Virgin Islands Department of Human Services, DAB No. 890R (1988)

DEPARTMENTAL GRANT APPEALS BOARD

Department of Health and Human Services

SUBJECT: Virgin Islands Dept. of Human Services

Docket No. 88-4
Reconsideration of DGAB No. 890

DATE:  March 23, 1988

RULING ON REQUEST FOR RECONSIDERATION

The Virgin Islands Department of Human Services (appellant) requested
reconsideration of Virgin Islands Commission on Aging, DGAB No. 890
(1987), in which the Board upheld the decision by the Administration on
Aging disallowing $399,211  1/ in meal costs charged to a grant under
title III-C of the Older Americans Act for the period February 10
through August 31, 1986.  The Board found that the only issue presented
was whether the costs should have been allowed because they were paid
pursuant to an order of the Territorial Court of the Virgin Islands.
Appellant conceded that the costs were otherwise unallowable because the
contracts for meal services were awarded to Duvergee, Inc. in violation
of applicable procurement standards.  The Board concluded that while the
court order required appellant to award the contracts to Duvergee, it
did not require federal reimbursement of the contract

The Board's regulations at 45 C.F.R. 16.13 state that the Board may
reconsider a decision where a party promptly alleges a clear error of
fact or law.  As discussed below, we find that appellant has not met
that standard here.  Accordingly, we deny the request for
reconsideration.

In requesting reconsideration, appellant asserted first that the Board
had erred in concluding that no deference was due the decision of the
Territorial Court.  Appellant took the position that, although the
decision was not binding, the Board should have deferred to the court's
interpretation of the Virgin Islands' preferred bidders statute as well
as to the court's factual conclusions regarding Duvergee's status as a
responsible bidder.  We find that reconsideration is not warranted on
this basis, however.  DGAB No. 890 states, and the record for that
decision substantiates, that appellant agreed that the preferred bidders
statute should not have been applied and that the contract should not
have been awarded to Duvergee.  Since appellant itself elected not to
defer to the decision of the Territorial Court on these matters, the
Board did not consider the issue whether the decision was entitled to
deference.  The Board's failure to consider an argument on behalf of a
party which is plainly inconsistent with the position the party has
taken before the Board cannot reasonably be considered an error of law
or fact.

Appellant further argued that the Board erred in not considering the
regulation which permits a grantee to reject bids when there are "sound
documented business reasons in the best interest of the program."  45
C.F.R. Part 74, Appendix G, 11(b)(2)(e). Appellant contended that it had
effectively raised this issue when it took the position that "it had to
comply with the court order to keep the program operating . . . [while]
proper action was being taken through the judicial system."  Appellant's
submission dated February 23, 1988, p. 3.

We are not persuaded that this is an adequate basis for reconsideration
either.  The statement in the prior proceeding to which appellant
alludes was:

            It is the Appellant's position that this disallowance should
            be denied on the grounds that proper action has been taken
            through the judicial system and that the Appellant during
            the 1986-87 award was under a court mandate to award the
            contract to Duvergee.  Thus, because the Appellant was not
            free to make its own decision, . . . the Appellant should
            not be penalized for the decision of the lower court in
            awarding the contract to Duvergee.

Appellant's brief dated April 27, 1987, p. 11.  The point being made
here was that appellant should not be penalized since it duly appealed
the court order requiring it to award the contracts to Duvergee.  This
is not tantamount to an argument that appellant awarded the contract to
Duvergee for sound business reasons.  Appellant also mentioned elsewhere
its concern that there would have been a "detrimental effect on the food
services to . . . [elderly people]" if the court had stayed the matter
pending appellant's appeal of its decision to award the contract to
Duvergee.  Id., p. 10.  Merely because the court proceeded so as not to
cause an interruption of meal services does not mean that the award to
Duvergee represented an exercise of sound business judgment, however.
Thus, even if appellant had cited the regulation in question, there
would have been no basis in the record for the Board to conclude that it
applied.  Accordingly, the Board's failure to consider it was not an
error.

Finally, appellant argued that the Board erred in sustaining the
Agency's finding that Duvergee was not a responsible bidder with respect
to the contract for meal services on St. Croix.  (The disallowance
covered the cost of meals provided on St. Thomas and St. Croix.)
Appellant asserted that since Duvergee's operations on St. Croix were
never inspected, there was no basis to question its status as a
responsible bidder on that island.

We find no basis here for reconsideration of DGAB No. 890.  Since
appellant conceded there that the contract should not have been awarded
to Duvergee, the Board did not make any finding regarding Duvergee's
responsibility.  Consequently, there was no error as alleged by
appellant.  Conclusion

For the reasons discussed above, we deny appellant's request for
reconsideration and reaffirm our decision in DGAB No. 890.

 

 

                            ________________________________ Judith A.
                            Ballard

 

                            ________________________________ Norval D.
                            (John) Settle

 

                            ________________________________ Alexander
                            G. Teitz Presiding Board Member

 

1.    Respondent subsequently found that this amount included a
non-federal matching share of $59,882, and reduced a subsequent
disallowance (for the period September 1, 1986 through March 13, 1987)
to correct the error.  Letter dated October 20, 1987 from Fisk to
Rhymer, p.