Work Completion Deadlines, Change in Scope of Work

Appeal Brief

Summary Paragraph

Between August 21-24, 2011, Hurricane Irene caused extensive damage throughout Puerto Rico. The Canóvanas (Municipio) (Applicant) claimed the disaster damaged the asphalt road at Caribe Street Pueblo Indio (Facility). The Central Office of Recovery, Reconstruction, and Resiliency (Recipient) approved two-time extensions. FEMA then granted three additional time extensions. The Applicant also requested changes to the scope of work (SOW) and additional funding. FEMA approved three funding amendments, bringing the project costs to $2,261,676.45. The Recipient, on behalf of the Applicant, sought additional funding and an extension. FEMA issued a Request for Information regarding the project costs and completion deadline. The Applicant responded by proposing a new deadline, May 31, 2024, and a completion timetable with a 40 percent cost increase. FEMA denied the additional extension and SOW changes, finding the Applicant did not justify its request based on circumstances beyond its control and did not provide documentation to support the cost increase. The Applicant appealed the change in SOW, contending FEMA erred in a prior obligation and did not award all previously requested funding and that the delays were beyond its control. The FEMA Region 2 Regional Administrator denied the appeal, finding the Applicant had not presented sufficient documentation to grant another time extension or additional funding. The Applicant submitted a second appeal, asserting that it had justified the delays and reiterating previously raised arguments.

Authorities and Second Appeals 

• Stafford Act § 406(a)(l)(A).
• 44 C.F.R. § 206.204(c)-(d).
• PA Guide, at 138-140.
• Central Office for Recovery, Reconstruction, and Resiliency, FEMA-4473-DR-PR, at 3; City of Pahokee, FEMA-4084-DR-FL, at 2; County of Santa Cruz, FEMA-1155-DR-CA, at 4. 

Headnotes

• FEMA is authorized to grant time extensions beyond the recipient’s authority based on extenuating circumstances or unusual project requirements beyond the applicant’s control.
• The Applicant points to various reasons as its justification for the delay, the primary reason being its lack of funding due to state law, which does not allow the award of a contract without having the financial means of covering the complete project costs. However, the lack of funding is a circumstance that FEMA finds to be within the Applicant’s control.

Conclusion

The Applicant did not establish extenuating circumstances beyond its control to justify a further time extension or a change in SOW. Therefore, this appeal is denied.

Appeal Letter

Appeal Analysis

Background

From August 21 through August 24, 2011, heavy rains from Hurricane Irene caused flooding, mudslides, and landslides throughout the Commonwealth of Puerto Rico.[1] The Canóvanas (Municipio) (Applicant) claimed that heavy rainfall, water runoff, and raised river levels damaged the asphalt road at Caribe Street Pueblo Indio (Facility). FEMA prepared Project Worksheet 1482 to document the Applicant’s claim and awarded funding for restoration. The Central Office for Recovery, Reconstruction, and Resiliency (Recipient) approved two time extensions to complete the work, resulting in a deadline of August 27, 2015. In response to the Applicant’s requests, FEMA approved three additional time extensions, three scope of work (SOW) changes, and additional funding, bringing the total project costs to $2,261,676.45, with a December 31, 2017, deadline. On March 24, 2022, the Recipient, on behalf of the Applicant, sought additional funding and a further extension until May 2024. 

FEMA issued a Request for Information (RFI) on October 24, 2022, seeking the estimated project costs and projected completion date, along with an explanation for the nearly five-year delay and lack of any progress since the extended work completion deadline expired in 2017. The Applicant responded on November 7, 2022, claiming it lacked funding due to design revisions, inflation, and labor and materials shortages during subsequently declared disasters, and it attributed its delay to FEMA’s delays in addressing requests for additional funding to account for these issues. The Applicant proposed a new deadline, May 31, 2024, with an estimated 40 percent cost increase. 

On April 5, 2023, FEMA denied the Applicant’s request for a time extension, stating that delays due to staffing shortages are not beyond the Applicant’s control. FEMA also denied the SOW change request (i.e., the request for additional funding) because the Applicant failed to provide documentation supporting a 40 percent cost increase.

First Appeal 

The Applicant appealed FEMA’s denial of the SOW change and time extension. The Applicant explained its delays by citing a variety of factors, including architectural and engineering studies completed in 2017, lack of water and electrical power during a subsequent disaster, a lack of competitive bids which prolonged the procurement process, and insufficient funding when the bidders’ proposals exceeded the estimated budget. In addition, the Applicant claims that when it requested additional funding from FEMA in January 2019 to account for the new bid proposal estimate, FEMA only awarded funding after considerable delay and erroneously excluded $402,942.00 from the award, which would have accounted for taxes, insurance, and other related costs. The Applicant also claimed FEMA’s additional delay in responding to its request for more funding to correct this error further delayed the project’s progress. The Applicant submitted a letter of support from the Puerto Rico Permits Management Office, auction notices, bid proposals, a statement of the bidder’s qualification, and its subgrant application. On June 28, 2023, the Recipient forwarded the Applicant’s appeal with its support. 

On October 16, 2023, the FEMA Region 2 Regional Administrator (RA) denied the appeal, finding the Applicant’s explanations for the delays did not justify another time extension, especially considering the Applicant had not started the repair work. Additionally, FEMA found that the Applicant had not submitted documentation to support a 40 percent cost increase.

Second Appeal

On December 14, 2023, the Applicant submitted a second appeal, again requesting additional funding, a time extension, and reiterating prior arguments. The Applicant also explains that the contracting for the project occurred during a historic period of financial challenges. Further, the Applicant states that FEMA did not address the Applicant’s inability, due to state law, to award a contract without having the means of paying the total project costs. The Applicant also states that Hurricane Fiona caused additional damage to the Facility, thus necessitating a new project and engineering design. The Applicant therefore proposes, as an alternative, that FEMA obligate a separate project under Hurricane Fiona that considers damage from both disasters. The Recipient transmitted the Applicant’s second appeal with its support on January 16, 2024.

Discussion

FEMA may reimburse eligible applicants for the repair, restoration, reconstruction, or replacement of public facilities damaged or destroyed by a major disaster.[2] To be eligible, work must be required as a result of the declared incident.[3] Eligible permanent work must be completed within 18 months of the declaration date of the major disaster.[4] For permanent work, the recipient may grant up to an additional 30 months for the completion of the approved SOW.[5] FEMA’s RA has the authority to grant extensions beyond the limit of the recipient’s authority and will make determinations appropriate to the situation.[6] Requests by applicants for time extensions should include a detailed justification of the need for the extension and a projected completion date.[7] To justify the grant of a time extension request, applicants must demonstrate extenuating circumstances or unusual project requirements beyond the applicant’s control.[8] If the RA denies the time extension request, the recipient may, upon completion of the project, be reimbursed for eligible project costs incurred only up to the latest approved completion date.[9] If the project is not completed, no federal funding will be provided for that project.[10] 

Since FEMA awarded funding for work to restore the Facility in 2011, FEMA has granted the Applicant three extensions in addition to the two extensions granted by the Recipient. The Applicant is requesting an additional time extension. However, the record indicates that the Applicant has not yet begun, let alone completed, any work for the approved SOW. The Applicant points to various reasons as its justification for the delay, the primary reason being its lack of funding due to state law, which does not allow the award of a contract without having the means of paying the total project costs. However, FEMA generally considers lack of funding to be a circumstance within the control of an applicant and not justification for a time extension.[11] In addition, given the lack of progress on this project, after a significant number of years and numerous time extensions, FEMA does not find that any of the Applicant’s other reasons for delay (including design revisions, the effects of subsequent disasters, and labor and materials shortages) constitute extenuating circumstances justifying a further time extension. 

With regard to the request for additional funding, FEMA will only reimburse eligible project expenses incurred through the most recent approved completion date. Here, the Applicant did not incur eligible project costs prior to the latest approved completion date of December 31, 2017. As such, the Applicant’s request for a change to the SOW to account for its additional funding request (i.e., 40 percent cost increase) is also denied.[12]  

Conclusion

FEMA finds that the Applicant did not establish extenuating circumstances beyond its control to justify a further time extension or change in SOW. Therefore, this appeal is denied.