GAB Decision 365
December 14, 1982 Gulf Coast Mental Health Center; Docket No. 82-91
Ford, Cecilia; Garrett, Donald Settle, Norval
Gulf Coast Mental Health Center of Gulfport, Mississippi (Center,
Grantee) appealed a decision by a Public Health Service (PHS) grant
appeals committee (Committee) upholding a disallowance of $6038.34
associated with the purchase of an automobile for the professional and
personal use of the Center's Executive Director. Involved was the
funding for the period September 1, 1979 through August 31, 1980, for
three grants made under the Community Mental Health Centers Act as
amended by Public Law 94-63.
Since the dispute concerns an amount under $25,000, and the Grantee
received a review by a grant appeals committee before coming to this
Board, the Board's special expedited review procedures apply. 45 CFR
16.12(d) (1981). Thus, we reviewed the record in this case to determine
whether the Committee's decision was clearly erroneous. Section
16.12(d)(1).
The Committee upheld the disallowance on the ground that the purchase
was subject to PHS approval under the deficit funding concept of the
Community Mental Health Centers Act which made all covered expenditures
subject to PHS approval, regardless of whether the purchase was from the
federal or non-federal share. Grantee admitted to the Board that the
automobile was purchased for the Center by the Board of Supervisors of
Harrison County, Mississippi with county tax funds which had been
transferred to the Center.
We find that the Grantee failed to show that the decision was clearly
erroneous and we uphold the disallowance. Our holding is based on the
parties' submissions and the telephone conferences with both parties on
August 12 and September 29, 1982, and separately with each party on
October 20, 1982 (as reflected in the summaries of the conferences).
Discussion
The grant in question was made under the Community Mental Health
Centers Act (now repealed), which defines "costs" attributed to grants
made under the Act to include state, local, and other funds. The
federal share is limited to the balance needed to cover the "deficit"
remaining after the total of all expected non-federal funds is
subtracted from projected grant expenditures. Thus, under this deficit
funding concept all expenditures affect the federal share. Accordingly,
if the automobile was (2) purchased with Center (i.e. grant) funds, the
purchase was subject to PHS approval and to disallowance if that
approval was not and could not be obtained.
The autobobile in question was purchased in April 1980 with funds
contributed to the Center by Harrison County, Mississippi for the
Center's "overall support." Grantee submission of November 8, 1982.
The
PHS grant appeals committee held that the Center had to reimburse the
Agency for the cost of the automobile because PHS had not approved the
purchase.
Grantee contended that the automobile had not been purchased with
either the federal or the non-federal share of the grant. Grantee
submission of July 9, 1982. Grantee relied on the absence of the
purchase cost in any of the Grantee's expenditure reports and on the
fact that the Grantee had not been reimbursed by the Agency for the
purchase.
The PHS Grants Policy Statement requires that PHS approval be
obtained for purchases of passenger vehicles (pp. 68, 69). That
statement defines property acquired under a grant-supported project to
include property purchased form the non-federal share, provided the
non-federal share is subject to federal approval and is documented as
part of the approved budget (p. 69).
Counsel for Grantee at one point conceded that the Agency decision
should be affirmed if Grantee had claimed the purchase cost as part of
its operating expenses. August 13, 1982 Board Summary of Telephone
Conference, p. 2. Indeed, our affirmance is based on Grantee's
admission, late in the case, that the automobile had been purchased with
Center funds. Grantee submissin of November 8. supra.
Grantee attempted to counter the damaging effect of its admission by
its argument that approval was not required because the Center did not
include the expenditure in its reports -- i.e., it did not ask PHS to
reimburse it the cost of the automobile. October 22, 1982 enclosure
with Grantee submission of November 8. We are not persuaded that
Grantee's failure to report a expenditure should relieve Grantee of its
obligation to obtain PHS approval for the purchase. *
(3) Conclusion
For the foregoing reasons, we find that Grantee failed to show that
the decision of the PHS appeals committee was clearly erroneous and,
accordingly, we uphold the disallowance. * Inasmuch as it was beyond
the scope of our review, we did not determine whether Grantee's omission
was contrary to other laws or regulations.
OCTOBER 22, 1983