GAB Decision 096
May 2, 1980 Operation SHARE Docket No. 77-19 Coster, Clarence;
Przybylinski, Donald Dell'Acqua, Frank
On June 10, 1976, the Office of Education (OE) issued to Operation
SHARE (SHARE), the grantee, a non-profit organization, a $111,095 award
under the Emergency School Aid Act to provide tutorial services to 875
students in the New Haven Unified, Paramount Unified, Pasadena Unified,
and Los Nietos Unified school districts for the year 1976-1977. This
grant program is authorized by Public Law 92-318 as amended by Public
Law 93-380, Catalog of Federal Domestic Assistance Number 13.532, listed
in 45 CFR Part 16, Appendix A(27). Applicable programs regulations are
contained in 45 CFR 185, Subpart G. General Provisions for Office of
Education Programs are contained in 45 CFR Part 100.
In a letter dated July 26, 1977, John P. L. Thorslev, Contracting
Officer, OE, Region IX, issued a reduction of grant award in the amount
of $15,714 because no services were provided to the Pasadena School
District. That was the amount attributed to the Pasadena element of the
project in an August 9, 1976 letter from Mr. Gilbert Solano, Director,
Operation SHARE Foundation, to Ms. Mary Ann Faris, Program Officer, OE.
In his letter notifying grantee of the grant reduction, Mr. Thorslev
accepted the grantee's estimate.
By letter of August 19, 1977, signed by Mr. Solano, SHARE requested
an extension of time until October 28, 1977 to file an application for
review by the Board. The extension was granted. SHARE'S application
for review, of the determination to make the reduction, was dated
October 27, 1977 and signed by Mr. Solano.
The Board requested a response to the appeal from OE by memorandum
dated November 11, 1977. In a memorandum dated December 12, 1977 OE
requested an extension of thirty days from the date of that memorandum
until January 12, 1978 to provide its response to the appeal. The
requested extension was granted by memorandum dated December 22, 1977.
The response to the appeal by OE was dated January 13, 1977. A letter
dated February 15, 1978 was sent to the Board, by SHARE, responding to
certain matters covered in the OE response to the appeal. This letter
was not filed and served in conformance with the provisions of 45 CFR
16.53(a). By letter dated May 16, 1978 the grantee was directed to
comply with the provisions of 45 CFR 16.53(a), which was accomplished by
SHARE's letter dated May 22, 1978.
An Order to Develop the Record was dated August 31, 1979 and
addressed to both parties. By letter dated January 30, 1980, grantee
responded to the Order. By memorandum, dated February 25, 1980, OE
informed the Board that it could not locate the file in this appeal and
would, therefore, be unable to respond to the Order.
OE, in its response to the appeal maintained that the grant reduction
be upheld because (1) no services were provided to the Pasadena School
District, (2) no approval was granted by the appropriate OE official for
changes in the program, (3) no application for program change
sufficiently justifying the change has been submitted to OE by SHARE,
and (4) the increased scope of services proposed by SHARE for the three
remaining districts never occurred.
(1) No Services for Pasadena School District
In both the letter of reduction of grant award and the response to
the appeal, OE has maintained that the services designated for the
Pasadena School District described in the original application for the
grant were not performed. OE stated, in its response to the appeal,
that the services were not offered to the Pasadena School District by
SHARE until November 17, 1976. SHARE is in agreement that no services
were provided to the Pasadena School District. SHARE maintained that in
place of providing services to Pasadena, it expanded the scope of
services in the remaining three districts.
According to SHARE, Ms. Mary Ann Faris, Program Officer then assigned
to SHARE by OE, in a telephone conversation of July 9, 1976, informed
SHARE that the Pasadena School District did not intend to participate in
the program.
Mr. Delano Yarbrough, Project Officer for ESAA for the Pasadena
School District, in an October 7, 1976 letter to Mr. Al Villa, Assistant
Regional Commissioner, OE, said, "In July Mr. Solano called the ESAA
office to ask if the District was still interested in participating in
the Operation SHARE project. I indicated that there are some concerns
and that we probably would not." On August 23, 1976, Ms. Faris, in a
letter to grantee, addressed to Mr. Solano, refers to "Pasadena's
decision to withdraw from your program."
(2) Prior Approval
OE maintained that SHARE had never received prior approval for the
program change to use the resources originally delegated to Pasadena to
increase the scope of services in the three remaining school districts.
There is no showing that written approval for the changes was ever given
by OE.
SHARE maintained, in its application to this Board that (1) upon
being informed of the Pasadena School District's intention not to
participate in the SHARE program, SHARE officials met with Ms. Faris on
July 12 to discuss how the funds allocated to the Pasadena District
might be otherwise put to use, (2) in a letter dated August 9, 1976,
presented to Ms. Faris on the same date, SHARE outlined the following
alternatives for disposition of the funds: (a) adding an additional
school district to replace, Pasadena, (b) increasing the services in the
remaining three districts and, (c) reducing the grant by $15,714 the
amount committed to the Pasadena element, (3) at the meeting with Ms.
Faris on August 9, 1976, SHARE was informed that Ms. Faris would not
support the alternative of substituting another school district, (4) by
letter dated August 12, 1979 grantee requested that the Office of
Education accept the alternative of reducing the grant, (5) during the
summer of 1976, OE officials informed SHARE that reducing the grant was
a poor alternative, (6) on August 27, 1976 Mr. Al Fain, who had been
appointed Program Officer for SHARE by OE on August 17, 1976, directed
SHARE to work on plans to use the funds from the Pasadena component to
expand services in the remaining three school districts and informed
grantee of what information would be necessary for a modification of
contract, (7) on September 28, 1976 and October 1, 1976, SHARE officials
met with OE regional officials (including a grant specialist) and
submitted a proposed modification of program, revised budget, and
support documentation, (8) there was unanimous agreement from all in
attendance that the modification be recommended for approval (OE has
disputed that there was any agreement to recommend that the modification
be approved), and (9) the program changes were implemented.
SHARE maintained that, in light of the circumstances mentioned above
and the fact that OE waited until April 28, 1977 to correspond with
SHARE on the proposed changes, it was justified in believing that the
proposed changes had been approved.
SHARE included with its application the following statement, by Mr.
Fain, dated April 19, 1977, with respect to the proposed reduction, "I
do not agree with this action. The client has presented sufficient
evidence over a series of meetings (requested by us) to justify an
increased scope of work in the three districts they had been serving.
We said we would let them know -- but never did. The grantee has gone
on the assumption that they had $111,095 to spend and has spent most of
it. To reduce the grant now would in my judgment be unfair to grantee."
(3) Sufficiency of the Application
Although Mr. Thorslev's notice of award reduction makes no mention of
any incompleteness in the documents submitted by grantee, OE maintains
in its response to the appeal, "Appellant failed to supply a revised
budget request and an adequate justification to support this change."
That contention seems to be contradicted by the statement in the notice
of award reduction: "at that time (April 28, 1977) you were told that
the Office of Education had taken the proposed budget revision under
consideration . . ."
The statement dated April 19, 1977 by Mr. Fain, discussed above, also
appears to contradict OE's position on this matter.
(4) Increased Scope in the Three Remaining Districts
Although Mr. Thorslev's notice of award reduction does not discuss
this matter at all, OE, in its response to the appeal, contended that
the work was not performed in conformance with the proposed changes,
because "Appellant had served only three out of four school districts
and 562 out of the promised 875 students."
The file contains a letter from the grantee to Mr. Fain, dated
September 16, 1976, outlining its plans for the method of expanding
services to the three remaining districts. That letter does not mention
an increase from the 562 students originally slotted for the three
remaining districts but rather says, with respect to the increase in
services, "This would best be accomplished by making extensive usage of
consultants during peak periods of recruitment . . . . it would also be
advisable to reinstate the half-time position Tutorial Resource
Specialist, which was deleted from our original budget."
Grantee also included the remarks of Mr. Fain, with respect to the
final program report, dated October 6, 1977, "Excellent final program
report. This applicant has performed the program activities of the
grant in a manner satisfactory to the government and I recommend that
the grant be closed." These remarks were made by the program officer
responsible for this grant.
Regulations
45 CFR 100a.28 and 45 CFR 100a.29 are the regulations governing
amendments to grants, budget revisions and minor deviations in direct
project grants administered by the Office of Education. 45 CFR 100a.
29(b) states, "(b) Recipients Other Than State and local governments.
Minor deviations from the project of a recipient other than a State or
local government (as defined in Sec. 100.1 of this subchapter) are
permitted without the necessity for an approved amendment or revision
where (1) they do not result in expenditures in excess of the total
amount granted, (2) there is not any material change in the content or
the administration of the approved project, and (3) expenditures are
otherwise made in accordance with, and for kinds of expenditures
authorized in the approved application."
OE maintained, and the grantee has not disagreed, that this section
would not apply because the removal of an entire school district and
increase in support of the other three districts amounts to a material
change.
45 CFR 100a.28 states, "The grant or contract must be appropriately
amended prior to any material change in the administration of an
approved project, or in organization, policies, or operations affecting
an approved project. Substantive amendments will be subject to approval
in the same manner as original applications. Project amendments may be
initiated by the Commissioner if changes are made in Federal
appropriations or laws governing such projects. If such amendment
constitutes a partial termination of the award, the procedures contained
in Sec. 100a.495 shall apply."
45 CFR 100a.15 makes it clear that the amendment application must be
in writing.
45 CFR 100a.27(c) provides, "(c) The Commissioner will notify the
applicant in writing of the disposition of its application."
SHARE, in maintaining that it submitted a revision request and
received no answer for months, asked that 45 CFR 100a.29(a)(8) be
applied to this case. That section states "Within 30 days from the date
of receipt of the request for budget revisions, the Commissioner will
review the request and notify the recipient as to whether or not the
budget revisions have been approved. If the revision is still under
consideration at the end of that 30-day period, the Commissioner will
inform the recipient in writing as to when the recipient may expect the
Commissioner's decision."
That section would seen not to be binding on OE in this case,
however, because 45 CFR 100a.29(a)(1) provides that, "(a) State and
local governments. (1) This paragraph applies only to recipients which
are State and local governments (as defined in Sec. 100.1 of this
subchapter)."
In its application for review, grantee maintains that its budget
revision to increase the scope of work of the grant program in the New
Haven Unified, Paramount Unified, and Los Nietos Unified School
Districts "was justified from the events that occured and from the
information and advice we were given from Regional Office staff."
However, it is clear that no prior approval in writing was received by
grantee from the appropriate official for this budget revision which
makes a material change in the administration of the approved project.
Nevertheless, grantee's claims depict a situation where the agency
had expressed disapproval of the alternatives of returning to OE the
funds attributed to Pasadena and substituting another school district
for Pasadena. Although grantee would not have suffered financial
jeopardy had it not spent the funds attributed to Pasadena, grantee
could well have believed that it would have been criticized by the
agency for not expending the funds at all -- especially after grantee's
request that the funds merely be returned to the agency had not been
accepted by the agency.
We must accept these unrebutted claims in view of the fact that the
agency has been unable to respond to the Order to Develop the Record in
this appeal. That Order stated in part, ". . (2) OE is directed to
confirm, deny or state that it has no knowledge with respect to the
claim that the grantee received directives during the summer of 1976
from OE officials that the alternatives of (a) reducing the grant by the
amount attributed to the Pasadena district, and (b) adding a new school
district to replace Pasadena were considered inferior to the alternative
of increasing work scope in the three school districts."
45 CFR 100a.27(c) requires that the Commissioner of Education notify,
in writing, the applicant of the disposition of his application. That
regulation does not state how much time from the date of the application
the Commissioner has to notify the applicant. Under a reasonable
interpretation of the regulation, we find that 45 CFR 100.a27(c) was not
complied with by OE when the grantee, faced with a situation where there
had to be a change in the project, made an application for amendment in
the third month of the grant and OE did not respond in writing until the
July 26, 1977 notification of disallowance, one month after the end of
the grant.
Conclusion
For the reasons stated above the appeal of Operation SHARE Foundation
is granted. The decision of the Office of Education to reduce the grant
award by $15,714 is reversed.
OCTOBER 04, 1983