Lesson 4 Overview and Objectives

This lesson focuses on the implications and negative effects of not properly documenting or approving changes to the scope of work for Public Assistance Program grants.

At the end of this lesson, participants will be able to:

  • Explain the implications of not properly documenting or approving scope changes
Impacts of Improper Scope Changes (1 of 2)

Properly documenting and requesting a change in the scope of work can prevent problems for both the Recipient and Applicant. It is the Applicant's responsibility to carefully document every step of a Public Assistance funded project and to keep the Recipient and FEMA informed of any action that might differ from the approved scope of work.

If an Applicant does not properly request scope changes or commences with work before the scope change request is approved, the Applicant may face delays in funding or loss in funding. Not having proper documentation throughout closeout of a project may also cause the applicant to lose funding.

Spreadsheet of accounting documents with calculator and magnifying glass.
Impacts of Improper Scope Changes (2 of 2)

If a Recipient or Applicant fails to comply with any term of the Public Assistance award, FEMA may take one or more of the following actions, as appropriate for the circumstances:

  • Temporarily withhold cash payments pending correction of the deficiency by the Recipient or Applicant
  • Deny the use of funds and matching credit for all or part of the cost of the activity not in compliance
  • Completely or partially terminate the current award for the Recipient or Applicant's program
  • Withhold future grant program awards
  • Take other remedies that may be legally available
Financial documents with a calculator, pen, and reading glasses.
Loss of Funding

There are many documented cases where an Applicant lost Public Assistance funding due to changing the scope of work without approval. For example, one Applicant requested funding through the Public Assistance grants program to upgrade the foundation of several damaged trailers. The Applicant based the request on a code requirement applying to repairs of trailers and installation of new trailers. The Applicant proceeded to install several new trailers after the incident and did not use the code and standard required foundation. The Applicant did not wait for FEMA to complete an environmental and historic preservation review before beginning the work or give final approval.

FEMA decided that the upgrades to the foundation of the damaged trailers were not eligible because the Applicant did not enforce the standard and nor did they comply with the environmental and historic preservation review findings. If the Applicant had communicated with FEMA and documented the scope changes before commencing with the work, the Applicant would have known how to proceed without losing the Public Assistance funding.

Trashed trailer park in Big Pine Key after a hurricane.
Delays

Improper request and approval for scope changes may also cause delays in funding. Delays in funding may cause delays in the completion of a project. Some project delays are widely publicized and may result in negative public opinion throughout the community.

Here is an example:

A school in need of temporary facilities does not request approval from FEMA in a timely fashion and contracts for work to begin as soon as possible. When FEMA and the State learn that the school plans to begin work immediately, the State advises the school to put the project on hold pending FEMA environmental and historic preservation approval. This causes delays in construction, funding, and more. The media then portrays the delay of the necessary temporary classrooms for children.

Two news reporters with an image of a flooded town on a screen behind them.
Audits

Finally, improper changes in the scope of work can generate an audit during or after grant closure. Grant closure is the financial reconciliation of the grant conducted by FEMA and the State, after the parties reach agreement that all applicable administrative actions related to the Public Assistance program are complete and that all program funds related to the disaster have been reconciled.

The closeout process begins when an Applicant submits a request to the Recipient to close a project. FEMA may conduct an audit of the program during or after grant closure.
A Public Assistance Specialist reviews repairs made to a corrugated pipe drain system.
Documentation for Audits (1 of 2)

Throughout the entire life cycle of the grant program, it is critical that the Applicant maintain accurate records of all events and expenditures related to disaster recovery work, in case an audit occurs. The Applicant should have a financial and record keeping system in place that can be used to track all elements of the Public Assistance funded projects.

The information required for audits may include:

  • Completed project
  • Completed Special Considerations Questions form
  • Estimated and actual costs
  • Force account labor
  • Force account equipment, materials, and purchases
  • Photographs of damage, work underway, and work completed
  • Insurance information
  • Environmental and/or historic alternatives and hazard mitigation opportunities considered
  • Environmental review documents
  • Receipt and disbursement documents
  • Bid documents, procurement procedures, and contracts
  • Records of donated goods and services, if any
A stack of file folders filled with documents.
Documentation for Audits (2 of 2)

Applicants should begin the record keeping process before a disaster is declared by the President. The importance of maintaining a complete and accurate set of records for each project cannot be over-emphasized. Not only is the documentation necessary for audits, it also facilitates the project formulation, validation, approval, and funding processes. All documentation should be filed with the corresponding project and maintained by the Applicant as the permanent record of the project.

Public Assistance grant recipients are required to comply with the provisions set forth under the Single Audit Act of 1984 (Public Law 98-502), as amended in 1996. The Act requires grant recipients expending $500,000 or more in Federal funds to perform a single audit or program-specific audit in accordance with the Office of Management and Budget (OMB) Circular A-133, Audits for States, Local Governments, and Non-Profit Organizations.
A folder open to show financial documents.
Additional Audits

Even though a single audit must be performed, grant recipients are also subject to additional audits by the Department of Homeland Security (DHS) Office of the Inspector General and State auditors. The Office of Management and Budget (OMB) requires grant recipients to maintain financial and program records for three years beyond the date of the final Financial Status Report or follow their and the Grantee's standard record retention policy if that policy requires record retention beyond the three-year requirement.

If a Financial Status Report is not required, records must be maintained for three years from the date of the final certification of completion of the Applicant's last project, or as directed by the Recipient. Typically, Applicants will be informed of audit requirements during their first meeting with FEMA. Any questions regarding the single audit, or audits in general, should be directed to the appropriate State official or Department of Homeland Security's Office of the Inspector General.

File drawers filled with file folders and paperwork.
Example of an Improper Scope Change (1 of 3)

Severe storms and flooding from the Missouri River damaged two sewage lift stations at Big Lake State Park. FEMA prepared a Project to repair the facilities. At closeout, FEMA denied the costs because the Applicant failed to notify the Recipient and FEMA about deviations from the approved scope of work, and therefore FEMA was unable to perform the proper environmental reviews.

The Applicant appealed FEMA's decision. On the first appeal, the Applicant argued that:

  • It tried to repair the facilities, but subsequently determined that the original parts were too damaged
  • The replacement facilities were designed to replicate the original function, but didn't include any capacity or function improvements
  • The design, function, and capacity were not changed, though the footprint and some components were modified
  • The work is not an improved project since there were no significant changes

The Applicant concluded that no National Environmental Policy Act review was required and the project was categorically excluded because the work did not extend outside the original excavated footprint nor disturb new ground.

Example of an Improper Scope Change (2 of 3)

The FEMA Regional Administrator denied the first appeal finding that the Applicant:

  • Did not notify the Recipient or FEMA of additional damages
  • Exceeded the scope of work
  • Pursued an improved project without obtaining advance approval from the Recipient or FEMA
  • Did not differentiate between the costs incurred to complete the approved scope of work and additional costs incurred to replace the Facilities

The FEMA Regional Administrator also noted that the Applicant changed the footprint of the Facilities by adding an extra vault.

The Applicant appealed FEMA's decision again. On the second appeal, the Applicant argued that it did not consider the necessary work an improved project and therefore did not notify FEMA.

Example of an Improper Scope Change (3 of 3)

FEMA used the following regulations to determine eligibility for funding:

  • 44 C.F.R. 206.223(a) specifies that to be eligible for financial assistance, an item of work must be required as the result of the declared disaster event. The Applicant did not describe how additional damages were a direct result of the disaster.
  • 44 C.F.R. 13.30(d)(1) states that Applicants must obtain prior approval from FEMA whenever a scope of work revision is anticipated. The Applicant changed the footprint and size of the lift stations without obtaining approval from the Recipient or FEMA. The administrative record contained no evidence of the Applicant's notification to the Recipient or FEMA, nor of the Recipient or FEMA's approval of, a change in the scope of work for this project.
  • The National Environmental Policy Act requires all Federal agencies to consider the environmental impact of a proposed action as well as whether any alternatives exist, prior to obligating funds and beginning work. As the work completed by the Applicant went beyond the approved scope of work, this change necessitated a new National Environmental Policy Act review.

FEMA concluded that funding would be denied because the Applicant did not demonstrate that additional damages were a direct result of the disaster and the Applicant exceeded the approved scope of work. The Applicant's failure to abide by the conditions of the grant also prevented FEMA from performing an environmental and historic preservation review prior to construction commencing.

Lesson 4 Summary

In this lesson, you learned how to:

  • Explain the implications of not properly documenting or approving scope changes

The next lesson will cover project deadlines, time extensions, and the relationship between the period of performance and project deadlines.