Opinion ID: 467580
Heading Depth: 2
Heading Rank: 2

Heading: City Responsibility for Disallowed Costs of Subgrantees.

Text: 18 The City contends that the Secretary offered no legal basis for holding the City liable for disallowances based on the failure of subgrantees to maintain proper records. In support of this contention, the City cites the Department's decision in Davis v. Youth Community Enterprises, 81-CET-234 (DOL 1982). In Davis, the ALJ determined that a prime sponsor was not liable for an award of backpay based on a subgrantee's discriminatory discharge of a CETA employee. However, in Davis, the discriminatory discharge violated the subgrantee's own personnel policies as well as the CETA requirement. 19 In the instant case, some of the City's subgrantees failed to maintain proper records pertaining to the operations of the CETA program. Unlike the situation in Davis, here the subgrantees merely lost or misplaced participant personnel files. As previously noted, the Act and the regulations require prime sponsors to ensure proper recordkeeping by subgrantees. 29 U.S.C. Sec. 835(a)(1); 20 C.F.R. Sec. 676.37(a)(3). The regulations further provide that a prime sponsor is responsible for the operation of all its subgrants and for assuring adherence by subgrantees to the requirements of the Act, regulations and other applicable law. 29 C.F.R. Sec. 98.27(d). Because the Act clearly makes the prime sponsor responsible for the operation of its subgrants, we conclude that the Secretary properly held the City financially liable for these disallowed costs. 20