Torrance Health Center

Citation:          FEMA-1008-DR-CA, Los Angeles County Department of Health Services, Outpatient Torrance Health Center, Damage Survey Report (DSR) 60569

Cross-
Reference:       Grant Acceleration Program
 
Summary:          Following the Northridge earthquake on January 17, 1994, the Los Angeles County Department of Health Services (Applicant) accepted a Public Assistance Grant Acceleration Program (GAP) offer to repair the Torrance Health Center.  Final eligible costs were funded on Large Project Closeout DSR 60590.  On April 24, 2008, the Applicant appealed FEMA’s closeout decision to treat $25,471 in costs for Architecture and Engineering (A&E) construction administration services as project management costs.  The Applicant argued that FEMA mischaracterized the expenses as project management soft costs when instead the costs were directly related to hard costs construction design and engineering services.  Re-characterization of the costs would result in a $29,546 GAP cost overrun ($25,471 in part A costs plus $4,075, the 16 percent allowance for project management part H costs) that could be offset by under-runs from another GAP project.  FEMA denied the first appeal August 19, 2008, because, consistent with the GAP guidelines and the documentation submitted, the costs associated with construction administration services is a project management soft cost and not hard costs.  On October 8, 2008, the Applicant filed its second appeal.  The Applicant maintained that the $25,471 in costs should not be categorized as project management soft costs, but treated as hard costs associated with the actual design and engineering of the project.  Support documents included a copy of the A&E Services Agreement and a Summary of Expenditures relating to the A&E construction administration.

Issue:               Is the $25,471 in construction administration services a hard cost, and therefore is the resulting $29,546 eligible for offset with GAP under-run funds?

Finding:           No.

Rationale:       44 Code of Federal Regulations §206.206(a); Instructional Guide for Cost Estimating Format (CEF)