Application for additional costs under a FEMA disaster recovery grant is denied, where FEMA already paid the cost to perform the work, which was required as a result of Hurricane Katrina, and is not liable for additional costs incurred because the original contractor failed to perform.
The Plaquemines Parish Government sought additional payment from the Federal Emergency Management Agency under a project worksheet for public assistance for the reconstruction of facilities damaged by Hurricane Katrina.
The expenses arose after the applicant defaulted the original contractor performing work and the bonding company which declared bankruptcy failed to complete performance. As a result, Plaquemines incurred various costs which were not priced in the original project worksheet, including for an architect/engineering firm to develop plans for a completion contractor, for the completion contractor to correct work not performed properly by the initial contractor, and for expenses incurred until the follow-on contractor was on-site and could complete various work.
In response, FEMA explained that it paid what it considers to be costs to perform the work, when such costs arose directly from the hurricane, including costs not already incurred by the original contractor.
CBCA agreed with FEMA, finding that the costs at issue would not have been incurred but for the defaults and were not the result of the hurricane, and therefore were ineligible.
CBCA explained that FEMA does not bear the risk of default by the contractor or surety. FEMA paid for the costs to complete the work required by the hurricane, but is not liable for costs arising only because of the default of the initial contractor and/or surety, as they did not result directly from the disaster.
The board rejected the parish’s argument that it was entitled to payment up to the price of the next low bidder on the original contract, finding it unsupported by statute, regulation, or guidance. According to the board, once the applicant made an award to the original contractor, the pricing proposed by a non-awardee is not relevant, and the parish can receive only the costs it incurred to perform eligible work.
Plaquemines Parish Government is represented by Michael G. Gaffney of Gaffney & Gaffney, Metairie, LA; and Peter Barbee, Plaquemines Parish Attorney, Belle Chasse, LA. The grantee is represented by Carla Richard, Executive Officer-Legal Services, and Danielle Aymond, Executive Counsel, Governor’s Office of Homeland Security and Emergency Preparedness, Baton Rouge, LA. The government is represented by Michelle Buckalew, Office of Chief Counsel, Federal Emergency Management Agency, Department of Homeland Security; and by Charles F. Schexnaildre and Frank E. Bruscato, Office of Chief Counsel, Federal Emergency Management Agency, Department of Homeland Security.
