DATE: January 20, 1995
CASE NO. 92-JTP-17
IN THE MATTER OF
STATE OF FLORIDA, DEPARTMENT OF
LABOR AND EMPLOYMENT SECURITY,
COMPLAINANT,
v.
UNITED STATES DEPARTMENT OF LABOR,
RESPONDENT.
BEFORE: THE SECRETARY OF LABOR
ORDER DENYING REQUEST FOR RECONSIDERATION
Counsel for the State of Florida, Department of Labor and
Employment Security (State) has requested that I review and
reconsider my decision issued December 5, 1994. In that decision
I reversed the Administrative Law Judge's (ALJ) Decision and
Order (D. and O.) of May 2, 1994, and affirmed the Grant
Officer's disallowance of $961,003 resulting from the excess
profits accumulated by the State charged to its Job Training
Partnership Act (JTPA), 29 U.S.C. §§ 1501-1791 (1988),
grants.
I note that generally, reconsideration is disfavored, INS
v. Doherty, 112 S. Ct. 719. 724 (1992), and should be granted
only to "correct manifest errors of law or fact or to present
newly discovered evidence." Harsco Corp. v. Zlotnicki,
779 F.2d 906, 909 (3d Cir. 1985). The JTPA language at Section
168(a)(3), 29 U.S.C. § 1578(a)(3), however, could be
interpreted as requiring a party seeking judicial review of a
Secretary's final order to specifically and timely urge all
objections before the Secretary, prior to filing an appeal.
Therefore, I have reviewed the State's request for
reconsideration in light of the case record. The State's
request for reconsideration is denied.
DISCUSSION[PAGE 2]
A. The Burden of Production.
The ALJ determined that the Grant Officer failed to meet the
burden of production pursuant to 20 C.F.R. §
629.57(i)(1988), because he relied on the wording of a single
contract to conclude that 250 other contracts executed during a
given time period between similar parties likewise violated the
regulations governing fixed unit cost contracts. [1] D. and O.
at 6. However, four other fixed unit cost contracts were
introduced into evidence during the hearing by the State's
counsel and averred to as representative of the 250 contracts at
issue in this case. Transcript (Tr.) at 22-23. The ALJ, prior
to issuing his decision, determined that the proffered contracts
were "satisfactory to decide the issues involved in this audit."
ALJ's Corrected Order Denying Motion to Admit, issued
Dec. 2, 1993, at 2. [2]
The regulations governing an ALJ's decision require that
"[t]he decision of the ALJ shall be based upon the whole record.
It shall be supported by reliable and probative evidence." 29
C.F.R. § 18.57(b)(1993). I found that the documentary
evidence in the record, consisting in part of the Administrative
File and the representative contracts, satisfied the Grant
Officer's burden of production. SeeState of Maine v.
U.S. Dep't of Labor, 669 F. 2d 827 (1st Cir. 1982). "A party
will have satisfied his burden of production if the evidence
presented is sufficient to enable a reasonable person to draw
from it the inference sought to be established (emphasis
supplied)." Id. at 830.
B. The Burden of Persuasion.
The State had the burden of persuasion to prove that the
balance of the contracts it had in its possession, [3] in some
40 or 50 boxes, Tr. at 21-22, in fact complied with the
regulations. The State did not introduce into evidence those
other contracts, nor any summary or sample thereof. It is a fair
inference, therefore, to conclude that the balance of the extant
contracts were, as stated by the State's counsel, essentially no
different from the contracts introduced into evidence.
On reviewing the contracts in the record, it is evident that
they provide generally for placement activities, including
placement without training, and not for training in specific
occupations at agreed upon wage rates. Thus, they do not satisfy
the regulatory requirements for fixed cost contracts. The
regulation at 20 C.F.R. § 629.38(e)(2)(1991) [4] which
governs the acceptability of single unit charge (fixed unit cost)
contracts as exceptions to the statutory limitation on
administrative expenditures, [5] must be strictly construed.
Texas Dep't of Commerce and Fort Worth Consortium v. U.S.
Dep't of Labor, Sec. Dec. and Order, Nov. 1, 1993, slip op.
at 2-10, appealdocketed,
[PAGE 3]
No. 93-5543 (5th Cir. Nov. 30, 1993).
The State's failure to prove compliance with the regulation
thereby tends to support rather than rebut the evidence
indicating a violation of the regulations. State of
Maine, 669 F. 2d at 831.
C. The Allowability of Profits.
The Grant Officer's response to the State's Motion for
Reconsideration suggests that the section of the Final Decision
regarding the nonallowability of profits may not be consistent
with the Department's interpretation at the time of the
underlying audit. Counsel for the Grant Officer refers to a
Notice published in the Federal Register eliciting comments from
the public regarding, among other things, the question of profits
realized through the use of fixed unit cost contracts. [6]
Although the Notice may be indicative of the Employment and
Training Administration's prior uncertainty of how to address
problems in the use of fixed unit cost contracts, it does not
overcome the plain meaning of the language of the Objectives
section of the governing cost principles adopted by the State for
its administration of JTPA.
CONCLUSION
A review of the case record in light of the specific
objections raised by the State fails to provide any reason for
modification or reversal of my December 5, 1994 decision.
The State of Florida, Department of Labor and Employment
Security's request for reconsideration IS DENIED.
SO ORDERED.
___________________________
Secretary of Labor
Washington, D.C.
[ENDNOTES]
[1] Seealso 20 C.F.R. § 627.802(e)(1993).
[2] In that Order, the ALJ denied the Respondent's request to
read as adverse to the Complainant all of the contracts which
were not produced during discovery as required.
[3] The State apparently destroyed the contracts from Program
Years 1983-1985. See ALJ's Corrected Order Denying Motion
to Admit at 2.
[4] This section does not appear in the current regulations.
[5] 29 U.S.C. § 1518 (1988).
[6] 53 Fed. Reg. 7989, 7992 (1988).
