33 Miss. Code R. § 1-33-1-IV-A
The terms "eligible" and "allowable" are often used interchangeably. Although technically a difference exists between these terms as defined below, their synonymous use will not influence the outcome of a cost determination.
Eligible costs are those costs in which DWSELF loan participation is authorized pursuant to applicable statute. Allowable costs are those project costs that are eligible; are only for projects or portions thereof that meet the definition of an emergency as established in Section I.C.(14) of this regulation; are reasonable, necessary, allocable to the project, within the established project scope and budget, in conformance with this DWSELF regulation and are approved as allowable by the Department.
An example best illustrates the difference between the two terms. Emergency improvements to drinking water systems, including construction of new drinking water systems or repair of existing drinking water systems, are eligible. Building of roads, fire fighting vehicles, wastewater treatment projects, etc. are not eligible.
Within a generic eligible category of projects, costs may be allowable or unallowable for loan participation. For example, the cost of building a distribution line is eligible, but such costs incurred after the thirty-day deadline established in Section III.C.(9)(e) of this regulation are unallowable.
In addition to and/or the absence of a specific cost item described in the DWSELF regulations, to be allowable under the DWSELF loan program, costs must meet the following general criteria:
Computers are also allowable if they are to be used for the operational control and analysis of the water system.
The cost of computer software specifically designed for the operation and maintenance (including the cost of developing unique operating programs for the specific loan funded project) of the treatment works is also allowable for loan participation.
Additional costs to correct defects (i.e., errors and omissions in the contract documents) and other costs caused by the impact of such defects on other portions of the project are not allowable. For example, if the construction drawings had omitted piping from a well to a water tank, and the engineer or contractor detected this before building was undertaken, the cost of a change order to include the piping would be an allowable cost, because:
If this omission had been realized after substantial construction work had been completed, and therefore required rework, delay, or additional work beyond that which would have been required by defect free drawings, the cost of the piping would still have been allowable, but the additional cost of rework or delay would have been unallowable.
The additional cost is measured as the difference between the cost which would have been included in the bid based on defect free drawings and the actual cost of the change order. For example, if a concrete tank had been constructed and was later found to be at an incorrect elevation due to an error in the design drawings and if it was necessary to demolish the tank and reconstruct it at the correct elevation, the entire change order would be unallowable, except for differences in excavation costs. If additional excavation was required to construct the tank at the correct elevation (i.e., the incorrect elevation was too high), the cost of the additional excavation would be allowable. However, if too much excavation had been undertaken, and fill was required to enable the tank to be constructed at the correct elevation (i.e., the incorrect elevation was too low), both the entire change order and the cost of the unnecessary excavation and additional fill would be unallowable. In these cases, the loan recipient must determine whether to seek remedial action or compensation from the responsible parties, however, such action or decision not to take such action will have no effect on loan allowability.
Regardless of the allowability of construction costs to correct errors and omissions, in no case are additional engineering, legal, observation, or other costs allowable, except for the cost of observing allowable construction work, to the extent that such observation costs would have been incurred to observe the same construction if such construction had originally been included in defect free drawings.
The term professional services refers to engineering, legal, administrative, and similar services. Should any costs for professional services be incurred prior to loan offer, these costs will be allowable provided that the loan recipient has requested and obtained Department approval of such costs, and the loan agreement budget period includes the time period that these costs are incurred.
An amount higher than the determination of just compensation may be found allowable as a result of an administrative settlement if the loan recipient provides sufficient written documentation to the Department prior to the actual acquisition. Such an administrative settlement may be appropriate where negotiated purchase is unsuccessful and where a condemnation action may entail a long delay or excessive cost. Administrative settlements may be used when they are reasonable, prudent and in the public interest. Documentation may include evidence of purchase negotiations, real property sales data, estimated court settlement and legal costs based on previous condemnation proceedings.
33 Miss. Code. R. § 1-33-1-IV-A