FMAG – Force Account Labor – Regular Time Costs – Mutual Aid Agreements

Appeal Brief

Appeal Letter

Appeal Analysis

Background

In July 2014, the Mills Canyon fire in Chelan County, Washington encompassed approximately 22,000 acres of privately and publicly owned lands, threatening power and communication lines, businesses, orchards, fishing streams, wildlife, cultural resources and approximately 1,900 structures.  The Washington Department of Natural Resources (Applicant) engaged the fire and requested assistance from FEMA.  The Region X Regional Administrator (RA) approved a Fire Management Assistance Grant (FMAG), with an incident period beginning at 0001 PDT on July 10, 2014 through 2359 PDT on July 22, 2014.  FEMA obligated Project Worksheet (PW) 6 to cover costs for labor, equipment, materials, travel and other miscellaneous items of work. 

FEMA identified issues when reviewing the Applicant’s documentation and, as explained in a Determination Memo dated October 26, 2017, it deducted: (1) $42,574.42 in ineligible force account labor regular time costs for seasonal firefighters, as well as costs outside of the incident period; (2) $6,515.16 based on an equipment cost calculation error; (3) $13,178.87 in incorrectly coded equipment transfers;[1] and, (4) $27,156.67 in ineligible costs for regular time hours for employees of the Naselle Youth Camp (NYC), operated under the Department of Social and Health Services, the Department of Corrections Larch Correction Center (DCLCC), and the Washington Conservation Corps operated under the Department of Ecology Cashiering Unit (DECU).

In its Determination Memo, FEMA noted that the interagency agreements (IAAs) between the Applicant and the three aforementioned responding agencies would not be viewed as contracts as all of the agencies are part of the State of Washington and do not constitute separate political subdivisions.  Accordingly, those employees are considered permanent employees and straight time costs are not eligible.    

First Appeal

The Applicant appealed in a letter dated January 16, 2018, and requested funding be reinstated totaling $69,590.00.[2]  The Applicant disputed FEMA’s determinations that costs associated with straight time salaries of personnel from other state agencies under the IAAs and seasonal employees were not eligible for reimbursement.  The Applicant also explained it entered into the IAAs with multiple state agencies throughout the wildfire season.  The Applicant argued that these IAAs established contractual frameworks authorized under the Revised Code of Washington (RCW) and FEMA misinterpreted the agreement to disallow eligible straight-time salaries of NYC’s supervisory staff, as NYC is a separate and distinct state agency.  In addition, DECU is an AmeriCorps program under a state law that stipulates that members are not to be considered state employees. 

The Washington Emergency Management Division (Grantee) forwarded the Applicant’s appeal on February 26, 2018, as well as its recommendation that FEMA grant the appeal.  The Grantee argued that the Applicant’s IAAs were for the use of supervisors and crew members from DECU, which State law exempts from being considered State employees.  Finally, because the Applicant is the Commissioner of Public Lands and a member of the Executive Department of the State of Washington, it was autonomous from the general operating government of the State. 

FEMA Region X sent a Final Request for Information (RFI) on April 30, 2018, and noted that the current administrative record did not contain enough evidence to establish that the straight time labor costs, in part, for permanent state employees were eligible costs under the FMAG Program.  The Agency requested the Applicant further explain how it was legally and financially separated from the State of Washington, and asked the Applicant to provide an updated IAA with NYC.  The Grantee responded to the Final RFI on June 8, 2018.  The Grantee argued that the NYC IAA should be treated as a contract under State law and accordingly, NYC personnel under the IAA are hired as contractors.   

FEMA Region X denied the appeal on August 3, 2018.  The Regional Administrator (RA) found that the Applicant’s IAAs with other State agencies are not considered contracts and as such, do not exclude employees of those agencies from FEMA regulations (the requirements under Title 44 of the Code of Federal Regulations (44 C.F.R.) Part 204).  Therefore, straight time salaries and benefits for supervisors from NYC, DCLCC, and DECU were not eligible costs.

The RA noted that eligible costs under the FMAG program include overtime for permanent or reassigned state and local employees, as well as regular time and overtime for temporary or contract employees hired to perform fire related activities.  The RA explained that permanent employees may include reassigned, backfilled, temporary and seasonal employees, when covered under an existing budget, and when used for a disaster during the season of employment.  The cost of straight time salaries and benefits for permanent employees are not eligible under the PA mutual aid agreements which apply to the FMAG program. 

With regard to determining if the IAAs were mutual aid agreements or contracts, the RA explained that while the State determines the makeup of individual governing bodies and separate agencies, these agencies are still part of the State.  Thus, any person working for a state agency is an employee of the state, regardless of which agency that employee works for.  The RA therefore found that the Applicant had not demonstrated that the costs associated with employees of different agencies were financially or legally separated to establish that federal funds were not being used to refund state general fund programs, and FEMA could not reimburse those costs.  In addition, as the requesting agency and providing entity are both departments of the State of Washington, the RA determined FEMA could not view this arrangement as a procurement contract as defined and governed by Federal regulations.  The RA finally found that FEMA’s grant eligibility is not governed by State laws and that federal funds could not be used to pay NYC personnel; and though FEMA could not provide funding, that did not mean that the Applicant did not have an obligation to make payment to NYC.   

Second Appeal

The Applicant appeals the RA’s decision in an October 2, 2018 letter and requests $27,156.67 in funding for the regular time hours of personnel from other state agencies.  The Applicant asserts the costs are in concert with its IAAs with the DSHS NYC, which state that those employees of “each party who are engage[d] in performing this agreement shall continue to be employees or agents of that party and shall not be considered for any purpose to be employees or agents of the other party.”[3]  The Applicant argues that the payment of DSHS personnel is a contract cost as described in the IAA.

The Applicant disagrees with FEMA’s characterization of the DECU supervisory staff as Department of Ecology permanent staff, as the RCW states those members are not to be considered state employees.  Likewise, the Applicant argues the DECU crew are also not permanent state employees, but are funded through the AmeriCorps program, and therefore their regular time should be eligible for funding.

The Grantee transmitted the Applicant’s appeal on December 1, 2018, along with its analysis supporting the appeal.  The Grantee explains that the RA based his decision on FEMA’s RP 9523.6 Mutual Aid Agreements that any person working for a state agency is an employee of the state regardless of which agency employs that person.  However, the Grantee argues this policy is inapplicable to the IAAs, which it says are contract agreements between separate state agencies under Washington State law, and satisfy FEMA’s definition of a contract as outlined in 44 C.F.R. § 13.36.  Accordingly, the Grantee concludes that the employees in question were contractors and their shift time, both regular and overtime, is eligible.    

Discussion

FMAG – Force Account Labor – Regular Time Costs

Section 420 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act and its implementing regulations vest FEMA with the authority to offer fire management assistance to state and local governments.[4]  Costs for overtime for permanent or reassigned state and local employees, and costs for regular time and overtime for temporary and contract employees hired to perform fire-related activities are eligible for funding.[5]  However, emergency work straight time salaries and benefits for an applicant’s permanently employed personnel are ineligible for federal funding.[6]  FEMA only pays overtime for emergency work, because regular or straight time is already funded in the state budget, and therefore employees performing such work would be paid whether or not a disaster occurred.  If the Agency paid regular time, the Applicant would be supplanting its approved funds with federal funds.

Costs for contract labor, mutual aid in accordance with an existing agreement, or temporary hires needed to accomplish emergency work are eligible for reimbursement.[7]  Under FEMA Recovery Policy (RP) 9523.6 – Mutual Aid Agreements for Public Assistance and Fire Management, a providing entity’s force account labor will be considered contract labor, with regular time, overtime, and benefits eligible for reimbursement.[8]  In addition, this policy states that straight time salaries and benefits for the requesting entity’s permanent employees are not eligible expenses.[9]  RP 9523.6 also states that when a requesting entity is a state, the force account labor costs of the providing entity will not be treated as contract labor if the force account labor is employed by a governmental subdivision (such as an agency) within that requesting entity.[10]

The State’s agencies and bodies of government are all part of the State government and therefore, any permanent, full time employee of a state agency is an employee of the state, regardless of which agency employees the person.  As the RA stated on first appeal, the State can determine the makeup of its individual governing bodies and separate agencies, but these are all part and parcel to the State.  Accordingly, per 44 C.F.R. § 204.42(c)(1), only the cost of overtime for permanent and reassigned state and local employees is an eligible expense. 

Although the Grantee argued that the budget of the Applicant is separate from other agencies, its budget partially comes from funds authorized by the State Legislature.[11]  The Applicant has not demonstrated the funds were separate to establish that federal funds did not duplicate state funding used to pay the straight-time costs of permanent employees.  The straight time costs for the employees of DECU, which are partly funded by AmeriCorps, are likewise ineligible.  Just as FEMA will not fund regular time for emergency work of state employees as those costs are already budgeted and funded, FEMA likewise will not reimburse straight time costs for those employees funded through AmeriCorps and employed with the State agency because those costs are already budgeted and funded.  The Applicant has not demonstrated those funds were not already budgeted and funded, and as such, those costs are ineligible. 

Mutual Aid Agreements vs. Procurement Contracts

Mutual aid agreements are agreements between jurisdictions or agencies to provide services across jurisdictional boundaries during an emergency or disaster.[12]  FEMA reimburses costs for eligible emergency work under mutual aid agreements in accordance with FEMA policy.[13]  FEMA’s grant regulations define a “contract” as “a procurement contract under a grant or subgrant [and also a] procurement subcontract under a contract.”[14]  Accordingly, an agreement between subdivisions within a state would not qualify as a procurement contract under Federal regulations.

The IAAs do not meet the definition of a contract under FEMA’s regulations because they are not procurement contracts under a grant or subgrant, nor did the Applicant procure the services of the other state agencies.  In addition, the IAA with NYC was not in effect at the time of the disaster, and although FEMA requested an updated agreement, the Applicant did not provide one. 

Rather, these employees were employed by a state government subdivision within the requesting entity.  Thus, the claimed labor costs remain ineligible for reimbursement.

Conclusion    

The costs at issue are for permanent, full time employees of a State agency and therefore are ineligible for reimbursement under a mutual aid contract.  In addition, while the IAAs qualify as mutual aid agreements under FEMA policy, they are not contracts procured under a subgrant.  Accordingly, the second appeal is denied.