Scope of Work

Conclusion:  Pursuant to 44 C.F.R. § 206.223, the work items excluded in the original version of PW 5591 are eligible under the PA Program.  In addition, the Applicant provided sufficient documentation to substantiate $196,315.79 in additional PA funding.

Background

In May 2010, extensive flooding throughout Nashville and Davidson County caused damage to the Metropolitan Government of Nashville and Davidson County’s (Nashville-Davidson or Applicant) Dry Creek Wastewater Treatment Plant (Facility).  The Facility is the sole source of wastewater treatment for the northeast area of Nashville-Davidson County.  FEMA prepared PW 5591 to address damage to the Main Blower Building of the Facility.  FEMA obligated PW 5591 for $78,883.38 based on a Cost Estimating Format (CEF). 

First Appeal

In the first appeal letter, dated June 8, 2011, the Applicant asserted that FEMA made several errors concerning the scope of work and associated funding necessary to restore the Facility to its predisaster condition for PW 5591.  In that appeal the Applicant presented six distinct issues.  First, the Applicant disagreed with FEMA’s decision to reclassify the Direct Administrative Costs (DAC) as indirect costs, thereby reducing the eligible amount in PW 5591.  Second, the Applicant requested that FEMA revise PW 5591 to reflect the actual effort expended for on-site resident engineering tasks associated with the recovery of the Facility.  Third, the Applicant asserted that it should be reimbursed for removal, disposal, and replacement of contaminated pipe insulation because such action complied with FEMA policy and guidance regarding mold remediation.  Fourth, the Applicant asserted that FEMA should authorize the replacement of all metal doors at the Main Blower Building because the doors were inundated with contaminated waters.  Fifth, the Applicant asserted that pursuant to FEMA Publication 348, Protecting Building Utilities from Flood Damage (FEMA P-348), FEMA should authorize the complete replacement of all electrical wires and cables because the Facility was submerged in nine feet of contaminated floodwaters and the electrical equipment was not salvageable.[1]  Finally, the Applicant asserted that a Technical Memorandum, prepared by Brown and Caldwell Engineers (Consulting Engineers), identified several areas where damaged items were missed and should have been included in PW 5591.[2]    

In a letter dated November 25, 2013, the Region IV Regional Administrator (RA) partially granted the appeal, approving $64,218.72 for the second, third, and fourth issues presented by the Applicant (i.e., resident engineering costs, pipe insulation, replacement of metal doors, and associated construction management costs).  However, the RA determined that Nashville-Davidson had not provided sufficient information to substantiate additional direct administrative costs, complete replacement of all electrical wires and cables, or the costs for other items that were excluded from the PW (first, fifth, and sixth issues, respectively). With specific regard to issues five and six, the RA determined that the format in which the Applicant documented costs made no distinction between existing line item costs included in PW 5591 (i.e., the FEMA generated CEF) and the appealed scope addition or cost increases.

Second Appeal

In the second appeal, dated February 12, 2014, the Applicant requests reimbursement for issues five and six (i.e., excluded work described above), in the amount of $196,315.79.  The second appeal includes $141,346.85 for lighting and receptacle replacement and $54,968.94 for the actual costs of a HVAC system and other miscellaneous electrical and mechanical equipment—all of which the applicant claims were excluded in the original PW.  The Applicant raises no issue with regard to the Direct Administrative Costs.

The Applicant also asserts that it used and submitted to FEMA bid documents to establish the cost to restore the Facility to predisaster condition; whereas, as mentioned earlier, FEMA used a CEF.  In the Applicant’s second appeal, it challenges FEMA’s cost methodology, stating the CEF is not reflective of the work completed or scheduled to be completed because it does not include the Contractor’s general requirements.  In addition, the Applicant asserts that the costs identified in the CEF were lower than the actual costs.  The Applicant further argues that it is not realistic to compare actual costs to each CEF line item and cites the FEMA Public Assistance Guide as evidence that actual cost of eligible repairs is the preferred methodology in determining costs for large projects.

Discussion

Work Eligibility

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), Section 406, authorizes FEMA to make contributions to a local government to restore eligible facilities on the basis of the design of such facilities as they existed immediately prior to the disaster.[3]  Pursuant to Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.223(a), which implements that provision, an eligible item of work must be required as the result of the disaster event, be located within a designated disaster area, and be the legal responsibility of the applicant.[4] The Applicant has fulfilled the latter two requirements of § 206.223(a); the issue on appeal is whether the work is required as a result of the disaster event.

As stated earlier, in the first appeal determination, the RA noted that the items excluded from the scope of work may be eligible for Public Assistance (PA) funding.  However, the RA could neither determine whether all items were damaged by the disaster nor distinguish between line item costs already included in PW 5591 and additional scope or cost increases not previously included in PW 5591.

It must be noted that, among other things, the Applicant’s Consulting Engineers conducted a detailed flood damage assessment of the Facility.[5]  The assessment included high water mark locations and an inventory of equipment that was reviewed by a licensed Professional Engineer.[6]  The inventory list is a detailed record that accounts for all of the Facility’s electrical equipment and distinguishes between disaster-damaged and non-damaged equipment.[7]  The inventory list was the basis for the scope of work in bid documents.[8]  In addition to the water mark locations and inventory list, the assessment asserts that the floodwater was contaminated and, therefore, likely had harmful impacts on electrical components.[9]  The Consulting Engineers substantiate this claim by providing laboratory reports that indicated the presence of contaminating factors, including pH and corrosivity levels above the Environmental Protection Agency’s recommended levels.[10]

Generally, FEMA policy and guidance states that wet electrical components must be replaced.[11]  Specifically, FEMA P-348 recommends replacing any wire or cable that is listed for dry locations that has been submerged in water[12] and notes that “sediments and contaminants contained in water may find their way into the internal components of installed electrical products and may remain there even after the products have been dried or washed….”[13]  Furthermore, it explains that “[i]nundation of electrical equipment in a building creates the danger of short circuits, electrical shock, damage of electric components and appliances, injury, fire, or even death.”[14]  Accordingly, FEMA P-348 recommends replacing damaged electrical components with new undamaged products because the damaged components are not suitable for continued use.[15]

FEMA 543, Design Guide for Improving Critical Facility Safety from Flooding and High Winds (FEMA 543), further explains that, in general, if electrical components get wet, they are likely to be damaged or destroyed.[16]  It provides that “electrical systems and components, and electrical controls of heating, ventilation, and air conditioning systems, are subject to damage simply by getting wet, even for short durations.”[17]  Additionally, unless specifically designed for wet locations, switches and other electrical components can short out due to deposits of sediment, or otherwise not function even when allowed to dry before operation.[18]  FEMA 543 also notes that wiring and components that have been submerged may be functional, although generally it is more cost-effective to discard flooded outlets, switches, and other less expensive components than to attempt thorough cleaning.[19]

In addition to FEMA 543, FEMA Publication 936, Floodproofing Non-Residential Buildings (FEMA P-936), describes conditions under which wiring and cables should be considered damaged.[20]  Specifically, FEMA P-936 explains that cable systems cannot be cleaned if floodwaters have entered the exterior sheaths of the cables.[21]  However, conduits inundated with flooding may be cleaned, provided the floodwaters are not corrosive or otherwise damaging and the conduits are routed and installed to prevent water from accumulating inside them.[22]  Furthermore, after flooding it should be assumed that conductors are damaged unless it can be proven otherwise.[23]

Based upon the Applicant’s supporting documents, and FEMA policy and guidance, FEMA has determined that contaminated floodwater inundated the Facility and, therefore, likely had detrimental impacts on its electrical components.[24]  As such, the items excluded from the original scope of work in PW 5591 are eligible for Public Assistance funding.

Allowable Costs

Pursuant to the Stafford Act § 406, FEMA is authorized to provide reimbursement for the associated expenses incurred by a local government during the repair, restoration reconstruction, or replacement of a facility damaged as the result of a declared disaster.[25]  Generally, costs that can be directly tied to the performance of eligible work are eligible for FEMA reimbursement.[26]  However, these costs must, among other things, be reasonable and necessary to accomplish the work, comply with applicable federal, state, and local laws, regulations and procurement requirements, and be adequately documented.[27]  Adequate documentation in this instance would include documents that validate actual costs for work items claimed in this appeal.