FEMA to award $474,750,898 to rebuild Charity Hospital

Business & Economy, Politics, Recovery

January 27th, 2010  1 Comments

As described in the document CBCA 1741-FEMA In the Matter of STATE OF LOUISIANA, FACILITY PLANNING AND CONTROL, an argument between the State of Louisiana, Facility Planning and Control (FP&C) and the Federal Emergency Management Agency (FEMA), which began at the end of 2005 and lasted until the Spring of 2008, has finally come to a close. A panel under the authority of the American Recovery and Reinvestment Act of 2009 has determined that FEMA must award the funding to replace Charity Hospital rather than repair the facility.

In multiple statements made by both parties, the two continued to disagree as to whether the hospital was repairable as defined by FEMA’s Code of Federal Regulations. Under this Code, a building is repairable if the cost to repair the
damages caused by natural disaster, in this case Hurricane Katrina,
does not exceed 50% of the cost of replacing the facility. If repair
costs exceed 50% of the cost to replace a facility, funding must be
replaced.

FC&P’s team of architects and engineers, headed by Blitch Knevel Architects (BKA), maintained that it would cost $190,265,025 to replace the facility at base (excluding contracting fees, overhead and profit), and $152,332,984.76 at base to repair damages. FC&P determined that repair costs would amount to 85% of replacement costs, thus

RSMeans Business Solutions, an independent research group that conducted its own surveys and assessments of the building damage, agreed that replacement funding should be awarded as their own damage evaluation of base repair costs amounted to 68% of base replacement costs.

FEMA’s evaluation concluded that damage repair costs would amount to $126,142,709, only 27% of the replacement cost of $474,750,898.

Each of the three parties gave testimony before the panel, who deemed BKA as a team of “highly experienced, licensed professionals who made a careful study of the entire hospital”. Similarly, the panel viewed the RSMeans team as “highly experienced” and were “licensed professionals…headed by an individual who is an expert in construction costing.” The FEMA representatives, however, were far less impressive, “less experienced and less credible, and had “spent far less time in the building than had the BKA witnesses.” Furthermore, most of the FEMA reps were unlicensed making the decision of repair or replace a fairly simple one.

Although FEMA brought up issues of skepticism regarding sufficient building protection prior to the storm, and whether some of the damages included in BKA’s claim were disaster related, the doubts were inadequately supported and thus unreasonable. The panel decided that “FC&P’s asset protection was reasonable and not negligent” and that even though the “repair cost estimates include some money for repairs to damage which occurred well after the disasters occurred and may have resulted from less than perfect asset protection,” the inclusion of such does not so greatly effect estimates as to instill qualification for replacement rather than repair.

There were few arguments over replacement cost estimates as they were within 3% of each other. FC&P failed to clearly demonstrate what medical equipment was damaged by the storm, nor did they specify the costs to repair or replace the equipment. The panel determined that FEMA’s overall base estimate cost of replacing Charity Hospital was less flawed than FC&P’s and has awarded FC&P FEMA’s estimate of $474,750,898.

The document provides a final disclaimer that the panel has no issue in the matter of Charity Hospital’s future location, the prior or otherwise.

- United States Civilan Board of Contract Appeals, “CBCA 1741-FEMA In the Matter of STATE OF LOUISIANA, FACILITY PLANNING AND CONTROL”. 27 January 2010.