 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. Finally, the Acting RA was correct in determining the Applicant did not exhaust its insurance coverage for “Contents”.
On May 22, 2011, a tornado damaged two of the Applicant’s schools. FEMA prepared PWs 1034 and 1336 to address damage to the exterior grounds. In 2012, FEMA approved an improved project to combine two schools, included PW 1034 into PW 1336, and capped the project at estimated costs. In 2014, the Applicant requested a change in the scope of work (SOW) to increase the improved project funding cap by $18,795,423.49, claiming additional damage and CEF changes. FEMA denied the request as untimely. The Applicant renewed its request at project closeout in 2016, also seeking DAC. FEMA again denied the 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. The Applicant appealed, reiterating its prior arguments and also asserting that FEMA overstated insurance reductions in the amount of $2,902,582.60. The Acting RA denied the appeal with respect to the SOW change, finding the request was untimely and the requested CEF changes were unsupported. Regarding DAC, she determined that the $155 hourly cap was reasonable. She also made a correction in the insurance reduction and partially granted the appeal in the amount of $2,011,551.25. The Applicant submitted a second appeal making similar arguments. The Applicant also disagreed with FEMA’s allocation of $88,610.16 in insurance proceeds as “Contents.”
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 obtain approval when a need for additional funding or a change in scope is anticipated.
- The Applicant 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 justified noncompetitive procurement.
- Following 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 and disallowing travel costs was an appropriate exercise of discretion.
Ernie Rhodes, Director
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) 1336 – Improved Project – Procurement – Direct Administrative Costs –Insurance
Dear Mr. Rhodes:
This is in response to a letter from your office dated November 14, 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 $14,536,123.59 in costs, including a proposed change to the scope of its improved project, an increase in estimated costs, Direct Administrative Costs (DAC) above those previously awarded, and correction in insurance reductions.
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. Finally, the Acting RA was correct in determining that the Applicant did not exhaust its insurance coverage for “Contents” under its insurance policy. Accordingly, this appeal is denied.
Please inform the Applicant of my decision. This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.
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 Joplin High School (JHS) and Franklin Technology Center (FTC) which are owned and operated by Joplin Schools (Applicant). FEMA prepared multiple Project Worksheets (PW) to address the repair and replacement of JHS and FTC buildings and grounds. PW 1034 covered repairs to the grounds of FTC and PW 1336 covered repairs to the grounds of JHS. Replacement of the buildings was addressed in other PWs. Using an estimate based on the cost estimating format (CEF), FEMA obligated PW 1034 Version 0 on November 11, 2011 and PW 1336 Version 0 on January 5, 2012.
The Applicant began acquiring a nearby property with the intent to enlarge or combine the two schools. On March 13, 2012, the Applicant requested permission to rebuild the two schools on an expanded campus of 28 additional acres because the original JHS was located in a floodplain. Without an approval from FEMA, the Applicant proceeded with its plans to combine the two schools into a single facility and to rebuild on the new, expanded campus. In a letter dated August 15, 2012, FEMA denied the Applicant’s request to relocate JHS, determining that the school was not subject to repeated heavy damages and that it could be moved out of the floodplain within the existing geographical grounds. FEMA advised the Applicant that it could choose to proceed with plans to combine the two schools at the new location, but that it would have to be approved as an improved project and capped at a fixed level of funding.
The Applicant requested an improved project for PWs 1034 and 1336 on August 2, 2012, citing the need to relocate outside of the floodplain and proposing the combination of both schools. FEMA prepared Version 1 for PW 1336 as an improved project, combining PWs 1034 and 1336 into one project. In a letter dated October 23, 2012, FEMA approved the request for an improved project for PW 1336 and obligated it with a funding cap of $1,341,081.40 on November 15, 2012. The letter also stated that the Applicant must notify FEMA of any variation to the proposed scope of work (SOW).
The Applicant received an insurance settlement for all of its properties that sustained damage as a result of the disaster, including JHS and FTC. A settlement letter from the insurance carrier, dated June 6, 2012, noted that the insurance settlement for HS building damage including repair costs to the grounds (PW 1336). The Final Statement of Loss, dated July 15, 2014, listed insurance proceeds paid to the Applicant to cover costs associated with the repair and replacement of its properties. The Applicant held a blanket policy with the insurance carrier and received final proceeds for Buildings, Business and Personal Property (Contents), and other coverage.
On June 30, 2014, the Applicant submitted a SOW change request to the State Emergency Management Agency (Grantee), seeking additional funding in the amount of $18,795,423.49 for what it called errors and omissions. It stated that it hired an architectural firm to compare existing as-built drawings of the old JHS and FTC grounds to the FEMA CEF estimate. The Applicant relied on a take-off of the facility and a design of the replacement building and grounds developed by the firm that it asserted included any new applicable codes and standards that were enacted after the original school building and additions were constructed. First, it argued that earthwork cost were underestimated in the amount of $418,394.88. Second, it argued that the stormwater drainage system was underestimated and that the FEMA stormwater drainage allowance did not adequately cover building code requirements for a proper stormwater drainage and water retention basin in the additional amount of $10,520,661.51. Third, the Applicant asserted that FEMA’s CEF for JHS understated damage to the sidewalks, parking lots, lights and driveways, and athletic field lights in the combined amount of $2,206,082.30. Fourth, the Applicant claimed that the original estimate omitted a water well and lawn sprinkler system, the asphalt running track, and hydro-seeding in the combined amount of $358,861.05. Next, it argued that with the relocation of JHS to higher ground, an additional covered walkway to connect JHS to FTC was omitted and would have been estimated at an additional $1,154,239.49.
The Applicant then asserted that its architectural firm had prepared a new CEF using a different City Adjustment Factor, resulting in an increase of $756,455.94, and including an additional 17 percent for cost escalation, with an increase of $3,368,409.57. 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. On August 7, 2014, FEMA denied the Applicant’s request on the grounds that the request was untimely submitted in compliance with the timeframe requirements specified in 44 Code of Federal Regulations (C.F.R.) § 206.206. FEMA stated that the Applicant had 60 days from November 15, 2012, the date on which PW 1336 Version 1 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 December 7, 2015, which were nearly identical to the 2014 request. The Applicant requested an increase of $14,778,045.30 for errors and omissions, and $4,017,378.22 for CEF factors, for a total increase of $18,795,423.52. The Grantee communicated these requests to FEMA in a letter dated July 14, 2016.
At closeout, the Applicant also sought reimbursement in the amount of $52,250.04 for Direct Administrative Costs (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 of the HGAC agreement.
FEMA issued a determination memorandum on November 22, 2016, informing the Applicant that it had 60 days from the date of obligation to appeal PW 1336 Version 1. 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 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, 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. It further noted discrepancies in the charges billed at rates higher than the reasonable threshold set by FEMA. FEMA also determined that some contract DAC were not specific to a particular task or project and some were for work completed outside of the contract dates. 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 $31,652.77. It also found that all claimed force account DAC was eligible, and awarded an additional $4,671.09.
In accordance with the determination memorandum, FEMA prepared PW 1336 Version 2, which included the additional $36,323.86 found to be eligible for a final approved amount of $1,377,405.26.
First Appeal Letter
The Applicant appealed FEMA’s determination in a letter dated January 26, 2017. First, the Applicant argued that it could not have appealed FEMA’s obligation of PW 1336 Version 1 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 continually 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 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 an appeal was not required until FEMA formally rendered a decision rejecting the errors and omissions and overlooked CEF cost factors and escalation factors.
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 procurement was proper. 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 lower than those provided for other HGAC members and for other government entities using U.S. General Services Administration (GSA) rates. It stated that given the circumstances prevailing at the time of the disaster – in particular, the number of other disasters, number of qualified consultants, and the increased demand for these services – the Applicant believed that its determinations regarding Witt’s pricing conformed to that of a reasonably prudent person.
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 stated FEMA incorrectly interpreted the insurance settlement for PW 1336 and requested an adjustment to the insurance proceeds reduction. The Applicant claims FEMA incorrectly made an additional insurance reduction from another project, PW 1980, and that the correct insurance allocation for PW 1336 should have been $144,496.00 instead of $3,046,079.00. On February 1, 2017, the Grantee forwarded the Applicant’s appeal to FEMA without a recommendation.
Final Request for Information
FEMA sent the Applicant a Final Request for Information (RFI) by way of a letter dated May 10, 2017, requesting that the Applicant improve the organization of the voluminous documents submitted in support of its appeal and explain the exhibits and their relevance to the claims. FEMA requested additional information to support its claims including a list of total actual costs to complete the project, costs for the approved SOW tracked separately from the improved project, relevant authority to support the use of a different CEF/RSMeans, codes and standards related to the alleged errors and omissions, among other items.
First, FEMA addressed the Applicant’s dispute over insurance reductions and requested that the Applicant provide a clear statement of the issue and the amount in question. FEMA also requested documentation of the insurance proceeds, how they were allocated, and a justification for the allocations, specifically indicating which proceeds were considered part of the settlement for “building” and which were for “contents.” FEMA also asked the Applicant to explain why it did not mention the discrepancy in the insurance reductions during Final Inspection when it signed off that the actual insurance proceeds were $3,046,079.00.
With regards to the claims for additional damages, FEMA stated that the record lacked documentation supporting that the additional costs were eligible errors and omissions, cost factors, or cost escalations. FEMA requested that the Applicant provide the total cost of the improved project; details of the costs of the claimed damages separate from the costs of the improved project; documentation of the date and action first taken by the Applicant to acquire the additional land for the new high school; documentation supporting why the new RSMeans factor should be used to calculate the CEF; documentation supporting why a new CEF factor should be used; documentation supporting the Applicant’s claim of job escalation factors; copies of the pertinent codes and standards requiring the additional claimed work, specifically the water retention basin the Applicant claims would have been required had JHS been moved to higher ground; and documentation supporting that the Applicant was legally responsible for the additional claimed work. FEMA also requested information explaining 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.
With respect to DAC, the Final RFI requested documentation showing that the Applicant considered submissions of vendors other than Witt, that the board properly determined cost-effectiveness of Witt’s rates, 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; and whether it conducted a cost analysis of Witt’s contract prior to its approval.
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 1336.
On June 13, 2017, the Applicant responded to FEMA’s Final RFI. The Applicant first explained that it assumed conversations about the final insurance Statement of Loss would take place at closeout and that FEMA would make adjustments based on actual insurance proceeds, however, those conversations never took place. The Applicant provided a Statement of Loss sheet, settlement letters from its insurance provider, and a spreadsheet listing its insurance allocations in support of its claim that the correct insurance reduction should have been $144,496.00.
The Applicant stated that total costs of the improved project were $18,871,211.45. It asserted that it was not required to break out the costs of additional damages compared to improved project costs because the errors and omissions at question were based on the original school replacement grounds SOW listed in PW 1336 Version 0. In particular, the Applicant attributed the additional costs, such as the water retention pond, to theoretical designs created by the architecture firm. The firm relied on its design of a replacement JHS building and grounds had they been rebuilt to their pre-disaster design and moved to higher ground. These costs were driven by codes and standards that the Applicant asserted would have governed the reconstruction of the school. In response to the request for codes and standards that required the water retention basin, the Applicant provided a copy of the Joplin City Floodplain Management Code and the City of Joplin Code regulating subdivisions. Additionally, to demonstrate the actions it took to acquire the additional land to build the new JHS, the Applicant provided a letter sent to owners of the property adjacent to JHS inquiring about selling those properties.
The Applicant referred FEMA back to its closeout request letter, dated December 7, 2015, to justify the increases in the RSMeans, CEF factors, and job escalation factors. The Applicant stated that it used the same RSMeans and CEF template that FEMA used to develop estimated costs for the SOWs. 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 JHS, 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, were reasonable.
Regarding DAC, the Applicant stated that it is the intent of the participating parties, not FEMA, which controlled the ongoing relationship of the contract. To that end, the Applicant and Witt came to an agreement on rates, caps, and duration of all of the agreements at issue. It maintained that because Witt’s rates were lower than those approved by the Federal government through the GSA Schedule, those rates were reasonable. The Applicant also admitted that it cannot confirm that the School Board had copies of Witt’s approved GSA contract at the time that it approved the Professional Services Agreement and stated its belief that the purpose of the procurement requirements was to assess reasonable costs.
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, adding that because the service provider was located outside of the state, none of the services could be provided without incurring travel-related expenses.
First Appeal Determination
On September 13, 2017, FEMA’s Region VII Acting Regional Administrator (RA) partially approved 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 15, 2012 obligation of PW 1336 Version 1. FEMA found that the Applicant’s matters on appeal related to errors and omissions were issues that were determinable at the time the improved project was approved and obligated. FEMA reasoned that the Applicant was sufficiently confident in its damage assessment to reach a settlement with its insurer prior to the obligation of Version 1 of PW 1336. 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 were anticipated.
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 more than a year 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 changes in the past, and had commissioned its architectural firm less than one month after obligation of PW 1336 Version 1. 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.
The first appeal decision also found that the Applicant had failed to document the claimed damages. The Acting RA noted that the Applicant, in asserting the additional damages, relied on a “virtual build” of the original projects and now seeks to use that estimate, after obligation of the improved project and demolition of the original school to justify the increases in costs. The Acting RA found that a conceptual cost estimate is insufficient documentation to support the eligibility of work and additional costs claimed. 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.
Regarding the CEF Factors, the Acting RA noted that the Applicant’s arguments concerning CEF and escalation factors were addressed in previous appeals. 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.
In terms of procurement, 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. Long-term contracts should be competitively bid. 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.
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.
The Acting RA determined that the insurance documentation provided by the Applicant in response to the Final RFI lacked specificity as to how the insurance settlement was allocated. As such, FEMA found that the Applicant did not exhaust the insurance coverage for contents. FEMA identified items that should have been allocated in the amounts of $811,249.61 for the building (grounds) and $88,610.16 for the contents. FEMA also found a typographical error in the CEF estimate that accounted for an erroneous increase of $35,667.58. FEMA originally reduced insurance proceeds in the amount of $3,046,078.60 from the total project. Deducting the revised amount from the total costs of $4,423,483.86, resulted in an award of $3,487,956.51. Then, subtracting the previously awarded amount resulted in a net increase of $2,110,551.25.
Less Contents Insurance
Less Building Insurance
Less Typographical Error
Amount of award
Less previous award
Amount awarded on appeal
The Applicant filed a second appeal by way of letter dated October 24, 2017. The Applicant stated that when formulating the SOW for PW 1336, FEMA would submit a draft PW and 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 argued that this timeline was unattainable and it decided to interrupt this process so that it could begin construction. It states that, when PW Version 1 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 offered as one example of an omission that FEMA overlooked the previously covered walkways between the JHS and FTC buildings which it asserted existed prior to the tornado. The Applicant further noted that after thorough review and analysis, its licensed engineers, architects, and hydrologists found that an underground retention pond would have been required to relocate the building onto the existing campus property and higher ground in lieu of the above-ground retention pond recommended and written into the SOW for PW 1336. The Applicant asserts that this water retention pond is a significant aspect of its request because building codes and standards would have mandated the pond in order to bring JHS back to its predisaster functionality.
The Applicant argues that FEMA was apprised of the damages to JHS and FTC but did not consider all aspects of the destroyed facilities which resulted in the errors and omissions requested at closeout. The Applicant maintains that it was not aware of FEMA’s oversight until its architectural firm was able to review FEMA’s PW development. It further asserts that it was not required to file a formal appeal to amend PW 1336, errors and omissions of the amount requested represents a substantial discrepancy that FEMA did not adequately evaluate, and PWs SOW regarding errors and omissions may be amended throughout the entire rebuilding process up to the final closeout reconciliation. 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.
With respect to DAC, the Applicant first argues that Witt’s rates were reasonable, because they were 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 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 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 DAC, the Applicant argues that, because Witt’s rates were 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. 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.
Finally, the Applicant briefly mentions that it disagrees with FEMA’s allocation of $88,610.16 of the insurance proceeds as building contents. The Applicant points to the Travelers Insurance document which states that the building settlement included “outdoor equipment, outdoor fixtures and outdoor property.” This miscalculation, it asserts, overstates insurance allocated to this project.
The Applicant’s request for an increase to the capped funding for its improved project consists of $14,431,801.41 in errors and omissions, CEF factors and cost escalation factors.
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 1336. 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, it was incumbent upon the Applicant to identify any 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 improved project.
Regarding the Applicant’s request for work it asserted to be required by codes and standards, particularly the below-ground retention pond, FEMA may increase the funding cap if additional work is required due to codes and standards. But here, the Applicant did not provide sufficient documentation showing that a below-ground retention pond would have been required by codes and standards. The Final RFI requested the pertinent codes and standards that required the identified design features of this system, the cost effectiveness of this particular system, and evidence that the Applicant was legally responsible for the proposed drainage improvements. In response, the Applicant provided codes that spoke generally to floodplain development and did not address the specifics of the proposed below-ground retention pond.
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 1336 Version 1. 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 1336 Version 1. 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 1 of the PW is also contradicted by its other statements. The Applicant acknowledges in its second appeal that, when PW 1336 Version 1 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 1336 Version 1 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. 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 the additional damage 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.
In light of the foregoing, FEMA was unable to approve a substantial increase in funding in 2014 when it first made the request or at closeout in 2016 since it was unable to inspect the newly claimed damage. 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 not substantiated as being justified. 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 1336 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 $15,712.02, 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 not explained 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 Acting 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. 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 lower than 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.
On second appeal, the Applicant disagrees with FEMA’s allocation and reduction of $88,610.10 as contents. As described in the Applicant’s insurance settlement and Statement of Loss, the insurance carrier assigned settlement proceeds into multiple categories, including “Building” and “Contents.” To support its position, the Applicant referenced a letter from their insurance carrier which stated that the building insurance settlement for JHS included “outdoor equipment, outdoor fixtures, and outdoor property,” and therefore FEMA’s misclassification of contents items overstates the insurance deducted from this project.
When administrating the PA program, FEMA must ensure that an applicant does not receive federal assistance for any loss for which it has received funding from insurance. To do this, FEMA deducts insurance proceeds from otherwise-eligible costs. The correspondence from the insurance carrier that the Applicant references in support of its position is ambiguous and does not clearly support the Applicant’s claim that FEMA made an erroneous insurance deduction of content items. Because the Applicant had a blanket policy covering multiple properties, FEMA did not have insight on how the Applicant’s proceeds were allocated to each facility covered by the policy. FEMA provided the Applicant the opportunity in the Final RFI to clarify how insurance proceeds were allocated for this project. In response, the Applicant provided the Final Statement of Loss, letters from the insurance carrier, and a spreadsheet describing the Applicant’s attribution of some of the proceeds. The information provided, however, did not clearly distinguish the allocation of proceeds for “Building” and “Contents” for PW 1336.
Without the Applicant’s explanation of how proceeds were allocated, FEMA used the CEF spreadsheet, dated November 18, 2011, to determine the appropriate insurance reductions to be taken for “Building” and “Contents” in PW 1336. The CEF spreadsheet lists damaged property costs and classifies them as part of “Building” or “Contents.” The Applicant’s insurance policy defines Business Personal Property (also referred to as Contents) as property within designated buildings or in the open within 1000 feet of the described premises so long as the property is not a permanent fixture. Because the Applicant did not provide sufficient documentation, it was appropriate for FEMA to rely upon the policy definition to classify items such as outdoor portable bleachers, tennis court nylon nets, mound covers, plate covers, field tarp storage roller, etc. as “Contents.” Because these items are not permanent fixtures as defined by the Applicant’s insurance policy, they are not part of the “Building” and therefore it was appropriate to allocate “Content” insurance proceeds to cover these costs.
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. After a review of insurance documentation, FEMA has determined that the $88,610.16 reduction was appropriate. Accordingly, this second appeal is denied.
 The Applicant requested an improved project prior to receiving FEMA’s letter denying relocation because it had already moved forward with its plan to combine the schools and rebuild on a new campus.
 A “blanket policy” is a single insurance policy that provides multiple types of coverage and/or covers multiple properties.
 Letter from Chief Fin. Officer, Joplin School Dist., to Mo. State Emergency Mgmt. Agency, at 1-2 (June 30, 2014).
 A “take-off” is a list of materials and quantities required to build a structure.
 Letter from Recovery Div. Dir., FEMA Region VII, to Dir. Mo. State Emergency Mgmt. Agency (Aug. 7, 2014).
 Letter from Chief Fin. Officer, Joplin Sch. Dist., to Mo. State Emergency Mgmt. Agency, at 1-3 (Dec. 7, 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 (Dec. 7, 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 the reason for the difference is unclear.
 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 1336 by incorporating them in the hourly rate for each Witt employee.
 RSMeans is a tool that provides cost estimation data.
 First Appeal Determination, at 16 (citing Second Appeal Analysis, California Department of Parks and Recreation, FEMA-1505-DR-CA, at 2 (Nov. 4, 2013)).
 FEMA First Appeal Analysis, Joplin Schools FEMA-1980-DR-MO, PW 575, at 18-20 (Mar. 2, 2017); FEMA First Appeal Analysis, Joplin Schools FEMA-1980-DR-MO, PW 1438, at 15-17 (Dec. 19, 2016).
 First Appeal Determination, at 27 (citing DAP 9580.4 “Emergency Work Contracting”).
 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).
 See, e.g., FEMA Second Appeal Analysis, St. Tammany Parish, FEMA-1603-DR-LA, at 6-7 (Aug. 1, 2017) (granting an increase where applicant established that certain additional code-driven work was related to approved work and could be tracked separately).
 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.
 Robert T. Stafford Disaster Relief and Emergency Assistance (Stafford) Act § 312(a), 42 U.S.C. § 5155(a) (2010).
 44 C.F.R. § 206.250(c) (2011).
 In the CEF spreadsheet, FEMA listed the total base costs for “Contents” as $61,229.00. FEMA also calculated administrative costs (CEF, Parts B-H) in the amount of $27,381.16, such as Quality Control fees, Preliminary Engineering fees, Overhead, Insurance and Bonds, Plan Review Fees, etc. and added them to the totals for “Contents.” These administrative costs were inappropriately included in the initial cost estimate for the project because content replacement does not involve construction and the expenditure of construction-related administrative costs. Therefore, the total reduction by $88,610.16 (CEF Part A-H total) was appropriate.