GAB Decision 321
June 30, 1982 Wayne County Board of Commissioners; Docket No. 81-196
Ford, Cecilia; Garrett, Donald Teitz, Alexander
The Wayne County Board of Commissioners (County, Grantee) appealed a
decision by the Office of Human Development Services (OHDS, Agency) to
disallow $124,308 awarded under a grant for the prevention of juvenile
delinquency. The $124,308 represents the federal share of the amount
expended under two successive one-year contracts between the County and
Action House, Inc. of Detroit, Michigan.
Under the two contracts, which began July 1, 1974, coterminous with
the grant award, Action House agreed to provide certain services to
youths referred by the Airport Area Juvenile Justice Service Center
(Center) and residing in a specified area near the Detroit City Airport.
The County asserted, and the Agency did not dispute, that the center was
not in a position to make referrals until "late August" 1974 and that
it
closed in November 1975. The youth served by Action House during the
time at issue resided in the specified area but none were referred by
the Center.
The issue is whether the County is entitled to the cost of services
to youths residing in the target area but not referred by the Center
where a contract incorporated into the grant by reference required that
services be provided only to youths referred by the Center, and where
the County failed to obtain the necessary prior written approval of the
Agency to modify the contract. We find that the County did not meet the
specified grant condition, and accordingly we uphold the disallowance.
This decision is based on the appeal, the Agency response, the
transcript of a telephone conference of June 2, 1982, and the County's
reply brief.
Discussion
Grantee alleged in its final submission that the City Airport area at
the time of the grant award in July 1974 was "extremely volatile,"
and
created a "very great" need for action to assist delinquency-prone
juveniles. It also alleged that Action House was the sole entity with
sufficient credibility to render assistance in a timely manner. (2) We
did not afford the Agency the opportunity either to admit or to deny the
County's allegations because, even if true, they do not exempt the
County from the consequences of its failure to observe the grant
condition that limited funded services only to youths referred by the
Center. The County admitted that the legislation authorizing the grant
required a system of referrals; that the contract between it and Action
House was for services only to youths referred by the Center; that the
referral provision was part of the grant; and that the County needed
Agency approval to amend the contract. Reply Brief, pp. 3, 4. /1/
In light of these admissions, it is not surprising that the County
conceded that the disallowance was "legally proper." Reply Brief,
p. 4.
In the face of prior Board decisions refusing to excuse a grantee from
unauthorized actions because of hardship or because a grantee conducted
the activities contemplated by the grant arrangement, the County argued
that the disallowance should be set aside because of the Agency's delay
in taking action to alert the County to the possibility of a
disallowance, alleging that the Agency had foreknowledge of the
situation. Ibid., p. 6; and see Inter-Tribal Council of California,
Decision No. 265, March 26, 1982; and Community Relations -- Social
Development Commission in Milwaukee County, Decision No. 108, July 3,
1980.
The County was not prejudiced by the four-year delay between the
audit and the disallowance.
The Agency never offered to explain the delay between audits
conducted in 1976 and 1977 and the October 29, 1981 notification of
disallowance. The County expressed some difficulty locating its files,
including a (3) copy of the HHS audit, but the Board promptly obtained
copies for the County and its counsel and gave the County extensions
until April 6, 1982 to file its completed appeal -- three-and-one-half
months after its November 25, 1981 notice of appeal -- to do what the
Board's procedures require be done, normally, in 30 days. 45 CFR 16.8
(1981). We do not condone the Agency's failure to act more promptly on
the audit recommendation, but the County was on notice since 1976 that
there was a serious problem with its administration of the grant and we
afforded it ample opportunity to perfect its appeal.
The County had opportunities to amend the grant but failed to avail
itself of them.
Countering Grantee's attempt to shift its responsibility to the
Agency is the County's own failure to take advantage of several
opportunities to amend the grant or the contract to delete the
requirement for referrals only from the Center. At the time that the
County submitted a revised grant application in November 1974 it knew,
by its own admission here, that Action House had filled its program and
could not take any Center referrals, yet the application continued to
incorporate the referral requirement. /2/ Again, at the start of the
second grant year the County renewed its contract with Action House, and
left intact the requirement that only those youths referred by the
Center be served. Agency Response, Exhibit 1. It was not until March
1976, if then, that the County requested Agency (4) approval of a
contract amendment deleting the referral provisions. /3/
There was no showing that the request was approved.
Other issues
The County alleged that Agency employees were aware that the County
was not using the referral system and argued that the Agency's failure
to take action during the term of the grant should be a basis for
reducing, if not reversing, the disallownace. In connection with this,
the County asked for a hearing so that it could elicit testimony from
Agency employees responsible for the grant. The Agency objected, so the
Board conducted a telephone conference to allow the County an
opportunity to explain why it thought a hearing was necessary. However,
the County when asked could not name the witnesses nor specify what
their testimony would be. Transcript (Tr.) of June 2, 1982 Telephone
Conference, pp. 1, 2, 8, 9.
The Board's procedures provide for a hearing if there are "complex
issues or material facts in dispute the resolution of which would be
significantly aided by a hearing, or if the Board determines that its
decisionmaking would be enhanced by oral presentations and arguments in
an adversary, evidentiary hearing." 45 CFR 16.11(a) (1981). We did not
find that any of these factors were present, and accordingly we
conducted no hearing.
As indicated above, the County never did identify which Agency
employees it was referring to, much less how and when these persons
became aware of the County's "administrative lapse." Tr. pp. 8, 9;
Reply
Brief, p. 6. The County argued that because the Agency exercised some
degree of guidance and surveillance during the grant, the Agency should
not be able to disallow for errors discovered in a post-grant audit.
The County did not point to any law or regulation or even a legal
principle to support its argument, nor can we. The Agency is authorized
to make grant funds available only in accordance with the statute and
implementing regulations. The Agency's guidance may prevent some
administrative lapses from occurring, but it is the County's grant and
the County remains responsible for these lapses even if the Agency does
not act on them until after a post-grant audit. (5) Conclusion
For the reasons discussed above, we uphold the disallowance of
$124,308. /1/ The grant in question was made under the Juvenile
Delinquency Prevention Act, codified at 42 U.S.C. 3801 et seq.
Departmental regulations implementing the Act conditioned funding upon
the provision of a coordinated youth services system characterized by an
information and referral service. 45 CFR 1350.1(d) (1977). The
original grant application in April 1974 envisioned a Youth Service
Center with responsibility for, among other things, "centralized intake
and initial assessment" and "case planning." Agency Response,
Exhibit 1.
A functional component was to be contract services with youth-serving
agencies to implement the case plan developed at the Center. Ibid. A
proposed grant modification allegedly submitted in March 1976 would have
substituted referrals from schools, block clubs, churches, and other
community sources for referrals from the Center. Appeal, Exhibit VII;
and see footnote 3, infra. We are not persuaded that the Agency was or
would have been unreasonable in not approving such a departure from the
coordinated system required by the statute and regulations. /2/
The Agency argued that the County's documents contradicted its
assertions that by the time the Center opened in August 1974 and again
at the start of the second grant year in July 1975, Action House had no
room for referrals. Response, pp. 22-23. The County replied that the
documents in question were introduced "only to show where the youths
served by the program lived, not to support other assertions." Reply
Brief, p. 4. A March 14, 1976 letter to OHDS from the Director of
Action House accused the County agency in charge of the Center of
forcing Action House to falsify records in an attempt to conceal the
fact that there had not been any referrals from the Center. Response,
p. 10 and Exhibit 12. The County dismissed the letter as merely an
indication that "interagency relations were less than smooth." Reply
Brief, pp. 4, 5. /3/ The Agency admitted that its files contain
such a request, but could not affirm that it received that request in
March 1976, or when or how the request came to be included in its files.
Response, pp. 9-10, fn. 1. Even if the County had proved that the
request was filed then, it would have been made at a time when referrals
were no longer possible because the program was full and thus could not
be considered a request for prior approval for any part of the grant
term.
OCTOBER 22, 1983