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Financial Accounting & Reconciliation

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster4399
ApplicantSchool Board of Bay County
Appeal TypeSecond
PA ID#005-U5PCR-00
PW ID#GMP 103398/PW 2056
Date Signed2022-12-21T17:00:00

Summary Paragraph

From October 7–19, 2018, Hurricane Michael impacted the Florida Panhandle.  The School Board of Bay County (Applicant) requested $8,465,975.38 in Public Assistance (PA) to repair damage to various components of multiple buildings at its Bay High School (Facility).  FEMA requested additional information, seeking documentation to identify and substantiate costs claimed.  The Applicant responded, but did not provide documentation to substantiate and validate actual expenses for eligible completed work repairs.  FEMA formulated an estimate of $6,090,219.00 for the requested repairs.  On March 18, 2021, FEMA issued a Determination Memorandum, partially approving $6,090,219.00, but denying $2,375,757.00 of the Applicant’s requested $8,465,975.00, finding that the Applicant did not provide adequate documentation to validate all of the completed work.  FEMA subsequently reduced the eligible costs by $6,090,219.00 due to insurance proceeds.  The Applicant appealed in a May 16, 2021 letter.  The FEMA Region IV Regional Administrator denied the Applicant’s first appeal, finding that the Applicant did not provide documentation necessary to validate the costs requested for reimbursement.  The Applicant submits a second appeal now requesting $2,405,109.31 in increased claimed actual costs.

Authorities and Second Appeals

  • Stafford Act § 406(a)(1)(A).
  • 2 C.F.R. § 200.403(g).
  • 44 C.F.R. §§ 206.203(c)(1); 206.205(b).
  • PAPPG, at 21-22, 133, 138, and 144.

Headnotes

  • FEMA may provide PA funding to a local government for the repair of a public facility damaged by a major disaster.  For costs to be eligible, FEMA requires, among other requirements, that costs must be adequately documented. 
    • The Applicant is advised that, currently, it has not provided adequate documentation to substantiate its claimed actual contract costs as it has not yet completed the scope of work (SOW) associated with the claimed costs.
  • Upon completion of a large project obligated based on an estimate, FEMA reviews the documentation to support the actual eligible costs and, if necessary, obligates additional funds or reduces funding.
    • At such a time that the work to repair the Facility has been completed, FEMA will review the documentation provided for the completed work and, if necessary, obligate additional funds or reduce funding based on actual costs to complete the eligible SOW.

Conclusion

The Applicant has not provided documentation necessary to support the costs requested as it has not yet completed the SOW associated with the claimed costs.  Therefore, the appeal is denied.  However, once the Applicant has completed the SOW and provided a final cost accounting, FEMA will review the Applicant’s documentation and award actual costs of the completed, eligible SOW.

 

Appeal Letter

Mr. Kevin Guthrie                 

Director

Florida Division of Emergency Management

2555 Shumard Oak Blvd.

Tallahassee, FL 32399           

 

Re:  Second Appeal – School Board of Bay County, PA ID: 005-U5PCR-00, FEMA-4399-DR-FL, Grants Manager Project 103398/Project Worksheet 2056, Financial Accounting & Reconciliation

 

Dear Mr. Guthrie:

This is in response a letter from your office dated July 22, 2022, which transmitted the referenced second appeal on behalf of the School Board of Bay County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of funding in the amount of $2,375,757.00 for repairs to its Bay High School buildings.

As explained in the enclosed analysis, I have determined the Applicant has not provided documentation necessary to support the costs requested as it has not yet completed the scope of work (SOW) associated with the claimed costs.  Therefore, the appeal is denied.  However, once the Applicant has completed the SOW and provided a final cost accounting, FEMA will review the Applicant’s documentation and award actual costs of the completed, eligible SOW.  By copy of this letter, I am requesting the Regional Administrator to take appropriate action to implement this determination.

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.

 

                                                                   Sincerely,

                                                                      /S/

                                                                    Ana Montero

                                                                   Division Director

                                                                   Public Assistance Division

 

Enclosure

cc:  Gracia B. Szczech

Regional Administrator

FEMA Region IV

Appeal Analysis

Background

From October 7–19, 2018, Hurricane Michael impacted the Florida Panhandle.  The School Board of Bay County (Applicant) requested Public Assistance (PA) to repair damage to various components of multiple buildings at its Bay High School (Facility), including roofs, ceilings, flooring, walls, restrooms, lighting, smart boards, receptacles, and fire alarm systems.  The Applicant provided project cost documentation, including contractor pay applications and a cost summary for $8,465,975.38.  FEMA issued a Request for Information on December 1, 2020, seeking documentation to identify and substantiate damages and costs claimed.  The Applicant responded with photographs, a roof damage assessment, and a spreadsheet listing damages.  FEMA formulated a cost estimate (referred to as a Cost Estimating Format (CEF)) to include work completed ($1,555,644.00) and uncompleted ($4,534,575.00), for a total estimate of $6,090,219.00.  On March 18, 2021, FEMA issued a Determination Memorandum (DM), partially approving $6,090,219.00, but denied the remaining $2,375,757.00 of the Applicant’s requested costs, finding that the Applicant did not provide adequate documentation to validate all of the completed work.  On March 19, 2021, FEMA uploaded an Agency-produced Insurance Narrative Sheet that noted an insurance reduction of $6,090,218.00 based on a review of the Applicant’s applicable insurance policies.  FEMA subsequently obligated zero dollars for the project.[1]

First Appeal  

The Applicant submitted a first appeal in a letter dated May 16, 2021.[2]  The Applicant provided a timeline of events and actions it took to support roof-related work in the immediate aftermath of the disaster.  On July 16, 2021, the Florida Division of Emergency Management (Recipient) transmitted the Applicant’s first appeal, recommending approval.

FEMA Region IV’s Regional Administrator denied the appeal on March 28, 2022, finding that the Applicant did not provide documentation necessary to validate the costs requested for reimbursement.  FEMA explained that although the Applicant asserted that work to replace the Facility’s roofs was eligible, that was not the issue identified as the reason for denial.  FEMA denied $2,375,757.00 for completed work because the Applicant had not provided adequate documentation to support the reimbursement of actual costs, such as invoices or proof of payment, as required under federal regulations and FEMA policy.

Second Appeal

The Applicant submits a second appeal dated May 24, 2022, requesting $2,405,109.31,[3] asserting it is eligible for costs now totaling $8,495,328.31, less the $6,090,219.00 previously determined eligible.  It states its costs are supported by contractor pay applications for the eligible work.  The Applicant claims that its attached pay application shows contract costs that total $8,495,328.31, with at least $6,932,264.59 of eligible work completed to date.[4]  It further notes that it expects this project will be completed within the next couple of months at which point the Applicant will be able to provide a final accounting of costs incurred for the eligible work at each facility.[5]  In a letter dated July 22, 2022, the Recipient transmitted the Applicant’s second appeal with its support.  

 

Discussion

FEMA may provide PA funding to a local government for the repair of a public facility damaged by a major disaster.[6]  For costs to be eligible, they must be adequately documented.[7]  For large projects, in which the work isn’t yet completed, FEMA makes an initial obligation based on estimated costs.[8]  While FEMA may base the initial obligation of funds on estimated costs, final costs for large projects are based on the actual documented cost of the completed, eligible work.[9]  Therefore, upon completion of a large project that FEMA obligated based on an estimated amount, the applicant should provide the documentation to support the actual eligible costs.[10]  FEMA reviews the documentation and, if necessary, obligates additional funds or reduces funding based on actual costs to complete the eligible scope of work (SOW).[11]  Documentation should provide the “who, what, when, where, why, and how much” for each item claimed.[12]  It is the applicant’s responsibility to substantiate its claim as eligible.[13]  If the Applicant does not provide sufficient documentation to support its claim as eligible, FEMA cannot provide PA funding for the work.[14]

FEMA estimated costs of $6,090,219.00 for the approved SOW to carry out the Facility’s repairs.  Subsequently, FEMA denied the Applicant’s request for claimed actual costs because the Applicant did not provide documentation necessary to validate the costs.  On second appeal, the Applicant submits documentation that it asserts shows actual costs of $8,495,328.31.  However, at the same time, the Applicant also notes that, as of the date of its second appeal submission, the project was not complete and it has not provided a full accounting of costs, acknowledging that only $6,932,264.59 of the requested costs represent completed work.  Therefore, the Applicant has not yet incurred all the costs it claims as being actual costs.

Notwithstanding the conflicting arguments, it appears that the Applicant has not completed the SOW and therefore has not provided a final cost accounting.  As such, the project is not ready for FEMA’s documentation review and final obligation based on the actual costs.

Nevertheless, the Applicant should note that, based on the current documentation, it has not adequately documented its claimed costs.  For example, the April 25, 2020–May 25, 2020 pay application summary lists lump sums for work completed during the period, such as $37,750.00 for “General Trades Bid Pkg.”  While an accompanying invoice names a construction company, it does not attribute the lump sum beyond “doors and windows,” or contain any information connecting the work and costs to the approved SOW.  Accordingly, the Applicant should provide adequate documentation to substantiate all its claimed actual costs upon completion of the SOW at final accounting.[15] 

 

Conclusion

The Applicant has not provided documentation necessary to support the costs requested as it has not yet completed the SOW associated with the claimed costs.  Therefore, the appeal is denied.  However, once the Applicant has completed the SOW and provided a final cost accounting, FEMA will review the Applicant’s documentation and award actual costs of the completed, eligible SOW.

 

 

[1] See generally, Insurance Narrative Sheet, Insurance Specialist, FEMA Consolidated Resource Center East (Mar. 19, 2021) (noting that when the estimated cost of work on a project is less than $3,200.00, that project is not eligible).

[2] In its first appeal letter, the Applicant asserted that its actual costs were $8,191,583.95 at the time of project submission, also stating that it had incurred additional contract costs, without specifying that amount.

[3] In its second appeal letter, the Applicant notes that although the first appeal amount at issue was $2,375,757.00, it is refining it request to $2,405,109.31, describing the amount in dispute as the total contract amount less FEMA’s previously determined eligible costs (prior to the insurance reduction).

[4] Letter from Exec. Dir. of Facilities, Sch. Bd. of Bay Cnty.. Fla., to Asst. Adm’r., Recovery, FEMA at 4-5 (May 27, 2022),  

[5] Id. at 5, footnote 13.

[6] Robert T. Stafford Disaster Relief and Emergency Assistance Act § 406(a)(1)(A), Title 42, United States Code § 5172(a)(1)(A) (2018).

[7] Title 2 Code of Federal Regulations (2 C.F.R.) § 200.403(g) (2018); Public Assistance Program and Policy Guide, FP 104-009-2, at 21 (Apr. 2018) [hereinafter PAPPG].

[8] PAPPG, at 138, 144. 

[9] Title 44 Code of Federal Regulations 44 C.F.R. §§ 206.203(c)(1), 206.205(b) (2018); PAPPG, at 144.

[10] 44 C.F.R. § 206.205(b)(1); PAPPG, at 144. The Recipient must certify that all incurred costs are associated with the approved scope of work and that the Applicant completed all work in accordance with FEMA regulations and policies. The Recipient must submit its certification of the Applicant’s completion of each Large Project with the final payment of claim and supporting documentation to FEMA within 180 days of the project deadline.

[11] 44 CFR § 206.205(b)(2); PAPPG, at 144.

[12] PAPPG, at 133.

[13] Id.

[14] Id.

[15] See e.g., PAPPG, at 21-22 (listing certain requirements that must be met for costs to be eligible, such as being: (1) directly tied to the performance of eligible work; (2) adequately documented; and (3) necessary and reasonable to accomplish the work properly and efficiently) and PAPPG, at 30-32 (outlining procurement requirements that applicants must comply with to receive funds for contract costs for eligible work).