Summary Paragraph From May 25 to August 1, 2011 the Missouri River flooded multiple counties in the State of Iowa. The Grantee worked with FEMA to prepare project worksheets (PWs) to reimburse applicants. FEMA prepared 45 small project category Z PWs to reimburse the Grantee for direct administrative costs (DAC) incurred during the development of the applicants’ PWs. In a first appeal letter the Grantee requested a small project net cost overrun for 45 small projects in the amount of $150,858.32. The FEMA Region VII Regional Administrator (RA) partially granted the first appeal in the amount of $148,811.46. The RA determined $1,334.79, $54.29, and $657.78 in respective costs on category Z PWs 474, 482, and 484 to be ineligible because the DAC correlated to applicant PWs 337, 143, 144, and 18, which FEMA determined to be ineligible. On December 28, 2015, the Grantee submitted a second appeal in the amount of $2,046.86. The Grantee reiterates that Disaster Assistance Policy (DAP) 9525.9, Section 324 Management Costs and Direct Administrative Costs, which does not specify that DAC pertain only to eligible work, should be applied to address the issue. Authorities and Second Appeals OMB Circular A-87. DAP 9525.9, Section 324 Management Costs and Direct Administrative Costs, at 2. PA Guide, at 40. Central Bradford Progress Authority, FEMA-4030-DR-PA, at 5. Headnotes OMB Circular A-87 requires that grant costs must be allowable and allocable. A cost is allowable if it is necessary and reasonable for proper and efficient performance and administration of Federal awards. A cost is allocable if it is chargeable or assignable to a grant. DAP 9525.9, Section 324 Management Costs and Direct Administrative Costs states that FEMA will reimburse direct administrative costs incurred by grantees and subgrantees that are properly documented and directly chargeable on a PW for a specific project. The PA Guide states that generally, costs that can be directly tied to the performance of eligible work are eligible. Such costs must be reasonable and necessary to accomplish the work. FEMA has determined that DAC, if incurred and properly documented, is only eligible for funding if the associated work is eligible.