DAB Decision 99
May 19, 1980 Franklin C. Fetter Family Health Center. Charleston, South
Carolina; Docket Ho. 80-40; Decision No. 99 Przybylinski, Donald G.;
Woodruff, Robert R. Dell'Acqua, Frank L.
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.)
Grantee appealed from a determination by the Grant Appeals Committee of
the Alcohol, Drug Abuse, and Mental Health Administration, Public Health
Service, upholding a disallowance of $18,202 claimed as indirect costs
under a National Institute on Drug Abuse grant. The Board denied the
appeal in the absence of a negotiated cost rate agreement covering the
period of the expenditures. The Board also rejected equitable arguments
advanced by the Grantee, holding that they were not a basis to disregard
a legal requirement.
DECISION
By letter dated February 26, 1980, the Franklin C. Fetter Health Care
Center (Grantee) appealed a decision of the Alcohol, Drug Abuse, and
Mental Health Administration (ADAMHA) Grants Appeals Committee upholding
a disallowance by a Grants Management Specialist, Grants Management
Branch, National Institute on Drug Abuse (NIDA), ADAMHA, Public Health
Service (PHS). The ADAMHA Committee decision is dated February 13, 1980.
The Agency disallowed $18,202 in expenditures claimed as indirect costs
under a NIDA research grant. The Grantee appealed this disallowance,
although it referred to the amount disallowed as $22,021. The Grantee
did not explain the discrepancy between the two amounts, and it is not
relevant to this decision.
The Board Chairman issued an Order on March 24, 1980, directing the
Grantee to show cause why the appeal should not be denied. The Order
cited a provision from the current (1976) PHS Grants Policy Statement
that in order to be reimbursed for indirect costs, a grantee institution
must first establish an appropriate indirect cost rate. This reiterates
the requirement in the August 1974 "Guide for Non-Profit Institutions"
(OASC-5), incorporated by reference into the 1974 PHS Grants Policy
Statement. The Order noted Grantee's admission that it "should and
could have negotiated the said rate" and failed to do so. The Order
directed the Grantee to identify in what resPects, if any, the statement
of the case there was materially incomplete or inaccurate. The Grantee
did not respond.
The Agency disallowed the indirect costs because of the absence of a
negotiated indirect cost rate for the May 1976 - June 1977 period of the
claim. The provisional indirect cost rate of 26.3 per cent negotiated
by the Grantee in September 1979 is limited by its terms to the period
from September 1, 1979 until amended. The Grantee does not dispute that
indirect costs claimed for the period May 1976 - June 1977 must be
covered by a cost rate agreement for that period and admits that there
is no such agreement here. The Grantee points to the hardship of
'having to absorb such expenditures and the "savings" to the Agency
as a
result of Grantee claiming 10 per cent rather than the 26.3 per cent
rate contained in the September 1979 agreement, but the Board
'(Page 02 - 99 - 05/19/80)'
has held that such equitable arguments may not be a basis for the Board
to disregard a legal requirement. See American Foundation for Negro
Affairs, DGAB Docket No. 79-4, Decision No. 73, December 28, 1979;
Chinle, Arizona, School District No. 24, Docket No. 77-15, Decision No.
60, June 29, 1979. Accordingly, in the absence of a negotiated cost rate
agreement for the period May 1976 - June 1977, there is no basis to find
for the Grantee.
Conclusion
For the reasons stated above, the appeal is denied. D11 May 21, 1992