The Applicant is appealing FEMA’s denial of $171,499.00 for engineering design services because the fee was determined using an estimated higher construction project cost rather than the lower actual cost. Hurricane Katrina destroyed a segment of Beach Boulevard, an FHWA roadway, that had Applicant owned utilities buried beneath. PW 954, awarded for $6,689,898.00, included $506,998.00 for estimated engineering costs. The engineering agreement contained a cost range of $342,998.00 to $537,398.00. After the engineers started work, the Applicant reached a multi-agency agreement that combined the utilities work and the FHWA road work into a single project. The Applicant paid a total of $342,998.00 for the engineering services. At closeout, along with action on other items, FEMA awarded engineering fees of $171,499.00—because the completed scope included FHWA work. The Applicant appealed, arguing that the joint project significantly reduced the overall project costs and that the engineering scope was formulated as a standalone project. FEMA’s Region IV Regional Administrator (RA) partially approved the appeal for $79,594.06, awarding additional funds for questioned engineering hours, quantity overruns, survey costs and work on a sea wall, a utility box and a large concrete structure. The RA denied the request to fund street lighting conduit and striping and an additional $171,499.00 for engineering fees. The Applicant submitted a second appeal for the engineering fees, adding a justification memorandum from an engineer. FEMA finds that the actual costs of the engineering scope of work are not reasonable as they were negotiated as a percentage of the initial total construction cost, and were not adjusted once the project was reduced. A cost reasonableness analysis was performed using Cost Curve B. The cost curve amount is 5.75 percent of the $1,888,244.73 actual cost for the utilities portion of the joint project. The appeal finds eligible engineering costs to be $108,574.07—a $62,924.93 reduction—based on Cost Curve B. Authorities and Second Appeals Stafford Act § 406(a)(1)(A), 705(c). 44 C.F.R. § 206.223(c). OMB Circular A-87. PA Guide at 75-76, 78. Headnotes The Stafford Act § 406(a)(1)(A) authorizes FEMA to make contributions to a local government for the reconstruction of a public facility destroyed by a major disaster. The basic engineering and design services normally performed by an architectural-engineering firm on construction projects are eligible for reimbursement. OMB Circular A-87 defines a cost reasonable if it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time. The engineering fees are unreasonable because the contract should have been amended when project became less complex. The PA Guide states that if actual costs are unknown the FEMA cost curves may be used to establish reasonable design service costs. Curve B establishes 5.75 percent of the $1,888,244.73 construction price, $108,574.07. Section 705(c) of the Stafford Act prohibits FEMA from recovering payments if certain criteria are met. Section 705(c) does not apply because the costs were unreasonable.