New Orleans Hospital Awarded $474 Million

      NEW ORLEANS (CN) – After three years of heated discussions and public fears that it would not be rebuilt, the U.S. Civilian Board of Contract Appeals said Louisiana will get a grant of more than $474 million – rather than the $150 million the Federal Emergency Management Agency offered – to rebuild hurricane-flooded Charity Hospital.

     Charity Hospital was severely damaged by hurricanes Katrina and Rita in September 2005 when massive flooding swamped greater New Orleans. It was one of two teaching hospitals and was part of the Medical Center of Louisiana at New Orleans.
     The Board of Contract Appeals said that the Louisiana Facility of Planning and Control (FP&C) asked that the arbitration panel direct FEMA to award $491 million, rather than $150 million, as a public assistance grant.
     The panel’s analysis was based on lengthy statements submitted by FP&C and FEMA, and a short statement submitted by Louisiana. The documents and testimony were considered during a five-day arbitration hearing.
     In July 2008, FP&C asked FEMA for more than $491 million to replace the hospital. FEMA responded in December 2008 that the cost to repair items damaged by wind was more than $15 million, the cost to replace items damaged by flooding was almost $60 million, and that FP&C should get that much plus $51 million for repairs approved by the Department of Homeland Security and FEMA.
     The Board of Contract Appeals memo issued Wednesday states: “Each party believes today that the position it took in 2008 is correct and should be adopted by the panel. … [The] key issue to be decided is whether FP&C has met the test prescribed by the FEMA regulation … which delineates when a public assistance grant should be made for repairs to a facility and when such a grant should be made for replacement.”
     A facility is considered reparable when the disaster damages do not exceed 50 percent of the cost of replacing it.
     FEMA claimed that the repair cost would be 27 percent of the cost of replacement. But engineers and architects at Blitch Knivel Architects estimated the repair cost would be 68 percent of the cost of replacement.
     The Board concluded that the “FEMA representatives who testified at the hearing were less experienced and less credible than the BKA witnesses.”
     FEMA claimed that some costs in the BKA estimate included repairs to systems that were in poor shape before the hurricanes hit.
     The panel added: “Very little attention was paid during the hearing to the estimates of the cost of replacing the hospital. This was appropriate, since the estimates submitted by FP&C ($491,884,000) and FEMA ($474,750,898) were within 3 percent of each other.”

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