Opinion ID: 420815
Heading Depth: 1
Heading Rank: 1

Heading: jurisdiction

Text: 37 Our first consideration in this appeal must be the extent of our jurisdiction to resolve all the issues raised in the three agency decisions. Subject matter jurisdiction is conferred on this court for review of a decision of the Secretary of Labor sanctioning a recipient of funds under CETA by 29 U.S.C. sec. 817 (1978) (repealed 1982). The Secretary urges that this court has jurisdiction to decide all questions relating to the sanction including claims arising under the EOA grant. FFC flatly contends that the issues arising from the EOA grant are not before this court. 8 38 The difficulty with treating the EOA and CETA issues in this case in separate judicial proceedings is obvious. The parties agreed to review the administrative cost disallowances and recommendations for debarment in a single hearing before an administrative law judge. The parties further agreed that the hearing would be governed by DOL procedures for debarment. The hearing was held according to the parties' stipulation, resulting in one lengthy record in which the various issues are dealt with interchangeably. The United States Court of Appeals for the District of Columbia has concluded that it cannot have jurisdiction over the CETA claims because that jurisdiction is exclusively vested by 29 U.S.C. sec. 817(a) (1978) (repealed 1982) in this court. Thus, we are the only court which may proceed to resolve the issues on appeal in one proceeding. 39 We conclude that the EOA claims encompassed in this appeal are properly before this court as matters ancillary to the CETA claims. By considering the EOA claims with the CETA claims, this court will fulfill the purpose of ancillary jurisdiction by promoting the economical and expeditious administration of justice. Texas Employers' Insurance Association v. Felt, 150 F.2d 227 (5th Cir.1945). To permit the FFC to pursue its EOA claims in another court would require that court to study the exact same record which this court has reviewed. We thus proceed to review both the CETA cost disallowances and the EOA cost disallowances. The CETA Cost Disallowances 40 FFC challenges only one CETA cost disallowance by DOL. DOL calculated that FFC had overcharged DOL's CETA grant $70,891, for direct and indirect administrative costs actually incurred in connection with other grants. For example, FFC had paid full salaries for individuals out of CETA funds when those individuals were only spending part of their time on CETA matters. 41 FFC's fundamental argument is that the CETA regulations provided that a recipient's first priority of compliance was to comply with its grant budget. 29 C.F.R. sec. 97.231 (1975). FFC argues that this grant budget is a binding contract between grantor and grantee and that it supersedes any regulations. In this case, FFC contends that the budget provided for the $70,891 in costs which were disallowed. FFC next contends that testimony before the ALJ by a DOL employee demonstrated that DOL had a practice of permitting recipients to charge CETA for the full amounts of items, rather than allocating a pro rata share for actual CETA expenses. Finally, FFC argues that even if the regulations provided that FFC should have allocated costs, the ambiguity in the contract between FFC and DOL should be construed in favor of FFC. FFC cites cases in which a contractor's method of charging indirect costs was first approved, and later disapproved. In one such case, the Court of Claims allowed the contractor to use the original method until it was notified that it was improper. Litton Systems, Inc. v. United States, 449 F.2d 392 (Ct.Cl.1971). 42 An evaluation of FFC's contentions first requires a review of the governing regulations. Two regulations primarily discuss the issue of costs allocations. First, the CETA regulations contain an explicit provision governing the charges to be made for salaries for employees who performed both CETA and non-CETA functions: 43 Prorating Salaries. In cases where an individual performs functions under several grants, their time shall be prorated among the different grants and the portion of the salary charged to the section 303 grant shall not exceed the percentage of time spent performing section 303 functions. 44 29 C.F.R. sec. 97.259(g)(5) (1975). Another regulation specifies what constitutes allowable costs: 45 Administration costs. Administration costs shall be limited to those necessary to effectively operate the program. Such costs include overall program administration as well as program activity administration costs incurred by prime sponsors, subgrantees, and contractors. Administrative costs shall not generally exceed 20 percent of the total planned costs for the entire grant, unless such additional costs have been approved in writing by the Secretary. 46 29 C.F.R. sec. 97.256(d)(1) (1975). CETA regulations also incorporated by reference the following provisions of Federal Management Circular (FMC) 74-4: 47 C. Basic guidelines. 48 1. Factors affecting allowability of costs. To be allowable under a grant program, costs must meet the following general criteria: 49    50 f. Not be allocable to or included as a cost of any other federally financed program in either the current or a prior period. 51    52 2. Allocable costs. 53 a. A cost is allocable to a particular cost objective to the extent of benefits received by such objective. 54