Conclusion:  On second appeal, Nashville-Davidson County (Applicant) provided adequate documentation to support reimbursement of costs associated with resident engineering services and the need to replace anaerobic digester membranes and membrane seals.

Summary Paragraph

Between April 30, 2010 and May 18, 2010, severe rainstorms, tornadoes, and straight-line winds impacted Nashville-Davidson County.  The rainstorms caused the Cumberland River to overflow and submerge building 40 located at Applicant’s Metropolitan Water Services Biosolids facility.  Anaerobic digesters 1, 4, and 5 located at building 40 all sustained damage from floodwater inundation.  FEMA subsequently prepared Project Worksheet (PW) 5593 documenting necessary repairs to these three anaerobic digesters.  In a June 3, 2011 letter, the Applicant submitted its first appeal and argued FEMA erred in estimating direct administrative cost (DAC) and resident engineering costs—the Applicant also asserted that anaerobic digester membranes and their seals were in fact not repairable as FEMA had estimated on the original PW.  The total disputed amount, including associated construction management costs, totaled $1,041,873.44.  The FEMA Region IV Regional Administrator, through a June 1, 2012 letter, denied the appeal in its entirety, stating the following: the request for costs associated with residential engineering services lacked adequate documentation; the request for DAC failed to document work attributable to preparing a PW; and requests for increased costs to replace membranes and their seals could not be reimbursed because the replacement was an improvement.  In a letter dated August 10, 2012, the applicant submitted its second appeal, again requesting resident engineering costs and costs to replace the membranes and membrane seals—the total amount requested was $623,712 and included associated construction management costs.  Upon FEMA’s subsequent request for additional information, the Applicant provided documents describing resident engineer’s services.  Further, the Applicant has provided adequate documentation to substantiate the need to replace digester membranes and membrane seals. 

Authorities and Second Appeals

• Stafford Act § 406 (a)(1)(A), 42 U.S.C. § 5172.
• 44 C.F.R. § 13.22.
• 44 C.F.R. § 206.203(d)(1).
• OMB Circular A-87 Attachment A (C)(1)(j)(a), 2 C.F.R. § 225 Appendix A (C)(1)(j)(a)
• PA Digest, at 48.
• PA Guide, at 36, 40, 79, 59, 110, and 139.

Headnotes

• OMB Circular A-87 provides that allowable costs must meet the cost principles of being necessary; allocable to Federal awards; and adequately documented.
  • The Applicant provided documentation to demonstrate that the resident engineering costs are necessary, allocable, and adequately documented for PW 5593. 
• PA Digest, at 48, provides that “[s]pecial services[,] which are not required on every restoration project, include engineering surveys, soil investigations, services of a resident engineer, and feasibility studies. These services must be specifically described and must be shown to be necessary for completing the eligible scope of work.”
  • This project is part of 19 separate PWs associated with flood recovery efforts of a complex nature, and could require the use of resident engineering services.
• PA Digest, at 110, federal funding for improved projects is limited to the federal share of the estimated cost of the original project or the federal share of the actual costs of completing the improved project, whichever is less. The balance of funds is a non-federal responsibility.
  • The applicant provided adequate documentation to separate improved costs from the original estimate.