Change in Scope of Work – Net Small Project Overrun

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster	4301
Applicant	Jackson Valley Irrigation District
Appeal Type	Second
PA ID#	005-1DA6E-00
PW ID#	PW 240
Date Signed	2021-10-04T16:00:00

Summary Paragraph

From January 3 - 12, 2017, severe winter storms, flooding, and mudslides affected the state of California.  The Applicant requested Public Assistance (PA) funding for five small projects.  On January 15, 2020, the Applicant re­quested closeout for all five of its small projects, and submitted a first appeal, Net Small Project Overrun (NSPO) request to the California Governor’s Office of Emergency Services (Grantee).  Final claimed costs for Project Worksheet (PW) 240 were $245,315.43, which, with the four additional projects resulted in a Net Small Project Overrun (NSPO) of $73,031.70.  To explain the overrun on PW 240, the Applicant said the project incurred additional costs to comply with requirements of the Federal Energy Regulatory Commission (FERC) and the California Department of Safety of Dams (DSOD).  The Applicant claimed the project needed to commence prior to the rainy season, so it began the project without submitting scope of work (SOW) change requests to FEMA.  The Grantee supported the Applicant’s NSPO appeal.  The FEMA Region IX Acting Regional Administrator denied the NSPO appeal, determining that the work constituted a change in PW 240’s SOW and the Applicant failed to request a change to the SOW.  The Applicant submitted a second appeal and argues that the SOW changed because the FEMA-approved SOW did not meet FERC or DSOD requirements and the changes to the SOW were necessary to meet required codes and standards.

Authorities and Second Appeals

• Stafford Act §§ 406(a)(1)(A), 422.
• 2 C.F.R. § 200.308; 44 C.F.R. §§ 206.203(c)(2), 206.204(e)(2), 206.206(a).
• PAPPG, at 21, 83, 130-131, 139.
• Holy Cross Sch., FEMA-1603-DR-LA, at 4 (July 7, 2021); Town of Fairfield, FEMA-4087-DR-CT, at 4.

Headnotes

• 44 C.F.R. § 206.204(e)(2) and 2 C.F.R. § 200.308 require an applicant to obtain the prior approval of FEMA for any revision of the scope or objective of the project.  The PAPPG, at 130-13 states the applicant should engage the grantee and FEMA as soon as it identifies a change to the SOW to allow FEMA time to review changes for eligibility and environmental and historic preservation (EHP) compliance requirements prior to commencement of work.
  • The Applicant did not notify FEMA of changes to the SOW, prior to commencement of the repairs thereby precluding FEMA from conducting an EHP review.

Conclusion

FEMA finds the Applicant did not notify FEMA of the changes to PW 240’s SOW prior to the commencement of the work, precluding FEMA from completing an EHP review.  Accordingly, NSPO second appeal is denied.

Appeal Letter

Appeal Analysis

Background

From January 3 – 12, 2017, severe winter storms, flooding, and mudslides caused damage throughout California.[1]  FEMA prepared Project Worksheets (PWs) to document five small projects for the Jackson Valley Irrigation District (Applicant).[2]  PW 240 documented erosion to three areas below the Lake Amador Dam uncontrolled concrete spillway that contained a blend of gravel and silt materials. 

In an email dated March 17, 2017, the Applicant’s consulting engineer provided a scope of work and cost estimate to repair the three erosion areas with concrete.  However, FEMA noted in PW 240 that, while the Applicant’s engineer had proposed repairs using concrete in the damaged areas, FEMA calculated estimated repair costs using gravel in order to restore the sites to their predisaster condition.  Thereafter, FEMA reviewed a hazard mitigation proposal (HMP) from the Applicant that proposed 244.37 cubic yards (CYs) of concrete be placed over the repaired area to reduce or eliminate future losses.  FEMA approved a scope of work (SOW) for PW 240 to repair the three erosion areas and approved estimated costs of $98,279.38 for repair, Hazard Mitigation (HM), and Direct Administrative Costs. 

FEMA issued a December 4, 2017 Record of Environmental Consideration (REC), documenting the Agency’s environmental and historic preservation (EHP) compliance review.  It included a condition that stated any change to the approved SOW would require re-evaluation for compliance with the National Environmental Policy Act and other laws and executive orders.

The Applicant completed the last of its small projects, PW 240, on November 21, 2019.  The California Governor’s Office of Emergency Services (Grantee) received the Applicant’s Project Completion and Certification Report for the five small projects on January 17, 2020.  Final claimed costs for PW 240 were $245,315.43, which, with the four additional projects resulted in a Net Small Project Overrun (NSPO) of $73,031.70.[3]

 

First Appeal

On January 15, 2020, the Applicant submitted an NSPO appeal to the Grantee and stated the significant overrun on PW 240 was because the repair work needed to comply with requirements of the Federal Energy Regulatory Commission (FERC) and the California Department of Safety of Dams (DSOD).  The Applicant explained FERC and DSOD required a Focused Spillway Condition Assessment Report (FSCAR),[4] which is a detailed analysis of the current state of the dam spillway, before construction activities.  Based on the FSCAR, the Applicant noted there were specific repair items and construction methods that were added which were not part of its contractor’s original estimate.  The Applicant acknowledged a change in the original SOW (i.e., additional repair items, construction methods, and final concrete quantities changed), creating a cost overrun.[5]  The Grantee supported the NSPO appeal in its March 11, 2020 transmittal letter. 

On February 10, 2021, the FEMA Region IX Acting Regional Administrator denied the NSPO appeal.  FEMA determined the work performed under PW 240 and associated additional costs constituted a change in SOW for which the Applicant had not sought approval prior to the commencement of work. 

 

Second Appeal

The Applicant submitted a second appeal on May 11, 2021, arguing that the SOW changed because the FEMA-approved SOW did not meet FERC[6] or DSOD requirements.  The Applicant explains it was important that the repairs commenced prior to the rainy season and so it began work without submitting project changes to FEMA.  The Applicant transmitted a Final Construction Report, which stated that it laid 401 CYs of concrete, and noted changes to the approved work included additional placement of concrete rubble above the concreted rock slope protection areas, adjustments to the actual footprint of concrete placement, and adjustment to size of sawcut areas on the spillway.[7]

In a letter dated July 7, 2020, the Grantee supports the appeal.  The Grantee contends the revised project amount for PW 240 represents the actual costs of repairs per the approved SOW.  It states the change in SOW designation is incorrect and a result of a misunderstanding.  The Grantee asserts that the contract to repair the sites documented in PW 240 did not include improvements or changes of any kind to the sites’ predisaster function, capacity, or design.

 

Discussion

Net Small Project Overrun/Change in Scope of Work

FEMA may provide Public Assistance (PA) funding for small projects to a local government for the repair of a public facility damaged by a major disaster on the basis of the Federal estimate.[8]  FEMA does not adjust the approved amount of an individual small project unless certain conditions apply, such as the applicant requesting additional funds related to an eligible change in the SOW or the PW containing inadvertent errors or omissions.[9]  Regardless of whether the request is to adjust an individual small project or relates to an NSPO, costs must be directly tied to the performance of eligible work.[10]  The applicant should engage the grantee and FEMA as soon as it identifies a change to the SOW to allow FEMA time to review changes for eligibility and EHP compliance requirements prior to commencement of work.[11]  The applicant is required to obtain the prior approval of FEMA for any revision of the scope or objective of the project.[12]

When FEMA obligated PW 240, it determined the eligible SOW included the repair and replacement of gravelly and silty backfill materials with rip-rap, along with an HMP for the placement of approximately 244 CYs of concrete over the repaired area.  The Applicant instead laid 401 CYs of concrete and changed the SOW to include additional placement of concrete rubble above the concreted rock slope protection areas, adjustments to the actual footprint of concrete placement, and adjustment to the size of sawcut areas on the spillway.[13]  Additionally, the Applicant’s engineer notes the use of additional concrete backfill beyond the original estimated quantity.[14] 

Although the Grantee asserts in its second appeal letter that the actual costs submitted for PW 240 align with the approved SOW, the Applicant acknowledges in both its first and second  appeal letters that it changed the SOW.[15]  However, the Applicant did not notify FEMA of the change in SOW prior to the commencement of work.

FERC notified the Applicant in a May 1, 2017 letter that it required a full condition assessment of the spillway and its damage and in April 2018 the Applicant submitted a revised workplan to FERC.  The Applicant’s engineer acknowledges that it changed the footprint of concrete placement, but the Applicant did not notify FEMA before it started work in October 2019.  FEMA policy notes that changing the footprint of a facility may have adverse environmental or historic implications and the REC states that an EHP compliance review would be required for any change to the approved SOW.[16]  In this case, the Applicant did not notify FEMA of work completed beyond the previously approved SOW for PW 240 until after the Applicant completed the project.  Because the Applicant did not provide FEMA an opportunity to review the proposed SOW changes for EHP compliance as required, the additional work is not eligible for funding.[17] 

 

Conclusion

The Applicant did not notify FEMA of the changes to PW 240’s SOW prior to the commencement of the work, precluding FEMA from completing an EHP review.  Accordingly, NSPO second appeal is denied.

 

[1] The President issued a major disaster declaration on February 14, 2017.

[2] PWs 172, 210, 212, 240, and 306.  PW 240 is specifically at issue and discussed on second appeal.

[3] The total costs claimed by the Applicant in its Project Completion and Certification Report equaled an overrun of $75,140.88.  The Grantee clarifies on first appeal through its Final Inspection Report, however, that due to a duplicative invoice, the total overrun amounted to $73,031.70.

[4] The Applicant states this report is classified and, therefore, has not provided the entire report to FEMA. 

[5] Letter from General Mgr., Jackson Valley Irrigation Dist. (JVID), to State Pub. Assistance Officer, Governor’s Off. of Emergency Services, at 2 (Jan. 15, 2020) [hereinafter Applicant’s First Appeal].

[6] Letter from Chief Dam Safety Eng’r, GEI Consultants Inc., to Gen. Mgr., JVID, at 2 (Apr. 30, 2021) [hereinafter GEI Letter] (The Applicant explains that, per a letter dated May 1, 2017, FERC required a full condition assessment of the spillway and its damage. The Applicant submitted this detailed assessment to FERC and DSOD for review and approval in April 2018, but did not receive approval from the agencies until October 2019.  The Applicant then commenced construction from October 28 to November 21, 2019.).

[7] Final Construction Report, Jackson Creek Dam Spillway Maintenance Repair Project, from Weber, Ghio & Associates, to JVID, at 3-4 (Jan. 21, 2020) [hereinafter Final Construction Report].

[8] Robert T. Stafford Disaster Relief and Emergency Assistance (Stafford) Act §§ 406(a)(1)(A), 422, Title 42, United States Code (42 U.S.C.) §§ 5172(a)(1)(A), 5189 (2012); Title 44 Code of Federal Regulations (44 C.F.R.) § 206.203(c)(2) (2016).

[9] Public Assistance Program and Policy Guide, FP 104-009-2, at 139 (Jan. 1, 2016) [hereinafter PAPPG].

[10] See PAPPG, at 21.

[11] Id. at 130-131.

[12] 44 C.F.R. § 206.204(e)(2); 2 C.F.R. § 200.308 (2016). 

[13] Final Construction Report, at 3-4.

[14] GEI Letter, at 2.

[15] Applicant’s First Appeal, at 2 (stating that a “regulatory oversight did cause a change in the original scope of work.”); Letter from Gen. Mgr., JVID, to Pub. Assistance Officer, Ca. Governor’s Off. of Emergency Services, at 1 (May 11, 2021) (stating “[T]he project scope changed based on these requirements during the approval process”).

[16] See PAPPG, at 83.

[17] See FEMA Second Analysis, Town of Fairfield, FEMA-4087-DR-CT, at 4 (Mar. 31, 2021) (FEMA denied funding in part because the Applicant completed a revised SOW without prior FEMA approval, which precluded FEMA from performing its necessary EHP reviews).  Additionally, although the Applicant argues the change in SOW was due to regulatory requirements, the Applicant has neither cited to, nor supplied copies of, specific codes, specifications, or standards that satisfy all five prongs of 44 C.F.R. § 206.226(d) for any of the claimed work.  Therefore, FEMA finds the Applicant has not demonstrated the costs were required by codes/standards upgrades.  See 44 C.F.R. § 206.206(a) (requiring an appellant to submit documented justification supporting its appeal); FEMA Second Appeal Analysis, Holy Cross Sch., FEMA-1603-DR-LA, at 4 (July 7, 2021).