Application Procedures; Allowable Costs & Reasonable Costs; Force Account Labor and Equipment Costs; Financial Accounting & Reconciliation; Immediate Threat (2024)

Appeal BriefAppeal LetterAppeal Analysis

Appeal Brief

Summary Paragraph

From December 10 to 11, 2021, severe storms, straight-line winds, and tornadoes caused damage in the State of Tennessee. Nashville Electric Service (Applicant) requested Public Assistance funding for the repair and restorationof its electricity distribution system.The Applicant submitted invoices, pay policies, cost spreadsheets, and timesheets. FEMA issued three requests for information seeking additional documentation. In response, the Applicant explained its cost methodology and provided documentation including cost allocation, force account labor (FAL), force account equipment (FAE) and contract cost spreadsheets. FEMA denied the request, finding that the Applicant did not provide documentation validating its claim. The Applicant submitted a first appeal requesting $3,071,707.68. The Applicant asserted that it previously provided documentation identifying specific work locations and details, and reiterated its cost methodology. The FEMA Region 4 Regional Administrator found that the Applicant’s documentation demonstrated eligible materials costs of $467,779.98. FEMA denied the remaining claim, finding that the Applicant did not provide documentation to validate the claimed FAL, FAE, contract costs, and meals. The Applicant submitted a second appeal for$2,603,927.70, asserting that it incurred the claimed costs in the performance of eligible work.

Authorities

• Stafford Act §§ 403, 42 U.S.C. § 5170b; 406(a)(1)(A), 42 U.S.C. § 5172(a)(1)(A).
• 2 C.F.R. § 200.403.
• 44 C.F.R. §§ 206.201, 206.206(a), 206.221(h), 206.223(a)(2), 200.403(g).
• PAPPG, at 51, 56, 65, 69, 72, 97, 115, 117, 140, 176.
• Nashville Electric Service, FEMA-4637-DR-TN, at 4.

Headnotes

• To be eligible, work must be located within the designated area. Costs must be directly tied to the performance of eligible work and adequately documented.
• The Applicant demonstrated that its claimed FAL, FAE, and contract costs for work located within the designated area are tied to the performance of eligible work.
  • The Applicant did not demonstrate that costs for bulk meals provided to employees were incurred in the performance of eligible emergency work.

Conclusion

The Applicant has demonstrated its FAL, FAE, and contract costs claimed for work located in the designated area are tied to the performance of eligible work. However, costs for meals provided to employees are not eligible because the costs were not incurred in the performance of eligible emergency work.Therefore, this appeal is partially granted in the amount of $2,359,118.01.

Appeal Letter

Appeal Analysis

Background

From December 10 to 11, 2021, severe storms, straight-line winds, and tornadoes caused extensive damage in the State of Tennessee. Nashville Electric Service (Applicant), a special district governmental entity, requested Public Assistance (PA) funding for the repair and restoration of its electricity distribution system (Facility).Specifically, the Applicant reported that severe winds from the disaster damaged or destroyed transmission poles, transformers, and associated components. From December 10 to 16, 2021, the Applicant performed repairs on the Facility in four counties. On January 14, 2022, the President issued a major disaster declaration that included three of the four counties as designated areas eligible for PA. The Applicant requested $3,071,722.49 for force account labor (FAL), force account equipment (FAE), materials, contract costs (including traffic control, right of way (ROW) clearing, and rental equipment), and meals for force account and contracted employees.The Applicant submitted documentation pertaining to work done in all four counties, including contractor and materials invoices, pay policies, a pole and transformer cost and location spreadsheet, timesheets, and summaries of the costs for contractors, equipment/operators, labor, and materials. FEMA created Grants Manager Project 667359/Project Worksheet 124, a Category F (Utilities) project to document the request.

FEMA issued three Requests for Information (RFI) seeking additional documentation supporting the Applicant’s claim. On June 9, 2022, FEMA issued an RFI seeking documentation supporting the claimed FAL, including employees’ job titles and functions, type of employee, days and hours worked, pay rate, and descriptions of the work performed. The Applicant provided a written response and additional documentation, including: a Policy Manual;[1] storm and power outage details; a spreadsheet showing FAL information (names, job titles, functions, type of employee, days worked, and pay rates); and power restoration milestones.

FEMA issued a second RFI on June 24, 2022, requesting supporting documentation related to project validation, including FAL, FAE, and materials. FEMA asked the Applicant to identify claimed costs by county, and to identify the costs specifically associated with each declared county. FEMA also requested supporting documentation to clarify if debris removal was limited to “cut and toss” activities or also included hauling debris away.[2] The Applicant provided a written response and additional documentation, including a revised pole location spreadsheet showing location (latitude, longitude, and county) and cost for each damaged pole/transformer; a debris clearance locations spreadsheet; and a cost allocation spreadsheet. The cost allocation spreadsheet showed the total claimed for the work in the three designated counties.[3] The Applicant stated that it recorded December 10 to 11, 2021 storm costs under a storm specific work order that the Applicant identified as “ST2203XX,” where the “XX” was a field for categories, such as “LA” for labor. The Applicant stated that the cost allocation spreadsheet showed per county costs based on the number of damaged poles in each county. The spreadsheet omitted the Applicant’s claim for bulk meal costs, but otherwise showed total claimed disaster costs of$2,826,897.99 associated with 117 damaged poles within the declared counties. The Applicant stated that all debris removal was cut and toss per its policy to not remove downed trees/limbs resulting from weather events and that the relevant public works departments removed the downed tree debris.

On July 19, 2022, FEMA issued a third RFI, requesting documentation clarifying costs related to FAL, FAE, materials, contract costs, and debris clearing and equipment. In a response, the Applicant clarified that its claim did not include labor, materials, equipment, or contract costs associated with repairing the poles in Williamson County because the county was not included in the disaster declaration.The Applicant provided a table showing the number of damaged poles per county.

In an October 11, 2022 Determination Memorandum, FEMA denied $3,071,722.49,[4] finding that the Applicant did not provide documentation validating its requested FAL, FAE, materials, and contracted costs. FEMA noted that the Applicant did not provide county/GPS specific FAL information, and that while the Applicant provided specific counties for FAE and materials, it did not provide specific locations where work was performed. FEMA also found that the Applicant did not provide documentation to support the eligibility of its meals and ROW clearance claims.

First Appeal

The Applicant submitted a first appeal dated December 7, 2022, appealing $3,071,707.68 of the previously denied costs related to the repair and restoration of damaged poles and transformers.[5] The Applicant asserted that it identified the specific locations and details for each damaged pole and transformer, and previously submitted that information. The Applicant resubmitted and referenced the revised pole location spreadsheet, stating that it showed details for each item, including numbers, size, type, cost, county, service center, and latitude and longitude coordinates. The Applicant reiterated its storm-related cost tracking methodology, stating that it followed industry standard cost management practices. The Applicant stated that it identified disaster-related costs and tracked them separately from regular operations and only claimed costs associated with the damaged poles it repaired in counties within the designated area for the declared disaster. It resubmitted its earlier cost spreadsheet limiting its claim on this basis. Therefore, although the Applicant cited to $3,071,707.68 as the total costs incurred, the appeal letter and the spreadsheet clarified that the Applicant was not claiming that full amount as eligible for the work in the designated areas. For example, although the first appeal letter listed total material costs of $467,779.98, the spreadsheet clarified that the Applicant was only claiming $430,946.91 in material costs as “eligible charges” for work in the designated areas.It noted that 117 of 127 damaged poles were located in three counties included in the disaster declaration. On December 9, 2022, the Tennessee Emergency Management Agency (Recipient) transmitted the appeal with support.

On November 20, 2023, the FEMA Region 4 Regional Administrator partially granted the appeal. FEMA found that the Applicant’s documentation demonstrated eligible costs for materials in the amount of$467,779.98.[6] FEMA denied the remaining costs, finding that the Applicant did not provide documentation to validate the claimed FAL, FAE, meals, and contract costs. FEMA noted that the Applicant did not provide documentation to substantiate the FAL claimed, such as work logs, activity logs, or other similar documentation to show the type of work completed per employee on an hourly basis. Similarly, FEMA denied all FAE costs because it stated the Applicant submitted logs showed employee names and hours but not the equipment used, the location of the work, or the activities performed with each piece of equipment. FEMA denied the requested costs for meals because it determined the Applicant’s employees received a daily per diem, the meals were not purchased in bulk, and the employees were not engaged in eligible emergency work. Finally, FEMA found that the Applicant did not submit debris monitoring documentation and did not demonstrate that the work was limited to clearing ROWs to enable facility access, or that the debris caused an immediate threat of further damage.

Second Appeal

In a letter dated January 12, 2024, the Applicant submitted a second appeal requesting $2,603,927.70.[7] The Applicant provides a final summary spreadsheetcontaining previously provided information pertaining to the Applicant’s FAL, FAE, meals, and contract costs claim. The Applicant states that the spreadsheet shows detailed descriptions of each employee’s storm restoration work and the date and number of hours worked. The Applicant further asserts that the hours shown align with individual timesheets showing hourly work to support its FAL claim. Regarding FAE, the Applicant states that the final summary spreadsheet contains detailed information (equipment type, dates and hours used, etc.) for each piece of equipment claimed. The Applicant requests that if FEMA finds the FAL claim to be eligible, that it also approve reimbursem*nt for employee meals. The Applicant clarifies that while some employees received a meal allowance, employees who could not leave their work sites due to the nature of the restoration operation received meals purchased in bulk from restaurants. It notes that the employees who received bulk meals did not receive meal allowances. The Applicant states that, although FEMA focused on debris work in the first appeal decision, its contract’s claim included other costs such as traffic control and equipment rental. Finally, regarding debris costs, the Applicant asserts that its documentation shows that tree trimming vendors conducted limited cut and toss debris work to facilitate access, at the direction of and monitored by the Applicant’s employees. The Applicant states that its final summary spreadsheet shows that its arborists accompanied workers and approved the timesheets and invoices for that work.

The Recipient transmitted the appeal and its February 28, 2024 dated letter, providing support and noting that the Applicant is submitting additional costs validation documentation on second appeal.

Discussion

Application Procedures/Allowable & Reasonable Costs

To be eligible, work must be located within the designated area of a major disaster or emergency declaration.[8] Costs must be necessary and reasonable to accomplish the work properly and efficiently.[9]

The Applicant utilized FAL, FAE, materials, and contractors to repair the Facility and restore power to customers. Components of the Facility, such as individual poles, were located across various counties within the Applicant’s service area. The Applicant performed the work in four counties; however, after the work was complete, the Applicant learned that only three of the counties had been designated in the disaster declaration. The Applicant provided documentation (a map, GPS coordinates, and addresses) that demonstrated that 117 damaged poles were located within the designated counties and distinguished them from 10 damaged poles that were located in the fourth county, outside of the designated areas. On first appeal, the Applicant acknowledged that the original total amount in dispute included costs associated with those 10 poles. Therefore, it used a cost allocation methodology to calculate the costs associated with work in the three designated counties and clarified that these costs totaled $2,826,897.99. Included in the total was a revised claim of $430,946.91 for materials associated with work located within the designated areas. FEMA’s first appeal decision found material costs eligible and inadvertently awarded the originally requested $467,779.98 for material costs.

On second appeal, FEMA finds that the cost allocation methodology used by the Applicant to determine costs associated with work in designated counties is reasonable. As a result, FEMA will apply a project cost adjustment to correct the clerical error in the first appeal response and reduce the total award by $36,833.07. Notwithstanding the clerical error for materials, the remaining costs FEMA will consider in this second appeal amount to $2,395,951.08 ($2,826,897.99 minus $430,946.91), plus the costs of bulk meals ($3,194.48, which, unlike the aforementioned FAL, FAE, materials, and contractor costs, the Applicant has not broken down to only those associated with the three designated counties). FEMA will not consider any additional costs included in the amount in dispute in the Applicant’s second appeal letter, as the Applicant has previously confirmed those costs are associated with work in the non-designated fourth county.

Force Account Labor and Equipment Costs

For permanent work, both straight-time and overtime labor costs are eligible for budgeted and unbudgeted employee hours.[10] To support eligibility of FAL costs claimed, the applicant should submit a summary of actual costs for completed work, timesheets, fringe benefit calculations, a pay policy, and information for each individual, including their name, job title and function, type of employee, days and hours worked, pay rate and fringe benefit rate, description of work performed with a representative sample of daily logs/activity reports.[11] FEMA provides PA funding for the use of Applicant-owned (force account) equipment, including permanently mounted generators, based on hourly rates.[12] FEMA only applies equipment rates to the time the Applicant is actually operating equipment.[13] To support eligibility of FAE costs claimed, the Applicant should submit, for each piece of equipment, the type of equipment and attachments used, size/capacity, locations and days and hours used, operator name, and schedule of rates.[14]

On second appeal, the Applicant has provided documentationthat shows detailed work descriptions for each employee, dates worked, and the number of hours.[15] The work details align with the claimed hours and dates shown in employee timesheetsunder work order “ST2203LA” that the Applicant identified as its designated FAL storm code. In support of its FAE claim, the Applicant has provided spreadsheets showing dates, hours, and the employee operating each piece of claimed equipment. The spreadsheets show detailed equipment information including type, year, make, and model; size/capacity; operator name; and rates.[16] Additionally, the FAL work descriptions show the activities performed with each piece of equipment. For example, thefinal summary spreadsheet submitted with the second appealshows that an employee, a Lineman Working Foreman, worked a total of 61 hours between December13 and 15, 2021, installing and repairing overhead lines, and utilized 57 FAE hours operating heavy trucks. The information on the employee’s timesheet records the same work dates, hours, and pay rates (regular and overtime) shown in thespreadsheetsand classifies the claimed hours under the work order that the Applicant identified for the declared incident. The Applicant has also provided GPS coordinates and addresses of the damaged poles where it performed repairs.[17]

Regarding meal allowances paid to its employees, the Applicant provided its predisaster Policy Manual, which includes provisions for a meal allowance paid to employees working overtime hours.[18] As such, the meal allowance is part of each employee’s associated overtime costs and is eligible in accordance with the other overtime costs claimed.[19]

Therefore, for the costs claimed for work located within the designated areas, the Applicant has demonstrated that its claimed FAL, FAE and employee meal allowance costs are directly tied to the performance of eligible work.

Financial Accounting and Reconciliation

FEMA may provide funding for permanent work required to repair a public facility damaged by a major disaster, including utilities (e.g., power generation, transmission, and distribution facilities).[20] An applicant may need to clear its ROW to obtain access to repair a utility.[21] FEMA may fund limited clearance of incident-related debris from the ROW to enable access to the facility.[22] Additionally, if trees in the vicinity of the facility were damaged by the incident and an arborist confirms that the trees cause an immediate threat of further damage to the facility (e.g., overhead power lines), FEMA may provide PA funding to remove those trees.[23]Costs must be directly tied to the performance of eligible work and adequately documented.[24]

Here, the Applicant provided invoices and spreadsheets in support of its claimed costs for ROW clearance (including equipment rental) and traffic control. The invoices identify and distinguish the claimed disaster-related costs by specifying the Applicant’s designated storm code“ST2203XX.” Regarding ROW clearance work (tree trimming work and equipment, and hydrovacs), the Applicant provided a spreadsheet with work locations (address, latitude, and longitude) that align with contractor invoices. The invoices identify the Applicant’s claimed disaster-related costs by specifying the “ST2203XX” code. For example, the Applicant claims costs for tree trimming and ROW clearance performed by ABC Professional Tree Service Inc. The associated invoices show costs under the Applicant’s claim that are distinguished from other costs billed to the Applicant with the specified “ST2203LA” cost code.[25] Furthermore, the Applicant’s documentation includes timesheets and FAL spreadsheets showing that the Applicant’s arborists provided oversight for the ROW clearance work. Although the Applicant stated that it cut trees from six locations and subsequently moved that debris to a location for public works pick up, the Applicant did not claim costs for debris hauling and disposal. The ROW clearance-related invoices show costs associated with tree work, equipment rental (mini skid steer and bulldozer), and equipment operated by contract labor (hydrovac) consistent with ROW clearance work. The information in the invoices substantiates the Applicant’s claim that the claimed ROW clearance work enabled facility access.[26] The Applicant does not claim or submit invoices for haulage, tipping fees, etc., that would typically be associated with debris removal work. Like the ROW documentation, the traffic control invoices distinguish the claimed costs through the specific code, “ST2203XX.” Thus, for costs claimed for work located within the disaster-designated areas, the Applicant has provided sufficient documentation to support that its claimed traffic control and ROW clearance contract costs are eligible.

Immediate Threat

FEMA may provide funding for emergency work that must be done immediately to save lives, protect public health and safety, protect improved property, or to eliminate or lessen an immediate threat of additional damage.[27] Under certain circ*mstances, FEMA may fund the provision of meals, including beverages and meal supplies, for employees and volunteers engaged in eligible emergency work.[28]

The Applicant’s claim for the costs of meals[29] purchased for employees is not eligible because the Applicant did not demonstrate that the costs were incurred in the performance of eligible emergency work, nor that the provision of meals met other eligibility requirements, e.g., they were provided to individuals that did not receive per diem.[30] Here, the Applicant’s restoration of its electricity distribution system is permanent work, and the Applicant has not provided documentation tying its meal purchases to any other eligible emergency work.

Conclusion

The Applicant has demonstrated its FAL, FAE, and contract costs claimed for work located in the designated area are tied to the performance of eligible work. However, costs for meals provided to employees are not eligible because the costs were not incurred in the performance of eligible emergency work.Therefore, this appeal is partially grantedin the amount of $2,359,118.01.[31]