Debris Removal – Mud, Silt, and Sediment – Contract Procurement – Reasonable Cost

Appeal Brief

Summary Paragraph

From August 26, 2012 to September 10, 2012, Hurricane Isaac deposited silt and sediment in St. John the Baptist’s (Applicant) storm drains, culvert piping, catch basins, and manholes (collectively, drainage system).  The Applicant requested Public Assistance (PA) to facilitate the cleaning of the impacted drainage system and the Federal Emergency Management Agency (FEMA) prepared Project Worksheet (PW) 1331 to document the work.  The Applicant contracted with Royal Engineers & Consultants, LLC (Royal) for project management services and Compliance Envirosystems, LLC (CES) to remove debris from the drainage system.  At the project’s conclusion, Royal, the project management firm, invoiced the Applicant $234,512.50 for debris inspection services.  FEMA wrote PW 1331(Version 1) rejecting the debris inspection costs that the Applicant put forward, but obligated $127,750.00 for 2920 hours of debris monitoring, which, although not properly procured, was eligible work.  Of note, Version 1 assigned the debris monitoring work a reasonable cost of $43.75/hr.  On first appeal, the Applicant requested reclassification or the debris monitoring to debris inspection and obligation of $234,512.50 for the debris inspection work.  The Applicant also asserted Royal’s contract complied with federal procurement standards.  The Regional Administrator’s (RA) first appeal decision: (1) rejected assertions that Royal’s work was more than debris monitoring; (2) found Royal’s “additional duties” included un-reimbursable “damage assessments;” (3) concluded Royal’s debris monitoring services were improperly procured; (4) surmised $43.75/hr. was a reasonable cost for debris monitoring; and (5) increased the eligible reimbursable hours by 24.5 hours.  Thus, the RA increased funding for debris monitoring by $1,072.00 for a total of $128,822.00.  The RA: (1) properly classified Royal’s debris work as basic debris monitoring; (2) correctly concluded the Applicant failed to comply with standard procurement processes regarding Royal’s debris monitoring services; and (3) accurately determined the reasonable rate for basic debris monitoring was $43.75/hr.  The RA made a slight calculation error in the number of reimbursable hours.  The number of eligible debris monitoring hours is 2,979.  The total eligible hours multiplied by the reasonable rate equals: $130,331.25.  Therefore, an additional $1,509.25 is eligible. 

Authorities and Second Appeals

• Stafford Act §§ 403(a), 324.

• 44 C.F.R. §§ 13.36(c), 13.43, 206.221(c), 206.223, 206.224(a)(1)-(3), 207.
• 48 C.F.R. § 2.101
• Public Assistance Guide, FEMA 322 (June 2007).
• Debris Management Guide, FEMA 325 (July 2007)

Headnotes

• Per 44 C.F.R. § 13.36(b)-(i), applicants seeking reimbursement under the Public Assistance Program must comply with Federal procurement requirements.
  • Applicant did not comply with Federal procurement requirements with regard to contracting debris monitoring services.
• According to the PA Guide, at 41, FEMA may determine a cost to be reasonable based on: historic documentation for similar work, average costs for similar work in the area, published unit costs from national cost estimating databases, and FEMA cost codes.
  • Applicant conceded the Regional Administrator was correct to calculate reasonable cost by assessing costs incurred for eight similarly situated parishes.

Appeal Letter

Appeal Analysis

Background

From August 26, 2012 to September 10, 2012, Hurricane Isaac deposited silt and sediment in St. John the Baptist’s (Applicant) storm drains, culvert piping, catch basins, and manholes (collectively, drainage system).  The Applicant requested Public Assistance (PA) to facilitate the cleaning of the impacted drainage system and the Federal Emergency Management Agency (FEMA) prepared Project Worksheet (PW) 1331 to document the work.  Additionally, PW 1331 included $50,000 for video surveys to locate blockages in the drainage system.[1]  From December 21, 2012 to February 1, 2013, Compliance Envirosystems, LLC (CES) carried out closed circuit television (CCTV) inspections to locate blockages.[2]  

On April 1, 2013, the Applicant contracted with Royal Engineers & Consultants, LLC (Royal) for project management services.[3]  Royal assisted the Applicant in procuring a debris removal contractor.[4]  After publicly soliciting bids, the Applicant contracted with CES to remove debris from the drainage system.[5]  CES cleaned from September 11, 2013 to July 14, 2014.[6]  During the cleaning operation, Royal, the project management firm, invoiced the Applicant $234,512.50 for purported debris inspection services.[7] 

On August 7, 2014, FEMA revised PW 1331.  The revised PW (Version 1) included mobilization and bypass pumping and the capture of actual costs up to project completion on July 14, 2014.[8]  Version 1 denied $234,512.50 the Applicant sought for Royal’s debris monitoring work.  FEMA concluded the debris monitoring work, although not a component of Royal’s project management contract, was eligible work and reimbursed 2,920 hours at the reasonable rate of $43.75/hr. for a total of $127,750.00.[9]

The Applicant communicated to Royal, FEMA’s concerns with the invoices, and on September 10, 2014, Royal responded with “an explanation of fees accrued as a result of the monitoring effort . . .”[10]  The communication was meant to address “FEMA[’s] . . . questions regarding the . . . monitoring fees for PW 1331.”[11]  Royal stated its employees were on site to perform damage assessments, estimate debris levels, manage CES, ensure debris and sediment were being properly handled by CES, document all damage removal, and document the quality of the service.[12]  Royal asserted that its employees observed and recorded daily activity, verified line lengths, evaluated lines to be cleaned, evaluated structural integrity of project elements, and made field measurements.[13] 

On April 13, 2015, FEMA obligated Version 1.[14]  This version implemented a number of funding reductions.

First Appeal

On May 19, 2015, the Applicant appealed the reduction of the reimbursement for Royal’s work.  The Applicant asserted that: (1) Royal’s field responsibilities exceeded those of debris monitors; (2) the skill and experience of Royal’s staff allowed for the cessation of CCTV inspections resulting in project cost savings totaling $1,184,875.58; and (3) $43.75/hr. is a reasonable rate for debris monitoring.[15] 

Royal wrote a second letter to the Applicant on July 7, 2015, and provided the letter to FEMA as an exhibit to the Grantee’s transmittal letter.[16]  In the letter, Royal asserted its “inspectors evaluated and inspected pipe or structure size, made field judgments on the required cleaning efforts, logged debris/sediment removed from individual line segments, and quantified the linear footage of pipe cleaned, and how many passes of cleaning [was] required.”[17]  Royal asserted that their employees “performed roles as both technical inspectors and ‘debris monitors.’”[18]  However, Royal did not separately itemize hours spent inspecting from monitoring.[19]  Royal concluded its letter by asserting that the total cost of the inspecting and debris monitoring was $234,512.50.[20]

On July 17, 2015, the State of Louisiana, Governor’s Office of Homeland Security and Emergency Preparedness (Grantee) transmitted the Applicant’s first appeal to FEMA.  The Grantee reiterated that Royal had provided “several levels of monitoring service.” [21]  The Grantee also asserted the cessation of the pre and post cleaning CCTV inspections was a direct result of Royal’s specially training personnel whose skills were “substantially beyond . . . normal debris monitoring skills.”[22]    

The FEMA Region VI Recovery Division Director issued a Request for Information (RFI) on October 5, 2015.[23]  On December 23, 2015, the Grantee provided its reply.[24]    

On March 7, 2016, the Regional Administrator (RA) issued his first appeal decision.  The RA’s decision: (1) rejected assertions that Royal’s work was more than debris monitoring; (2) found Royal’s “additional duties” included un-reimbursable “damage assessments;”[25] (3) concluded Royal’s debris monitoring services were improperly procured; (4) assessed $43.75/hr. as a reasonable cost for debris monitoring; and (5) increased the eligible reimbursable hours by 24.5 hours.[26]  Thus, the RA increased funding for debris monitoring by $1,072.00 for a total of $128,822.00.[27] 

Second Appeal

On April 27, 2016, the Applicant submitted its second appeal.[28]  The Applicant’s second appeal: (1) contends Royal provided debris inspectors not debris monitors; (2) argues Royal’s debris inspecting services were procured in compliance with all federal procurement requirements; (3) agrees that $43.75/hr. is a reasonable rate for debris monitoring but that Royal’s employees were inspectors who should be paid at a higher rate; and (4) challenges the RA’s calculation of hour eligible for reimbursement.[29] 

The Grantee’s transmittal letter, dated June 28, 2016, framed the controversy on appeal as an issue of reasonable cost for Royal’s services.[30]  Grantee asserted that the nature of Royal’s work was debris inspecting not debris monitoring, and thus, Royal’s entire invoice must be reimbursed.[31] 

Discussion

Nature of Royal’s Debris Work

The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) authorizes FEMA to provide Assistance to meet immediate threats to life and property resulting from a major disaster.[32]  Title 44 Code of Federal Regulations (44 C.F.R.) authorizes the RA to provide assistance for the removal of debris in order to eliminate immediate threats to life, public health, safety, significant damage to improved public or private property, and to ensure economic recovery of the affected communities.[33]  Debris monitoring is defined by the Debris Management Guide, FEMA 325 (July 2007) as “[a]ctions taken by applicants in order to document eligible quantities and reasonable expenses during debris activities to ensure that the work complies with the contract scope-of-work and/or is eligible for [PA] grant reimbursement.”[34]  Debris monitors should be able to estimate debris quantities, differentiate between debris types, properly fill out load tickets, and follow all site safety procedures.[35]  The primary role for debris monitors is to verify that work completed by the contractor is within the scope of work, and to provide the required documentation for PA grant reimbursement.  Included in a debris monitor’s duties is documenting the location and amount of debris collected.  The Debris Management Guide notes debris monitors should have experience working on construction sites and be familiar with safety regulations; however, it is not necessary to have professional engineers and other certified professionals perform these duties.[36] 

The Applicant contracted with Royal for project management services.[37]  The contract specifies Royal’s project management duties as well as additional services, which were administrative in nature.[38]  The contract does not, however, substantiate Royal’s role as either a debris monitor or debris inspector. [39]  Consequently, a review of Royal’s Daily Time & Activity Reports (daily logs) is necessary to assess the nature of Royal’s work.

The daily logs Royal submitted in response to FEMA Region VI’s RFI illustrate that Royal’s “debris inspectors” simply documented each day’s activities with brief narratives of: (1) CES’ various equipment troubles; (2) days that CES did not work a full day; (3) hours CES worked; (4) differing percentages of blockage in each pipe; and (5) daily distance measurements of pipes cleaned.[40]  Additionally, Royal’s employees took photographs to document the dumping of debris from the vacuum truck and each drain, culvert, catch basin, and manhole CES cleaned.  These daily logs also contained statements such as the: “crew inspected,” “crew able to verify drain line cleaned” and “contractor [CES] measure[d],”[41] which support a conclusion that Royal only monitored and recorded CES’ work.  These monitoring and recording activities are standard duties outlined in the Debris Management Guide as ordinary debris monitoring functions.  Royal’s daily logs and photographs provide no evidence that its employees performed inspections, nor do the daily logs and photographs reveal any additional duties beyond that of ordinary debris monitoring.   

In addition, Royal’s assertions in its September 10, 2014 and July 7, 2015 letters that inspectors were needed to evaluate and inspect the drainage system to ascertain size, length, and blockage percent are contradicted by CES’s inspection report.[42]  As stated above, between December 21, 2012 and February 1, 2013, CES inspected the Applicant’s drainage system. [43]  CES’ inspection yielded a 166 page report outlining debris affected areas, length, shape, height, and width of each drainage system.[44]  Thus, there was no need for inspectors to evaluate or ascertain the dimensions of the drainage system and extent of blockage as that work was already completed by CES. 

Moreover, Royal, in its own correspondence dated September 10, 2014, referred to its work as “monitoring” and “monitoring effort”[45] and its submitted spreadsheets identified the hours as “PW 1331 Monitoring.”[46]  The record lacks any evidence that Royal’s employees executed additional duties or inspections; thus, Royal’s work was ordinary debris monitoring.[47] 

Contrary to the Applicant and Grantee’s assertions, the cessation of the CCTV inspections was not in some way an implicit finding by FEMA that Royal’s personnel had skills substantively beyond normal debris monitors.  Rather, the reason for the cessation of the CCTV inspection is attributable to the completion of a $50,000.00 drainage system executed by CES between December 21, 2012 and February 1, 2013.00.[48]  FEMA finds the termination of the CCTV and Sonar inspections was a consequence of the prior inspection work completed by CES, not Royal employee qualifications. 

In sum, the debris removal work undertaken by the Applicant is the type of routine silt and sediment removal work contemplated under both the Public Assistance Guide (PA Guide) and Debris Management Guide, and Royal’s employees functioned as debris monitors.[49]  Assertions that Royal’s employees acted as debris inspectors, performing tasks above and beyond those of basic debris monitors, are unsupported by the administrative record.  Accordingly, the RA properly considered Royal’s debris work to be basic debris monitoring. 

Contract Procurement

Applicants seeking reimbursement under the PA program must comply with Federal procurement requirements.[50]  Those standards require local governments to, among other things, conduct all procurement transactions in a manner providing for full and open competition consistent with the standards at 44 C.F.R. § 13.36.[51]  Full and open competition, generally means that a complete requirement is publicly solicited and all responsible sources are permitted to compete.[52]  Notably, when an applicant does not comply with procurement standards, FEMA has discretion to employ a range of enforcement options including the authority to de-obligate all funding.[53]  In instances where the work performed is otherwise eligible, the agency may award reasonable costs.[54]

In pertinent part, the Applicant’s project management contract with Royal states “[t]he consultant [Royal] will assist St. John the Baptist Parish with . . . [p]roject management, assistance in reimbursement and implementation of technical assistance in . . .  [d]ebris [r]emoval . . .” [55]  Additionally, Royal’s Overall Project Budget & Compensation, Pricing Schedule, states that the “[o]verall budget assumes performing [project management] and [direct administrative cost] task[s] on Hurricane Issac.”[56]  It is evident from the contract language that debris monitoring was not contemplated by the parties because it is not mentioned.  The RA therefore correctly found that the basic debris monitoring services did not undergo full and open competition.[57]  Consequently, the RA had the authority to de-obligate all funding or, as here, award reasonable costs.[58] 

Assessment of Reasonable Costs

The PA Guide describes the following ways FEMA may determine a cost to be reasonable: historic documentation for similar work, average costs for similar work in the area, published unit costs from national cost estimating databases, and FEMA cost codes.[59]  Because Royal did not perform any debris inspection work, the issue of reimbursing inspection work at a higher rate is moot.  With regard to the basic debris monitoring rate of $43.75/hr, the Applicant has agreed it is reasonable.[60]  Moreover, the RA correctly established this reasonable rate by considering eight similarly situated parishes.[61]

Reimbursable Hours

Surveys and damage assessment activities are covered by an applicant’s management costs.[62]  As such, the surveys are not eligible work under this PW.[63]  On first appeal, after reviewing Royal’s spreadsheets, the RA found Royal invoiced a total of 3,054 hours.[64]  On second appeal the Applicant asserts Royal billed 3091.5 hours.[65] 

The spreadsheets related to the work, reflect only 3080.5 total billed hours.[66]  From the 3080.5 total billed hours, the RA identified a number of hours associated with ineligible work.  Specifically, the RA concluded that 25 hours billed between September 9, 2013 and September 10, 2013 were ineligible because they were survey and assessment work.[67]  However, in addressing the matter, the RA made a mathematical error.  The correct number of ineligible hours billed between September 9, 2013 and September 10, 2013 is not 25 hours, but rather 17 hours.[68]  

Additionally although the debris removal project concluded on July 14, 2014, the Applicant sought reimbursement for 84.5 hours billed for work in December 2014.[69]  The RA correctly found those hours ineligible because they were billed 5 months after the debris removal project was completed.[70] 

As such, as reflected in the table below, the correct total number of ineligible hours is 101.5.  After subtracting the 101.5 ineligible hours from the 3080.5 total billed hours, the total reimbursement eligible hours is 2,979, which equates to $130,331.25.  The Applicant previously received a total of $128,822.00.  Therefore, an additional $1,509.25 remains to be reimbursed.[71]  

Table

Conclusion

The RA: (1) properly classified Royal’s debris work as basic debris monitoring; (2) correctly concluded the Applicant failed to comply with standard procurement processes regarding Royal’s debris monitoring services; and (3) accurately determined the reasonable rate for basic debris monitoring was $43.75/hr.  The RA made a calculation error assessing the number of reimbursable hours.  As such, $1,509.25 in eligible costs remain to be reimbursed to the Applicant.