DAB Decision 73
December 28, 1979 American Foundation for Negro Affairs, Philadelphia,
Pennsylvania; Docket No. 79-4; Decision No. 73 Dukes, David V.; Kelly,
Bernard E. Mason, Malcolm S.
SUMMARY
(The following summary is prepared on the responsibility of the
Executive Secretary of the Board as a convenience to the interested
public. it is not an official part of the decision and has not been
reviewed by the Panel. Similar official summaries of earlier cases
appear in 45 CFR Part 16, Appendix.)
An ad hoc Grant Appeals Review Committee upheld a decision by the Grants
Management Officer, Bureau of Health Manpower, Health Resources
Administration, Public Health Service (PRS), to disapprove a portion of
a proposed transfer of funds between the consulting and travel
categories of a Health Career Opportunity grant that would have covered
the costs for presentations to the U.S. Commissioner of Education and
Assistant Secretary for Education. The grantee claimed that, prior to
PHS disapproval, it received approval for such a transfer in a letter
from a program officer in the Office of the Assistant Secretary for
Education.
The Board found that the grantee had submitted no notification of
approval of the transfer by the granting agency, PHS, and that the
letter from the program officer in the Office of the Assistant Secretary
for Education was neither shown to be relevant to this grant nor would
in any case be proper authorization to transfer the funds.
The Board also found that travel expenses charged to a PHS grant may not
be used without authorization to attempt to acquire Office of Education
funding or to persuade the Office of Education to continue funding other
projects of the grantee. The Board accordingly denied the appeal.
DECISION
This case involves a request by the grantee, American Foundation for
Negro Affairs (AFNA), to the Health Resources Administration (ERA),
Public Health Service (PHS) to transfer $1500 from the consulting
category to the travel category of Grant #1018M13118-06, a Special
Health Career Opportunity grant under Section 774(b) of the PHS Act and
42 CFR Part 57, Subpart S. Both the Grants Management Officer, Bureau
of Health Manpower, ERA, PBS, and an ad hoc Grant Appeals Review
Committee disapproved a portion of the proposed transfer that would
cover the costs for presentations to the U.S. Commissioner of Education
and Assistant Secretary for Education. The grantee claimed that,
previous to PBS disapproval, it received approval for the transfer in a
letter from Rene P. Cardenas, then a program officer, Fund for the
improvement of Postsecondary Education, Office of the Assistant
Secretary for Education.
The Chairman accepted jurisdiction over this case despite the grantee's
persistently inadequate response to an initial question of the
timeliness of the appeal (e.g. letters from the Executive Secretary of
the Board dated February 6, 1979 and March 29, 1979 and telephone
conversation dated April 10, 1979 and letters from the grantee dated
April 3, 1979 and April 12, 1979), but directed the grantee in an Order
to Show Cause to show why the appeal should not be dismissed on the
merits on grounds specified in four numbered subparagraphs. The
grantee's response failed to address the issues raised in the Order.
Prior Approval-Proper Official
The Notice of Grant Award-Revised (9128177), item 16, notes that the
grant is subject to the terms and conditions imposed by the PBS Grants
Policy Statement and 45 CFR Part 74.
The PBS Grants Policy Statement (October 1, 1976) states that all
rebudgeting requests that require prior approval must be submitted to
the grants management officer designated on the Notice of Grant Award.
That officer is responsible for reviewing the request and preparing a
prompt answer (p. 67).
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Section 45 CFR 74.107 (October 1, 1976) states that the granting agency
shall review the request and notify the grantee. Section 45 CFR 74.3
defines "granting agency" as the operating agency of HEW authorized
to
award and administer grants. The grantee has submitted no notification
of approval by the granting agency, PBS. Mr. Cardenas, whose concurrence
the grantee relies on, was not authorized to approve, and the grantee
has failed to respond to direct questions by the Board seeking the
basis, if any, for the grantee's intimation that his letter to the
grantee was intended or could be intended as an approval or was even
related to the present grant.
Use of PBS Grant Funds for Travel Expenses for Presentations to the
Office of Education and Assistant Secretary for Education
The PHS review committee in its December 6, 1978 letter to the grantee
characterized the expenditure in question as "travel performed for the
purpose of seeking new or continued funding from other governmental
agencies..." and stated that it was beyond the scope and purpose of the
grant. The grantee in its October 10, 1978 letter to HRA characterized
the meetings as an effort to "apprise them (officials within the Office
of Education) of the work of AFNA and to ensure HEW's continued support
and cooperation."
45 CFR Part 74, Appendix F, B sets out the basic considerations in
determining the allowable costs of a grant to a nonprofit institution.
Generally, Appendix F, 8.4(a) states that (apart from distributable
indirect costs) a cost is allocable to a grant if it is "incurred
specifically for the grant." Appendix F, C.1 states that a direct cost
is "any cost which can be identified specifically with a particular cost
objective... Costs identified specifically with the grant are direct
costs of the grant and may be charged directly thereto." The costs in
question have been claimed as direct costs rather than as part of an
indirect cost pool. Nothing in the record indicates that the travel
costs in question were incurred specifically for the PBS grant.
45 CFR Part 74, Appendix F, G.46 sets out the standards to be applied in
establishing the allowability of travel costs for nonprofit
institutions. Section G.46(d) states that travel costs "directly
attributable to specific grant.. performance are allowable" and may be
charged to the grant as a direct cost.
Travel expenses charged to a PHS grant may not be used without
authorization to attempt to acquire Office of Education funding or to
persuade the Office of Education to continue funding other AFNA
projects. Nothing in the record indicates that such an activity is
directly attributable
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to performance of the PBS grant. Section G?46(c) states that travel
costs incurred in "the normal course of overall administration of the
business are allowable and shall be treated as indirect costs". The
grantee in this instance, however, was treating the expenditure as a
direct cost. If this were an indirect cost rate negotiation it would
have taken an entirely different course, and different appeal procedures
would have been applicable (45 CFR Part 75).
The grantee's essential argument in its response to the Order to Show
Cause is that payment of the disallowance will be a hardship. The
grantee may be correct but if the expenditure was unauthorized, this
Board should not excuse it because of hardship.
Conclusion
Accordingly, we deny the appeal and affirm the determination by PBS to
disapprove the transfer of funds between two categories of a PBS grant
to cover the costs of presentations to the Office of Education and
Assistant Secretary for Education. D11 May 15, 1992