Force Account Labor and Equipment Costs

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster	4490
Applicant	Lutheran Senior Services
Appeal Type	Second
PA ID#	189-U0DG1-00
PW ID#	PW 259, 283
Date Signed	2022-04-25T16:00:00

Summary Paragraph

The coronavirus (COVID-19) pandemic resulted in a major disaster declaration for the State of Missouri.  The Applicant requested $1,634,264.51 for PW 259 and $2,488,453.05 for PW 283 in Public Assistance (PA) funding for force account labor (FAL), force account equipment (FAE), and materials costs incurred.  FEMA issued a Determination Memorandum for each PW and concluded that the straight-time FAL expenses to complete emergency work was ineligible for PA funding.  The Applicant appealed, disputing FEMA’s designation of its employees as budgeted/salaried employees and asserting that its hourly/part-time employees performing straight-time emergency work should have been eligible.  The Missouri State Emergency Management Agency (Grantee) transmitted the Applicant’s first appeals to FEMA for each PW and recommended denial.  The FEMA Region VII Acting Regional Administrator denied the Applicant’s straight-time FAL for emergency protective measures, finding the Applicant’s employees were budgeted.  The Applicant submitted second appeals for each PW, contesting FEMA’s definition and interpretation of the word “budgeted,” stating that, given the magnitude of COVID-19, the straight-time ought to be eligible.  The Grantee transmitted the Applicant’s second appeals to FEMA, recommending that both appeals be denied.

Authorities and Second Appeals

• Stafford Act § 403(a)(3).
• 44 C.F.R. §§ 206.223 (a); 206.225(a)(3); 206.228(a)(2)(iii).
• PAPPG, at 23-24.
• Town of Lyons, FEMA-4145-DR-CO, at 3.

Headnotes

• Except in limited circumstances, straight-time labor of a budgeted/permanent employee performing emergency work is ineligible for funding.

• The Applicant’s employees were budgeted and worked straight-time hours, which are ineligible for PA funding.

Conclusion

FEMA finds the Applicant’s straight-time is not eligible because the work was performed by the Applicant’s FAL.  Therefore, this appeal is denied.

 

Appeal Letter

Appeal Analysis

Background

The coronavirus (COVID-19) pandemic resulted in a major disaster declaration for the State of Missouri on March 26, 2020, with an incident period of January 20, 2020, and continuing.  As a result of the pandemic, Lutheran Senior Services (Applicant) requested Public Assistance (PA) for force account labor (FAL), force account equipment (FAE), and materials costs.  FEMA prepared Project Worksheet (PW) 259 to document the request for $1,634,264.61 incurred between August 1, 2020, and December 31, 2020, as well as PW 283 for $2,488,453.05 incurred between March 1, 2020, and August 31, 2020.  The Applicant included the following for both PWs: straight-time and overtime FAL to provide COVID-19 testing for employees and residents, and work and costs to provide screening and healthcare support, perform facility disinfection, and distribute personal protective equipment.  FEMA issued a Determination Memorandum (DM) in June 2021 for each PW concluding that the straight-time FAL expenses to complete emergency work were ineligible for PA funding.[1]

First Appeal

The Applicant submitted appeals for PW 259 and PW 283 and stated FEMA’s classification of all employees as budgeted/salaried employees was incorrect, and that its hourly/part-time staff performing straight-time emergency work should have been eligible for reimbursement.  The Applicant adjusted its claims to $452,104.00 for PW 259 and $562,280.00 for PW 283.  These revised amounts noted that both straight-time and part-time hourly employees conducted eligible tasks.  The Applicant asserted that a significant portion of its hourly and part-time employees would have been furloughed due to decreasing business for its rehabilitation services, but the Applicant repositioned them to meet new staffing requirements in other areas.  The Applicant stated that its labor policy supports strategies such as replacing vacant positions with existing employees and enabling its staff to perform multiples roles and shifts outside their core department in the same or different areas from their primary job title.[2]  The Applicant maintained that utilizing part-time/hourly staff was cost-effective and supported by FEMA policy.[3] 

In separate letters dated August 25, 2021, the Missouri State Emergency Management Agency (Grantee) transmitted the Applicant’s appeals to FEMA, recommending denial.  The Grantee stated that the Applicant did not provide documentation demonstrating that the straight-time FAL costs for the Applicant’s permanent budgeted employees met the PA program’s criteria for funding in either of the appeals.  On November 12, 2021, FEMA requested additional information for PW 259 to clarify whether the $5,956.00 was being claimed as straight-time FAL or contractor costs.  The Applicant provided additional information about the contract costs on appeal.

In separate letters dated November 17, 2021, the FEMA Region VII Acting Regional Administrator partially granted $5,956.00, because the Applicant established that the contract labor expenses were eligible.  FEMA denied the Applicant’s straight-time FAL, finding for both PWs that the Applicant’s employees were budgeted; therefore, the straight-time labor costs were found ineligible.  FEMA determined that the employees did not meet the criteria of unbudgeted or reassigned staff under FEMA policy since its labor expenses were not sourced externally.

Second Appeal

In separate letters dated January 14, 2022, the Applicant submitted second appeals for PWs 259 and 283.  The Applicant contests FEMA’s definition and interpretation of the word budgeted, stating that, given the magnitude and effect of COVID-19, both straight-time and overtime work ought to be eligible, because nothing related to the COVID-19 pandemic was budgeted.  The Applicant asserts that the staff assigned to perform the unbudgeted COVID-19 duties were employees reassigned from their normal job functions, not recruited or contracted labor.  The Applicant also states that its costs may be eligible under Section 403(d)(1)(A) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, as amended by the Sandy Recovery Improvement Act of 2013.  The Grantee transmitted the Applicant’s appeals in separate letters dated January 25, 2022, for PW 259, and January 26, 2022, for PW 283.  The Grantee recommends that both appeals be denied.  The Grantee disagrees with the Applicant’s interpretation of relevant terms and recognizes that FEMA’s use of the term budgeted refers to projected expenses of permanent, non-temporary, contracted personnel, rather than the effects of reassigned work tasks.

 

Discussion

FEMA may provide assistance for emergency protective measures that eliminate or lessen immediate threats to lives, public health, or safety.[4]  Except in limited circumstances, the straight-time of an applicant’s own labor forces, i.e., its budgeted employees, performing emergency work is ineligible.[5]  An applicant’s permanent employees or seasonal employees working during the normal season of employment are considered to be budgeted employees.[6]  For emergency work, only overtime labor is eligible for budgeted employees.[7]  

The Applicant provided FEMA with samples of payroll for straight-time labor and a timesheet validation summary confirming that all the employees who performed emergency work were either permanent or seasonal budgeted employees.  The documentation in this case shows that the Applicant’s force account employees performed the emergency protective measures, rather than any unbudgeted or temporary employees or contractors.  Furthermore, the Applicant did not provide documentation indicating that an external source funded its straight-time labor expenses.[8]  Consequently, the straight-time FAL costs are not eligible for PA funding.

 

Conclusion

The Applicant’s straight-time is not eligible because the work was performed by the Applicant’s FAL.  Therefore, this appeal is denied.

 

[1] FEMA issued a DM for PW 259 on June 2, 2021, and for PW 283 on June 22, 2021.  FEMA partially approved each PW and found the overtime, provisions of supplies and commodities, and COVID-19 testing for employees and residents eligible in the amount of $689,409.82 for PW 259 and $1,040,234.30 for PW 283.

[2] Letters from Lutheran Senior Services to State of Mo. Emergency Mgmt. Agency (SEMA), at 3-4 (Undated).  The first footnote to the FEMA First Appeal Analyses for PWs 259 and 283 stated that the Grantee received emails from the Applicant that included undated attached first appeal letters; the Grantee received an email on July 30, 2021 for PW 259 and on August 23, 2021 for PW 283.

[3] Id. (citing Public Assistance Program and Policy Guide, FP 104-009-2, at 24 (Apr. 2018) [hereinafter PAPPG]).

[4] Robert T. Stafford Disaster Relief and Emergency Assistance (Stafford) Act § 403(a)(3), Title 42, United States Code § 5170b(a)(3) (2018); Title 44 Code of Federal Regulations (44 C.F.R.) § 206.225(a)(1) (2019).   

[5] 44 C.F.R. § 206.228(a)(2)(iii) (stating costs associated with host state evacuation and sheltering may be eligible); PAPPG, at 24 (stating that if straight-time labor for budgeted employees is funded from an external source and the employee is reassigned to perform eligible emergency work that the external source does not fund, the labor costs may be eligible).

[6] PAPPG, at 24.

[7] 44 C.F.R. § 206.228(a)(2)(iii); PAPPG at 24.

[8] Even though the Applicant argues that FEMA’s authority is expanded due to the magnitude of COVID-19 and the Sandy Recovery Improvement Act of 2013 (SRIA), FEMA funding is limited to what is authorized under Agency regulations and policy (consistent with the Stafford Act).  See FEMA Second Appeal Analysis, Town of Lyons, FEMA-4145-DR-CO, at 3 (June 22, 2017) (denying funding because 44 C.F.R. § 206.228 expressly prohibits reimbursement of straight-time salaries and benefits of an applicant’s permanently employed personnel performing eligible emergency protective measures under the Stafford Act).