Project Management and Design Services

Appeal Brief

Appeal Letter

Appeal Analysis

Background

From September 1 through 3, 2021, the remnants of Hurricane Ida impacted areas throughout New Jersey.[1] Flooding from the disaster damaged a police station (Facility) located in the lower level of a municipal building owned by the Borough of Jamesburg (Applicant). The Applicant requested Public Assistance (PA) funding to replace destroyed contents, make repairs, and implement hazard mitigation (HM) measures at the Facility, with total costs of $355,621.00.[2] FEMA created Grants Manager Project 548926 to document the Applicant’s claim as category E (buildings and equipment) work.

The Applicant hired Clarke Caton Hintz (CCH), an architectural firm, to prepare project design plans for the Facility. CCH submitted fee proposals for its services, including renovations to the Facility and construction of a one-story, 3,826 square foot addition to the municipal building.[3] CCH estimated costs of $336,500.00 for the project design services.

On March 23, 2023, FEMA conducted a “tabletop” site inspection of the Facility using information and photographs provided by the Applicant to complete the damage description and dimensions (DDD) section of the site inspection report.[4] The DDD included damage to interior features, including drywall, base molding, and chair rail; and damaged or destroyed contents, including conference tables, desks, chairs, filing cabinets, bookshelves, appliances, and a gun locker. On June 8, 2023, the Applicant approved the DDD in Grants Portal/Grants Manager (GM).[5]

In a Determination Memorandum (DM) uploaded to GM on August 2, 2023, FEMA found that the work proposed by CCH included “design renovations and upgrades,” which “deviate[d] from the disaster-related damage originally captured for the Facility.”[6] Thus, FEMA determined that the work was not necessary as a result of the disaster, and denied $336,500.00 for CCH’s project design services.[7]

First Appeal

The Applicant submitted a first appeal dated September 11, 2023. The Applicant revised the amount in dispute, requesting $34,100.00 in costs paid to date to CCH. It described the history of the project development process, asserting that it engaged CCH and incurred the costs at issue following a verbal conversation with FEMA’s representatives. The Applicant stated that FEMA subsequently opined that the work recommended by CCH would not be found eligible, at which point it “immediately ceased any FEMA approved work with [CCH].”[8] It asserted that FEMA’s representatives did not have the discretion under federal law, regulation, or policy to direct the expenditure of public funding or “to verify [the] eligibility of a project before the project has been through the various management reviews.”[9] Moreover, it asserted that “FEMA’s insistence and directive to perform new construction [was] unreasonable,” and thus the construction proposed by CCH was unnecessary; however, FEMA had prevented it from exploring more reasonable cost options such as “reconfiguring internal items and the code compliance sally port.”[10] Therefore, the Applicant argued that because FEMA’s representatives acted outside of their authorized discretion, “FEMA [wa]s liable for all costs associated with the [CCH] work.”[11]

The Applicant also stated that the Facility’s holding cells required upgrades in order to comply with current codes and standards. It attached copies of the New Jersey specifications for holding cell construction, which it asserted met the criteria for eligible codes and standards under federal regulation.[12] The Applicant stated that it understood it would be responsible for any ineligible Facility upgrades. Finally, the Applicant noted that the disaster caused damage to the Facility, which was not disputed. Therefore, it asserted that work to reconstruct the holding cells was required as a result of the disaster. In a transmittal letter dated September 22, 2023, the New Jersey Division of State Police (Recipient) expressed support for the appeal. The Recipient stated that FEMA denied costs to reconstruct the Facility, and that the Applicant was requesting reasonable costs for “internally moving the holding cells, creation of the code required sally port and any [Americans with Disabilities Act (ADA)] compliance issues.”[13]

On June 6, 2024, the FEMA Region 2 Regional Administrator denied the appeal. FEMA found that the New Jersey Department of Corrections and Juvenile Justice Commission specifications for holding cell construction did not apply to the requested repairs, as the former applied “only to new facility construction and renovation, not repairs,” and the latter code did not contain specifications requiring the reconstruction of holding cells.[14] Additionally, FEMA stated that the Applicant had not identified any provision of the ADA that required holding cell upgrades. Further, FEMA noted that, for construction design services to be eligible, “the required facility alterations must have a reasonable and technically supportable relationship to the damaged elements of the facility.”[15] However, FEMA determined that no such relationship existed between the upgrades the Applicant requested and the disaster related damage to the Facility. Therefore, FEMA found that the upgrades were ineligible and, consequently, the costs for CCH’s services were also ineligible. Finally, FEMA stated that “it is not bound by statements of rank-and-file employees prior to management review regarding the eligibility of the claimed work.”[16]

Second Appeal

The Applicant submitted a second appeal dated July 31, 2024, requesting FEMA approve $34,100.00 for the CCH project design services. The Applicant does not dispute FEMA’s denial of costs for upgrades to the Facility. However, it again argues that it sought CCH’s services at the direction of FEMA’s representatives and asserts that FEMA’s position in the first appeal decision regarding the “statements of rank-and-file employees … is against FEMA’s own policy.”[17] It quotes the Public Assistance Program and Policy Guide (PAPPG), which states that “PA staff at the [Joint Field Office] are responsible for providing customer service to each Applicant, conducting site inspections, obtaining project information and documentation, determining eligibility, and awarding projects.”[18] Thus, the Applicant asserts that FEMA policy “demonstrates that the PA staff is responsible for determining eligibility, not management,” and the Applicant “should be reimbursed as per FEMA guidelines.”[19] In a transmittal letter dated August 12, 2024, the Recipient expresses support for the appeal.

Discussion

FEMA may provide funding to a local government for the repair of public facilities damaged by a major disaster based on the predisaster design and function of the facilities and in conformity with applicable codes and standards.[20] To be eligible for PA funding, work must be required as a result of the disaster.[21] FEMA may provide PA funding for costs related to project management and design activities as part of the project.[22] Architectural, engineering, and design services for the approved scope of work, including HM, are eligible provided the services are reasonable.[23] When evaluating the eligibility of project management and design services, FEMA considers whether the project includes improvements that are ineligible for funding.[24] Costs for project management and design services associated with improvements or other ineligible work are not eligible.[25] No approval given by field personnel outside of the obligation process can be considered legally binding.[26]

Here, the Applicant requests reimbursement for a partial payment for CCH’s services in designing the Facility improvement project. However, on second appeal, the Applicant acknowledges that “the proposed improvements to the [Facility] are ineligible expenses.”[27] As stated above, FEMA’s policy explicitly states that costs for project management and design services associated with improvements and other ineligible work are not eligible.[28] Therefore, regardless of the Applicant’s contention that it obtained CCH’s services at the direction of FEMA’s field personnel (without FEMA approving any costs for architectural, engineering, or design services through the obligation process), because the project design costs at issue are associated with ineligible improvements, the costs are ineligible.

Conclusion

The costs for the project design services at issue are associated with ineligible improvements. Consequently, the design services costs are ineligible. Therefore, this appeal is denied.