Direct Administrative Costs and Management Costs

Appeal Brief

Summary Paragraph

Hurricane Ike caused high winds, severe storms, and flooding during the incident period of September 7 through October 2, 2008. FEMA approved multiple Project Worksheets (PW) for the Park Board of Trustees (Applicant), including PWs 14425, 14515, 14613, and 14644, for permanent repairs to facilities at Seawolf Park. The Texas Division of Emergency Management (Recipient) requested large project closeouts for the four projects in separate letters. Each large project closeout request included a claim for direct administrative costs (DAC). In four separate determinations, FEMA denied the DAC claimed, finding that the documentation provided lacked the specificity required for FEMA to find the DAC activities eligible. The Applicant appealed in four separate letters, stating that it provided sufficient documentation to permit FEMA to find the DAC eligible. In four separate letters, the Recipient supported the Applicant’s appeal. FEMA partially approved the appeals, finding that the Applicant documented that some of the DAC activities were eligible activities but that the Applicant did not provide documentation demonstrating the eligibility of the remaining DAC activities, which had generic descriptions. The Applicant submitted its second appeals, reiterating its prior arguments and also stating that, on October 3, 2023, it submitted a “revised DAC report” in response to the first appeal decisions. The Recipient supports the Applicant’s appeal. FEMA issued a Request for Information asking for a copy of the revised DAC report. The Applicant provided the report, which included a table providing additional clarity regarding the specific DAC activities performed for each of the four projects previously found ineligible. 

Authorities

• 44 C.F.R. 206.206(a).
• DAP 9525.9, Section 324 Management Costs and Direct Administrative Costs; Memorandum from Assistant Adm’r, Disaster Assistance Directorate, FEMA, to Reg’l Adm’rs.
• Texas Division of Emergency Management, FEMA-4423-DR-TX, at 2.

Headnotes

• FEMA may reimburse DAC that are properly tracked, charged, and accounted for directly to a specific project. 
  • The additional explanation provided with the Applicant’s second appeal demonstrates the claimed DAC is eligible. For example, the Applicant revised the previously provided task description of “1 hr. SB-102” for PW 14425, to “Stewart Beach project scope review/documentation review” in the revised DAC report provided on second appeal.

Conclusion

The Applicant has demonstrated the claimed DAC is eligible. Therefore, the appeals for the four projects are granted in the amount of $37,346.92for the RA to follow, if any. [This should mirror the conclusion in the response letter and in the conclusion section at the end of the analysis.]

Appeal Letter

Appeal Analysis

Background

Hurricane Ike caused high winds, severe storms, and flooding during the incident period of September 7, 2008, to October 2, 2008.[1] FEMA approved multiple Project Worksheets (PW) for the Park Board of Trustees of the City of Galveston (Applicant), including PWs 14425, 14515, 14613, and 14644, for permanent repairs to facilities at Seawolf Park. The Texas Division of Emergency Management (Recipient) requested large project closeouts for the four projects in separate letters.[2] Each large project closeout request included a claim for contract Direct Administrative Costs (DAC) performed by the Louis Berger Group, totaling $66,171.16 for the four projects.[3] With each large project closeout request, the Recipient provided a DAC Summary Report which included a narrative of the claimed DAC, listed by hour.  In four separate determinations, FEMA denied the DAC claimed for the Louis Berger Group, finding that the documentation provided in the DAC Summary Report lacked the specificity required for FEMA to find the DAC activities were eligible.

First Appeal 

The Applicant appealed via four separate letters, stating that it provided documentation that permitted FEMA to find the DAC eligible, for a revised request totaling $58,704.87.[4] The Applicant resubmitted the DAC Summary Report previously provided with the closeout requests. In four separate letters, the Recipient supported the Applicant’s appeal. 

In letters dated in August 2023, the FEMA Region 6 Regional Administrator partially approved the appeals, finding that the Applicant documented that some of the DAC activities were eligible activities, but that for other DAC activities, the Applicant did not provide documentation demonstrating eligibility. For example, FEMA approved DAC for PW 14515 that related to a line item that stated, “review Dellanera specs to support project scope development,” but denied DAC for the same PW that related to a line item that stated, “review files.” In total, FEMA approved $21,357.95[5] of the claimed DAC for the four appeals and denied $37,346.92[6] of the claimed DAC.

Second Appeal

In four letters signed October 23, 2023, the Applicant submits its second appeals, requesting the previously denied DAC totaling $37,346.92, and reiterating its prior arguments. Additionally, the Applicant states that on October 3, 2023, the Applicant submitted a “revised DAC report” in response to the first appeal decisions. In letters dated November 15, 2023, the Recipient transmits the Applicant’s appeal, agreeing with the Applicant’s assertions. 

In a letter dated December 13, 2023, FEMA issued a Request for Information (RFI) seeking a copy of the October 3, 2023, revised DAC report referenced in the Applicant’s second appeals. On December 15, 2023, the Applicant transmitted its revised DAC report dated October 3, 2023, and a table providing additional clarity regarding the specific DAC activities performed for each of the four projects that were previously found ineligible. For example, for PW 14515, the Applicant expanded the task description of “review files” to “project documentation gathering for project closeout.”

Discussion

FEMA may reimburse DAC that are properly tracked, charged, and accounted for directly to a specific project.[7] Examples of eligible DAC include, but are not limited to: project formulation activities, such as project description development and project scope development, project processing activities, and closeout activities.[8] The responsibility to substantiate appeals with documented justification falls exclusively to the applicant and hinges upon the applicant’s ability to not only produce its own records, but to clearly explain how those records support the appeal.[9]

The DAC found ineligible on first appeal related to descriptions that were vague and generic in nature. With the Applicant’s second appeals, the Applicant provides an expanded narrative for each of the DAC hours previously found ineligible. For instance, in the original DAC Summary Reports, the Applicant included a task for “1 hr. SB-102” for PW 14425. In the revised DAC report provided on second appeal, however, the Applicant expanded that description to “Stewart Beach project scope review/documentation review.” Similarly, for PW 14515, the Applicant clarified in the revised DAC report that the original description of “review files” was “project documentation gathering for project closeout.” Another example is contained in the revised DAC report for PW 14613, in which the Applicant expanded the original description of “PW support” to “Seawolf PW scope formulation based on revised cost estimate and documentation.” Likewise, for PW 14644, the Applicant amended the original description of “SP106” to “bid package review and documentation review for FEMA 406 mitigation scope of work.”

Based on the additional explanations provided in the revised DAC report submitted with the Applicant’s second appeals, the Applicant has demonstrated the claimed DAC is eligible.

Conclusion

The Applicant has demonstrated the claimed DAC is eligible. Therefore, the appeals for the four projects are granted in the total amount of $37,346.92.[10]