DAB Decision 39
September 27, 1977 Adelphi University; Docket No. 75-20; Decision No.
39 Clarke, Stuart H.; Malone, Thomas Wilner, Irving
DECISION
Adelphi University, Grantee, appeals from a determination by the
Director, Grant and Procurement Management Division, Office of
Education, Department of Health, Education, and Welfare, (the
"Director") disallowing a salary expenditure and demanding a refund.
On March 20, 1972, Grantee was awarded a grant to conduct a National
Training Center under authority of P.L. 91-257. On the same date it
detailed an employee (who desires that her identity not be disclosed in
these proceedings) then earning a salary of $7,276 per annum as
secretary to the head of one of the University departments, to a full
tine position as administrative assistant to the grant Project Director,
at an annual salary of $13,500.
Upon audit, the HEW Audit Agency recommended a "financial adjustment"
to
the extent that the employee's new salary exceeded her salary in her
last previous position ($6,224.00) on the ground that the new salary was
unreasonable and not in conformity with the consistently applied
policies of Adelphi University. This sum was reduced by Department
officials to $5,149.00 by the addition to the amount recommended for
disallowance of 9% ($425.00) for allocable indirect costs and its
reduction by $1,500.00, the amount considered a permissible salary
increase in accordance with University practices. Grantee appeals from
the determination disallowing this expenditure of $5,149.
Under "Principles for Determining Costs Applicable to Grants and
Contracts with Educational Institutions," Federal Management Circular
(FMC) No. 73-8 (formerly OMB Circular A-21), paragraph J.7.a, relating
to compensation for personal services, proviDes:
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"...The costs of such remuneration are allowable to the extent
that the total compensation to individual employees is reasonable
for the services rendered and conforms to the established policies
of the institution, consistently applied..." (emphasis supplied).
This provision does not appear to have been published in the Federal
Register prior to the date of the transaction which gave rise to these
proceedings, but the Grant Notification Award makes applicable to the
grantee herein Grant Terms and Conditions, OE Form 5241. That Form, in
turn, declares that allowability of costs pursuant thereto shall be
determined under Exhibit X-2-65-1 of the Department of Health,
Education, and Welfare Grants Administration Manual which incorporates
practically the entire content of OMB Circular A-21. Thus, we have here
a sufficient showing of actual notice to the grantee of the pertinent
limitations upon allowability of costs. whether such actual notice
would constituent an adequate substitute for the publication requirement
under the Pucinski Amendment, 20 v.S.C. Sec. 1232(b) (I) (Supp. V,
1975), would require our careful consideration. But in light of the view
we take of the matter before us on its merits, we do not reach this
question.
It is the position of the Director that the increase in the employee's
salary from $7,276 to $13,500 upon promotion from her secretarial
position under a departmental chairman in the University to that of
administrative assistant to the grant Project Director represents an
increase of 85%. This, together with the fact that the increase
coincided with the effective date of the grant establishes, in the view
of the Government, the unreasonableness of the new compensation,
especially since in the Government's view, the employee's duties upon
promotion were not significantly different from those in her previous,
secretarial position.
As far as the requirement of conformity with the University's
established practices is concerned the Director points out that prior to
the effective date of the grant and the promotion of the employee,
annual increases for change in an employee's duties or responsibilities
were limited to $1,500, and that the maximum annual increases subsequent
to that date to secretarial, clerical and technical employees were in
the amount of $1,030.00. Consequently, he contends that the much
greater increase involved herein must clearly be deemed to be in
non-conformity with the University's consistently applied standards.
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The prima facie impressiveness of these arguments notwithstanding, we do
not think that they are determinative upon the ultimate issue. Whether
the Regulation relied upon by the director supports the disallowance
herein must in the final analysis depend on the answer to the question
whether the employee's duties in her new position are shown to be
significantly broader and more demanding than those performed by her
while in the employ of the University. The Regulation itself explicitly
recognizes the link between compensation and "services rendered" in
weighing reasonableness or, by necessary inference, in testing the
conformity of such compensation to "consistently applied" University
standards. There are no obstacles in the way of reaching this issue
since both parties to this proceeding agree, perhaps with some
reluctance, that the formal change in the title of the employee's
position from secretary to administrative assistant upon her transfer to
the grant project is not conclusive upon the ultimate issue - "Titles do
not determine level of responsibility" - and that the mere fact that the
employee had been receiving a considerably lesser remuneration while
secretary to a chairman of a University department is not dispositive
upon the question of reasonableness of the increased salary in her new
position.
Little if anything would be gained by examining the evidence bearing on
the decisive issue in the framework of rules governing burden of proof,
i.e., whether the language in the Regulation declaring costs of
remuneration allowable "to the extent" that the compensation is
reasonable, etc., renders reasonableness a condition precedent for
entitlement, with a burden upon the grantee to carry the burden of proof
concerning this fact as upon any issuable fact that must be
affirmatively shown, or whether the burden be deemed that of the
Government to show the unreasonableness of the compensation charges to
the grant. As we perceive the facts, the Director has made no showing
that the employee's higher salary was unreasonable or not in conformity
with established University practice in relation to the services
rendered by her.
Affirmatively, the record contains uncontradicted and unchallenged
evidence that in her position with the grant project the employee
performed numerous duties not expected of a secretary. These included
acting for the project director and responsibility for conducting and
implementing all matters of the Institute (i.e. the National Training
Center), acting as spokesperson for the program, maintaining liaison
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with the grant authorities and Adelphi University and meeting with their
representatives, accounting and bookkeeping, data gathering and report
writing, scheduling for training teams, distributing and coordinating
assignments, determining priorities and supervising work assignments,
resolving problems and grievances, scheduling vacations and compensatory
time, designing and maintaining records including records of financial
transactions (overall budget, travel and transportation advances,
payment of invoices, quarterly reports, consultation payments) and
coordination of fiscal affairs. While the record contains no direct
evidence as to what the employee did in her former capacity as
secretary, her job description for her secretarial position bears no
resemblance to the variety or scope of the manifold activities she is
said to have routinely carried out since her transfer to the National
Training Center Project under the grant. Since her promotion was what
professional personnel experts refer to as vertical rather than
horizontal, - See, O. Glenn Stahl, Public Personnel Administration, (6th
ed.) p. 152, - the University standards, invoked by the director, for
increases in compensation upon promotion to a higher grade or a position
on the same level, are without relevance.
The foregoing facts are attested to by the Vice President for
Administration and Planning and Treasurer of Adelphi University
responsible for various functions, including personnel and budget, who
represents himself as familiar with such matters not only at Adelphi
University, but at other educational institutions as well, and by the
project director who obviously possesses direct and frequent opportunity
to observe and evaluate the employee. The qualifications possessed by
these individuals render the record evidence concerning the employee's
duties credible as well as persuasive. On the other hand, the record
does not recite the qualifications of HEW Audit personnel in the area of
personnel administration, and their statements on this issue are
confined to unsupported, general opinions. We find that the specific
evidence concerning the employee's duties and responsibilities lends
support to the grantee's assertion that, while titled an administrative
assistant, the employee's actual duties more properly are those of
Director of Administration, Assistant Program Director for
Administration or Assistant to the Director for Management which, when
analogized to cited positions at Adelphi University, would merit
salaries in the range of $16,605 to $18,200.
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A comparison of the range of the employee's position requirements and
activities with U.S. Position Classification Standards strongly
indicates a resemblance to the position of Administrative Officer for
whom the compensation spread is GS-9 - 15 ($14,397 - 43,923). Such
officer is described as a "Generalist." He is said to aid "the
operating
manager and subordinate operating officials in getting things done
through his knowledge of and skills in dealing with organization,
methods, funds, equipment and other tools and resources of management.
Ordinarily he has a responsible role in the management of both financial
and human resources because of his immediate relationship to the
operating manager." See, U. 5. Civil Service Commission, Administrative
Officer Series GS-341, TS 63, August 1966.
There is additional material in the file which seems to be inconsistent
with the Director's position. It appears that prior to the award of the
grant herein, and at the request of the grant officials, grantee
submitted a Grant Proposal and Table of Organization together with a
statement of approximate cost for personnel. The Table of Organization
provided for two Administrative Assistants to be compensated at $15,700
for one and $8,000 for the other, and for one Administrative Secretary
at a salary of $9,500.
Since it has proved impossible to fill the position of the senior
Administrative Assistant notwithstanding considerable effort, all three
positions have been redesigned and the employee involved herein was
employed on a trial basis. She soon established her high competence to
the full satisfaction of her supervisor. By redesigning the three
positions an annual saving of $4,200 was effected.
From the foregoing it is reasonable to conclude that the Government had
been put on notice that, in addition to the project director, the
project required the services of one whose annual compensation was to be
$15,700. The Grant officials did not question this proposal, and the
record does not disclose any criticism of the incumbent, or evidence of
dereliction in her performance in the position of Administrative
Assistant. Having agreed to the need of employing an administrative
assistant at $15,700 per annum it seems inconsistent for the Director to
question, for unreasonableness, compensation at the rate of $13,500 to
the incumbent unless it be for the
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mere reason that her earnings in the immediately previous position were
considerably less, a position which the Director has expressly stated to
be invalid.
For the reasons stated we sustain the appeal and set aside the
Determination of disallowance in the amount of $5,149.
May 7, 1992