DAB Decision 2
April 1, 1974 University of Miami, Docket No. 3; Grant No.
04-H-000329-02-0 under Section 509 of the Social Security Act - Decision
No. 2 Saunders, Charles B., Jr.; Bernstein, Bernice Dukes, David V.
This is an appeal pursuant to 45 CFR Part 16 from the determination of
the Health Services and Mental Health Administration that an unallowable
expenditure has been charged to the grant. The undersigned members of
the Grant Appeals Board have been designated as a panel of three for the
disposition of the instant case. This decision is made on the basis of
the documents submitted to the Board.
BACKGROUND
A Comprehensive Health Care Program Grant running from April 1, 1972 to
March 30, 1973, was awarded to the University of Miami by the Health
Services and Mental Health Administration (HSMHA), to be administered by
the Regional Office Health Director, The total amount of the grant was
$725,000. Around October of 1972 the grantee determined that the
grant-supported project would have to be relocated. (Exhibit #1,
Grantee's Appeal Document) The grantee, asserts that the HSMHA Regional
Office was apprised of these events. (Exhibit I)
FACTS
The grantee states that the first cost estimates for the relocation were
obtained by the grantee in December 1972. The grantee further states
that the Regional Office of HEW was notified that the total estimated
expenditures would be $157,058 and that the Regional Office indicated
that the estimates should be submitted by the Director of the Project in
the next Project Revision. (Exhibit I)
In its appeal document (Exhibit I) the grantee makes the following
additional statements:
1. During preparation of the budget revision in January 1973, the
Regional Office informed the Project Director that a request for
supplemental relocation funds should not be sent separately but as
a part of the budget revision.
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2. On February 9, 1973, the Regional Office informed the Project
Director that the revised budget period should extend to 15 months
and that the budget should be received by the Regional Office no
later than March 15, 1973.
3. The revised budget was submitted on March 5, 1973, and the
estimated expenditures were budgeted in Item Number 25 "other
category" totaling $157,058, actual renovations began on February
28, 1973. While not documented by the grantee in Exhibit I, these
statements appear to be supported by the Regional Office in
Exhibit #III.
4. On March 19, 1973, a site visit was performed by "Dr. Arthur
Leslie, Regional Medical Director, and Mr. Fred Morrison, from the
Regional Office, with regard to some concern over various budget
items." "The only specific concern expressed by the site visitors
with regard to the relocation costs were hopes that the ultimate
costs would be lower than the budgetary estimate."
5. The grantee also states in his appeal document that "the plans
for the proposed alterations and renovations, as to the cost, were
approved by the Regional Federal Engineering and Construction
Agency."
6. Finally in Exhibit I the grantee states that subsequent to the
March 19 visit, the Regional Office, in a series of events,
declined to approve the full costs of the relocation. The final
decision was outlined in a letter of June 25, 1973, from the
Interim Regional Health Director to the grantee.
The granting agency does not generally agree with the facts as stated by
the grantee. In Exhibit III, an A.T.S. Memorandum from the Acting
Regional Health Administrator to the Acting Chief, GPRB/DGC/ORM/OAM/H
addressing itself to the subject of this appeal, the following important
contradictions appear:
The Regional Office states that the first official notification that the
Project would be moved outside the University of Miami Medical Complex
was contained in Dr. Seligman's letter of March 5, 1973, which stated in
part "of course our plans for relocation have by necessity been
implemented." The Acting Regional Health Administrator (RHA) goes on to
state "although the project had informally advised
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the Regional Office that a move would be necessary, the timing and
details concerning it were not known until the letter of March 5 was
received and copies of the plans (were) given to us on the March 19
field visit."
The grantee implies in Exhibit I that the Regional Office was advised
around Dec. 1972 that the amount of 157,058 would be necessary. The
Regional Office states that there is nothing in their records to
indicate that notification was given to the Regional Office prior to
March 12, 1973.
The grantee's recollection of the site visit is strongly contradicted by
the Acting RHD in Exhibit III as follows: "The visit was made by Dr.
John T. Leslie and Mr. Frank Morrison of the Regional Office staff. The
budget revision that was under discussion was for some $300,000 more
Federal funds than were available. As previously indicated copies of
Grants Administration Manual Chapter 1-44 were given to Dr. Seligman.
There was discussion of the $75,000 maximum for alterations for the life
of the project. The grantee was advised that $25,083 had previously
been spent on renovations which left a maximum of $49,917 which could be
approved if retroactive approval was granted. The grantee was
instructed (confirmed by letter dated March 20) to submit a budget
within the funds available and that alteration and renovation costs be
no more than $49,917."
The grantee's statement that the proposed plans were approved by the
Regional Office Facilities Engineering and Construction Agency (ROFEC)
is confirmed by the Acting Director, Division of Grants and Contracts,
ORM/GAM/H in his response (Exhibit II) to the grantee's appeal.
However, he goes on to state that "while it is true that the plans were
approved by the ROFEC on March 20, we understand that Regional Office
staff did not receive copies of the plans (dated Feb. 8, 1973) until
March 19. Nevertheless, it must be pointed out that although ROFEC
performs a valuable technical review of plans from an architectural and
engineering standpoint, the Agency does not have the authority to commit
the expenditure of Federal grant funds. Furthermore, the expenditure of
grant funds in excess of $75,000 for alterations and renovations would
be in violation of the prior approval requirements contained in Part
1-44-40C., unless a waiver is obtained from the head of the granting
agency or his designee."
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DISCUSSION
The grantee challenges the agency determination on the following
grounds:
1. that it cannot cite authority indicating that a ceiling for
project renovations is carried forward to new grants. 2. the
renovation plans were approved by the Regional Office
Facilities Engineering and Construction Agency. 3. the Regional
Office may not have authority to make final determination as to
disposition of expenditures allowable under the grant award.
The grantee goes on to assert that the relevant standards are undefined,
vague, and ambiguous and as such constitute a financial burden on the
grantee which may jeopardize the future of the program, and that a
waiver of the ceiling is not without precedent.
The appeals panel finds that sufficient authority for the Regional
Office action in establishing a ceiling of $75,000 is contained in
applicable Department Policy, Chapter 1-44 of the Department's Grants
Administration Manual. Section 1-44-40A.1.d of the chapter provides
"the amount budgeted or used for alteration and renovation during the
entire project period may not exceed the lesser of $75,000 or 25 percent
of the total funds approved for direct costs for the entire project
period...." The panel also finds this language neither vague nor
ambiguous and a definition of "alteration and renovation" is also
contained in that chapter of the manual in Section 1-44-30, Definition.
The fact that the renovation plans were approved by the Regional Office
Facilities Engineering and Construction Agency is not considered
significant. That Agency's approval of architectural and engineering
aspects of renovations did not and cannot constitute authorization to
expend funds in excess of $75,000 for renovations.
The panel also finds that the Regional Office has been delegated
authority to make final determinations concerning alteration and
renovation expenditures since the authority to approve grants under
Title v of the Social Security Act has been delegated to the Regional
Health Administrator. This delegation includes the authority to
administer the grants thus awarded. (Exhibit II)
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Finally, the fact that waiver of the $75,000 limitation is not
unprecedented is not considered significant.
DECISION
The appeal is denied and the action of the Regional Office is sustained.
May 7, 1992