Direct Administrative Costs

Citation:  FEMA-1763-DR-IA, City of Cedar Rapids, Direct Administrative Costs, Project Worksheet (PW) 99

Cross- Reference:  Administrative Costs, Reasonable Cost

Summary:  Heavy rainfall beginning in May 2008 resulted in severe flooding that caused extensive damage in the City of Cedar Rapids (Applicant).  FEMA prepared PW 99 in the amount of $356,502 for the estimated cost of emergency sandbagging.  Included in the cost estimate was $542 in actual Direct Administrative Costs (DAC).  After the Iowa Homeland Security and Emergency Management Division (Grantee) reviewed the Applicant’s documentation of actual costs, FEMA closed out PW 99 and reduced the total eligible project cost to $190,727 based on the Grantee’s recommendation.  The adjusted total included $243 ($299 less than originally approved and obligated) in DAC and $1,405 for a new contract item in Project Management costs.  The Applicant requested an additional $617 in DAC; however, FEMA determined that the Applicant’s documentation did not support the eligibility of 1) $75 in DAC associated with a consultant’s hourly rate that exceeded $155, and 2) $542 in DAC claimed for work completed 90 days after project completion.  In the first appeal, the Applicant asserted that both categories of DAC were eligible for reimbursement.  In the appeal response, the Regional Administrator noted that the Applicant did not justify the hourly rate above $155 and determined that the claim for $75 was ineligible.  The Regional Administrator also determined that a portion of the DAC incurred for closeout activities were eligible for reimbursement and obligated $539 with version 2 of PW 99.  In the second appeal, the Applicant reiterates that the DAC charged at an hourly rate above $155 is eligible because the protocol used to procure the contract established the rate as a reasonable cost and justified the rate as appropriate for a program manager’s skill level/expertise.  The Applicant cites 44 CFR §13.36(b), Procurement, Procurement standards, and OMB Circular A-87, Attachment A, section C, and Attachment B paragraph 32 as supporting its claim regarding the reasonableness of the consultant’s hourly rate.  After reviewing the second appeal, FEMA requested additional information detailing the specific administrative tasks performed by the contractor that were associated with the claimed DAC.  The Applicant submitted documentation including general tasks, but did not provide specific descriptions of the administrative tasks that were explicitly requested by FEMA.

Issue:  Has the Applicant provided sufficient documentation identifying specific administrative tasks that would enable FEMA to determine whether the claimed Direct Administrative and Project Management Costs are eligible for reimbursement?

Finding:  No.

Rationale:  44 CFR §13.36 Procurement, Disaster Assistance Policy 9525.9, Section 324 Management Costs and Direct Administrative Costs