refused to remand the case for further development of a record and three braised and evolving list of complaints which turns the burden of proof into an impossible standard asked a reasonable  ness the cost principle provides that an incentive payment is allowable if the total compensation paid to an individual is reasonable in turn total compensation paid to an individual is reasonable if it is comparable to wages or similar work in the grantees labor market t n s produced in wage compare abilities which is basically an analysis of comparable wages as labor market the study showed that the majority of t n ss employees were paid total compensation including their incentive compensation that was within the range of comparable wages the cost paul is not at all concerned with the timing a compensation is concerned only with the amount when the board analyzed the percentage of an aggregate and individual compensation that was paid as an incentive the board evaluated the wrong factors and now it's arbitrary even if the percentage of compensation paid as an incentive were relevant to the record contains only conclusory statements no evidence as a result there's no rational connection between the facts and the record and the conclusions that the board drew and that is also arbitrary b when it refused to remand the incentive payments to the agency the board treated t n s differently than it treated seabird another head start grantee in seabird community action agency as in this case the board found that seaford had failed to prove that some of its and sense of immense complied with its policy instead of disallowing those payments as the board did he or the board remained in the case to the agency to further an opportunity to prove to a c f close quote that it had complied with its own policy and this reasoning and makes sense for a couple of reasons first the board's purpose is to review final decisions of the agency the board is not an auditor or in the first instance when the board itself identified further questions that that wasn't part of the agency's final decision its own compensation policies and the agency must take into account the group the autonomy of a grant to determine what expenditures that should make the board raises develop that evidence and explanation and that is ignoring important evidence and facts the most important evidences the board itself has held and that's arbitrary the board offers contradictory rationales for treating t n s differently than it did see her in its decision on the motion for reconsideration the board said that the basis for the disallowance and c byrd was that the grantee lacked a policy and that's just factually incorrect on the first page of the secret decision it said this disallowance is a c f saying we cannot tell whether the payments comply with sea birds written bonus policy and that's exactly what happened here even if the board were correct the board doesn't doesn't justify why you should to do differently than distinction is that the record is missing evidence from the brand to be a balance about the the incentive payments and it's missing that evidence because it wasn't on notice it had to agency and the board moves the goal cuts the audit finding and the disallowance were premised on allegedly missing plans for performance which was the result as the district court itself acknowledged of a mis interpretation skipping a step which is that i think they looked at the charts and they did not really compute there's there it was a need for explanation given the policy one with a higher grade would get a higher bonus and people with lower grades got higher s initial disallow much that was not the basis of the agency's final decision instead the board raises these issues sue is fontenay and when t n s says and the board even acknowledges without further evidence or explanation from the gran an explanation for why texas was treated this way well there's something happening that we're not there we're missing sure in see furby and the board starts out by saying look it's important to point out that in incentive payments is not unreasonable and i think when you get here there's that sense again that somehow we shouldn't be using federal grant money to pay these people but really a lot of these people were making bold low the reasonable policy one is that it grants he doesn't have money for unexpected expenses it basically has what it budgeted for and so in order to be fiscally prudent it encourages its employees to spend conservatively and  and then if they have need a rainy day fund they have it but if they don't need that rainy day fund those can be paid to the employees and it's a way to bump up their salaries without giving up permanent wage increase that they need to have money or the following it isn't the case of the record shows that in twenty ten everyone got the same incentive payments how can that be an incentive payment ok so i think incentive payments can be based on cost reduction so it can be an incentive to constrain costs and to get and to spend conservatively but beyond that you know we really haven't pushed for the twenty ten pain that's in our brief and all we're asking for a  and on we would primarily we would be focused on the twenty eleven and twenty twelve payments because those did defer based on and if you argue that there should be a person by person review and i mean already it feels like there's a lot of micromanaging here over i mean there must be a lot of federal grants like this and the notion that there can be no disallowance if it looks like the system is just not a legitimate system are not being applied legitimately that they would have to go through with you and pick through every single employee that just doesn't seem that workable to me right so i want to back up and there's a version of that argument that works in your favor too which is why are they micromanaging even to this point exactly but also backed up and say that all grants fees are an open book and auditors come in and they have all they have total access to our books and records and they came in this case and they didn't say well these payments are arbitrary or you don't have the performance evaluation of the disciplinary record the auditors came in and say you're missing your plans with performance and we don't know what grade was associated with which employee just to push back on that a little bit you assign four different bands and you say we're to you know great people accordingly and then you have a year when you don't appear to apply that whatsoever her and then you have other years where the payments are more individuated but they appear to crisscross your own criteria you don't come forward initially you your current don't come forward initially with an explanation of what this is about criteria for why something that looks really inconsistent with the plan is in fact consistent and so you can see why if they want to be looking but they also don't want to be looking at every stitch that the decision might be you know guy you haven't met your burden to appropriate and it's important because federal grant tease out after that own money and they make expenditures and reliance on the cost principles and when you can disallow allowable costs so let's say there are allowable costs caught up with some potentially suspect payments then you're basically and acting up panel levying a penalty on that doesn't that have to be your burden though to come forward and say in this question the consistency of your application of your plan is question and the question whether you're using a matrix and you need to give comfort that we have to go into every little stitch because here's our logic here's the final grid showing how we applied it and it all computes and the fact that you didn't do that you know suppose any one another chance another chance another chance i mean if i say come on you know look further but they want you to provide something that where it all adds up at a medium general level and then they can say ok we're comfortable and go away and if you say no we're going to just sort of give you a bunch of stuff that looks really inconsistent and that doesn't follow our published eleven charts within this specific categories of who they are like head start teachers they're pretty consistent that within has started teaching as they get whatever the b s go whatever but that's the kind of explanation that we could have offered and i mean it should be and that we would offer on hand i mean and that the point is that the this issue wasn't raised until the board's decision it the agency did not complain about the inconsistency of the payments other than twenty ten any prior at all and so when we asked her i mean and it's also it also defers from what the agency's final decision seagraves it's not consistent with the policy where the stated objective is to reward people with exemplary performance so that was the type of issue that they were debating now about what was the logic of the it well made some kind of decision that look these payments maybe maybe not may not have complied with the policy we're willing to concede those but there's a vast majority of payments here that did comply and the the documentation we provided the exact documentation that the disallowance asked for and then we provided it and then they said provide the personnel evaluations we provided it and then the next thing we turn around they're questioning something else and that may be ok but we need an opportunity to be able to respond ok pursuant to his compensation plan and reasonable during the initial monetary review t n s told the asian see that the relevant documentation which it described as a means of performance that's not from the agency it's that the relevant documentation was missing and unable to be located and at that time it provided only a two page scoring matrix to substantiate its more than one point three five million dollars in incentive payments now after the agency issue monitor or t n s had an opportunity to correct the deficiencies at the agency balance but failed to do so so the agency issued the disallowance letter again noting the lack of documentation then on appeal to the board t n s provided only summary spreadsheets to justify your over one point three million dollars in incentive payments where was the earliest plays where the agency made clear precisely what type of i think i would answer that by by saying that the agency can't specify particular types of documents it wasn't able to specify you know you need to produce all of your forms fifty one because that's not how it works it's the gran see responded with these scrunchy to show exactly what the original letter said was missing that the agency changed the rules and said death not enough you need to have performance evaluations and then they say ok here are performance evaluations the board said that wasn't enough that it needed disciplinary records and discretionary points in other words their argument is that every step of the way they provided what was asked for and then the response was well that's not enough but i think that that's an argument there's only so long target and there's only so much specificity that the at the agency can provide when they're not getting see said well this is not enough we need more and they did that each step of the way and then in the end when they said well ok we consider it so we can respond to this the it to the extent that there were allowable and allowable payments it doesn't say if you remain and we can show you this he doesn't say we have these documents which we will produce on remand it doesn't say in fact it doesn't even argue that they can explain the consistencies it it doesn't say you know you would think if there were some good explanation for these inconsistencies that they would have argued a motion for reconsideration they would have said you know what  tell who's getting these and how much they are right and when you've got all that when you can see got all the information he kept saying like for example when they gave these sample evaluations that the board again demanded something that the original letter had not asked for which is disciplinary records and in these discretionary points and your honor the math because why is that that is because of the next to identified in that the two thousand and seven policy so once that policy was produced the agency looked at it and said well your own policy says you need to keep performance evaluations on file in order to make these ngs and so why haven't you produced those  in response with the reply brief to the board to us produced evaluations for one employee now performance evaluations were only one of several factors that went into the the ratings and there was no documentation produced or proffered as  these other factors so you know again i think they characterize it as escalating demands for documentation that's because they were they were producing they were producing new information which process and i think this is tough because on the one hand this is federal money on the other hand these are employee bonuses which you know the documentation for which at least in my limited experience in and out of government tends to be rather limited  somewhat discretionary criteria are put out somebody in that evaluative position makes a call and the bonus gets paid so you know and it also seems like it might be an area in which guidance would be helpful from the agency you know you don't want this to become a slush fund and source of corruption obviously and we respect that that's why you're here on the other hand these are early learning centers are they not i mean this is some of the lowest paid people in the economy and they know how sophisticated personnel office is i'm guessing and so you know some kind of guidance on what would suffice how to keep their records and you know what to produce might forestall this now oh i think i would contrast this case with an industry highly regulated industry the court everyone in the regulated every one of the great way to answer these this is different the grantees have the freedom to draft their own policy their requirements that they keep out of the documentation to justify their costs but it's really  incumbent upon them to know what documentation they have because it's their policies not the agency say this is do you really want every employees individual performance appraisal or do you want a number or a column on their that says you know yes or no discipline in the past whatever it was ninety days you know ultimate qualitative bottom line of performance appraisal i mean no i think maybe if they have a matrix that was better administrative process certainly at the initial audit i'm not saying that they would have to produce every single performance evaluation i'm sure that sampling would be appropriate at that point and maybe some sort some summary of the of the payments assuming there were no inconsistency but once they say our records are missing and unable to be located then yes they do have to produce they do have to produce the record so you're saying that this is  and it just really raised alarms and that's why the process becomes more formalized and that's why the extent of documentation that's demanded is more to tell and that's correct and not only was there the initial monitoring view but that that report states that the grantee had one hundred twenty days to correct the deficiencies and that they certainly could have provided documentation that if they weren't sure what to provide they could have gone to a c f and said you know what that it turns out we do have documents what would you like to see they didn't do that and that's why the disallowance letter was issued and then they had another opportunity with their briefs to the poor or they could have provided additional documentation that's when they provided the summary spreadsheets or looked at it and said well these there are parent justification for these and consistencies what they say is they implied that it's some positions have a reasonably low or unusually low base salary that sort of positions are be difficult and also tough to fill and they suggested that's the reason for the inconsistency problem with that if that's their explanation that's not consistent with the policy either if they were paying people higher incentive payments the other was to ensure that we had comparable wages so people who were it had an appropriately low base compensation increasing their pay with a one time bump was completely consistent with the policy also i want to make it clear that when the auditors come in and look at our records we don't say a bunch of documents are missing we say the plans of performance are missing because there's a misunderstanding of what they're asking for and that's what the auditors base their just allow any such thing as plans are performing that this family right and now is the problem is that they were asking for plans we don't know what we're talking what they're talking about and we say well i guess we don't have the plans of requirements and then that's the basis for the disallowance and when we disprove that then it should be sent back so because really they've looked we flipped it on i've flipped the process on its head the process that the auditor comes in they're paging through documents looking through files to see what's going on they make the basis for this to the disallowance the board then is just looking to see whether the good the auditor got it right or not the board is not itself paging thr thousands of documents and lastly i'll just say that there isn't this is federal money but there is a a standard that keeps these payments reasonable and that is aren't they with in the reasonable range now  position that that's kind of a safe harbor the if there were going to reasonable range is closed or not well if it is in the sense that to the extent that the agency was using the completely wrong standard then that around the world pushing aside their general compliance with the standard compensation and comparable jobs yes that it was arbitrary for them to ignore or to ignore the standard to require the agents that asked them to come in and disprove every single thing no matter how many times it changes or whether we have noticed that it is simply a burden of proof that is