GAB Decision 443
Docket No. 83-17
June 30, 1983
University of Kansas;
Ford, Cecilia; Settle, Norval Teitz, Alexander
The University of Kansas (University, appellant) appealed a decision
of the National Institutes of Health (NIH), Public Health Service (PHS),
disallowing $21,551.47 in costs charged to a research grant awarded by
the National Institute of Dental Research (NIDR). NIH disallowed
certain charges to the grant for salaries and associated costs because
these charges were for "work that was done outside the scope of the
grant."
The Board, after a preliminary review of the appeal, found that the
University had not been given the opportunity to appeal this matter to
PHS pursuant to 42 CFR Part 50, Subpart D. Generally, the Board cannot
take an appeal unless the appellant has exhausted preliminary appeal
procedures, or has waived its right to such an appeal without objection
of the Agency. See, 45 CFR 16.3(c). After a conference call regarding
this matter, the University informed the Board that it wished to waive
the PHS procedures and proceed with its appeal with this Board. PHS did
not object. Since the amount in dispute was less than $25,000.00, the
appeal was processed under the Board's expedited procedures, with some
changes agreed to by the parties. 45 CFR 16.12.
Based on the record, which includes the parties' written arguments
and exhibits as well as a type of a telephone conference call, we find
for the University on the grounds that the work questioned was within
the scope of the grant and that there is no requirement for prior
approval for such changes.
Background
NIDR awarded a grant (No. DE-04115) for the period of April 1, 1975
through March 31, 1976 to the University to obtain, study, and analyze
the dental evolution of certain (2) transplanted Mexican populations.
The overall objectives stated in the original grant proposal were:
1. Determination of the relative importance of genetic and
environmental factors influencing the development and evolutionary
divergence of the dentitions of human populations.
2. Determination of the degree of divergence of the two transplanted
Mexican populations from the parental population.
3. Assessment of the influence of the gene flow from Spanish
populations on the dental morphology and tooth size of the Mestizo
populations.
4. Analysis of the heritability of dental characteristics using both
family pedigrees and population data.
5. Establishment of the degree of correspondence between
odontometrics and discrete traits in the calculation of genetic
distances.
The grant application indicated that most of the data had been
collected but that a field trip to Mexico would be necessary to obtain
certain data.
On July 18, 1975, the principal investigator wrote to the Scientist
Administrator of Extramural Programs, NIDR, to request a transfer of
funds from the "salaries and Wages" category of the grant budget to
the
"Foreign Travel" category to permit travel to Guatemala for the
collection of additional data. This letter also stated that:
one of the major problems in the analysis of genetic hybridization of
human populations is the establishment of the morphology and gene
frequencies of the parental populations. Since several of the Mexican
dental samples have been demonstrated to be triracial hybrids with some
African admixture, it is necessary to obtain baseline African data for a
formal analysis of hybridization. The Black Carib population of
Livingston, Guatemala offers such an opportunity since it is probably
the least hybridized group of (3) descendants of West African slaves in
the New World. Dental casts and blood specimens should permit the
creation of a model of hybridization based upon dental morphology.
Appellant's Appeal File, Tab 3. This request was approved in writing
by the Agency on July 23, 1975.
The principal investigator submitted a continuation application in
January, 1976 which became the basis for an approved award for the
period April 1, 1976 through March 31, 1977. In that proposal, the
investigator indicated in a section headed "New Directions" that since
a
large portion of the gene flow of the Mexican populations orginated from
the African gene pool, it was necessary to obtain a sample population as
an African baseline for comparative purposes. The investigator stated
that field work in Guatemala and Belize had been undertaken. The
investigator explained that this referred to field trips to Guatemala
during the first budget period and to the planned trip to Belize which
was undertaken in 1976 after the start of the second budget period.
Appellant's Appeal File, Tab 8, pp. 41-42. The principal investigator
indicated that the generic composition of these populations would
provide sufficient data "to assess the impact of African admixture on
polygenic traits such as odontometrics." Appellant's Appeal File, Tab 4.
Procedural History
After concluding investigations and releasing a draft report to the
University, NIH issued a final report on August 27, 1982. /1/ In the
final report, NIH concluded, based on statements made by certain
employees working on the grant, that improper salary costs incurred
during the period of 1975 through 1977 for "work not within the scope of
this grant" had been charged to the grant. The work questioned (4)
related principally to sickle cell anemia research based on data
collected in Belize and anthropometric measurements of Irish peoples
based on data obtained by the principal investigator from the Peabody
Museum. Agency's Appeal File, Tab 1A, p. 8. The report stated that
there was no evidence that the principal investigator had ever requested
approval to change the scope of the grant to include such costs. NIH
further indicated that in the original draft report it took exception to
the salary charges in question on the basis that they were not related
to grant DE-04115 and that this position was based on the description of
the planned grant work set out in the grant application, not on a broad
concept of what might constitute scientific relatedness. The final
report indicated that NIH, to assure a clear understanding, was revising
its wording on this matter. NIH now started that the issue was that the
salary charges were for work outside the scope of the grant for which
the principal investigator needed to obtain prior approval before he
could charge the costs to the grant.
Based on the final report, the Associate Director for Extramural
Research and Training, NIH, after consultation with a group of senior
staff, recommended, and the Director of NIH concurred, that NIH take
action to recover the amount of $21,551.47 from the University. A
disallowance letter dated December 27, 1982 was issued to the University
by the Chief, Financial Advisory Services Branch, Division of Contracts
and Grants, NIH, to recover $21,551.47 of costs charged to the grant.
Parties' Arguments
The principal investigator, in response to the Agency's draft
findings, argued the relevance of the sickle cell data and Irish data to
the grant project. Appellant's Appeal File, Tab 8, pp. 39-42. The
investigator contended that in order to make a comparative study of the
dental traits of the four Mexican populations involved in the project,
it was necessary to "factor out" the effects of admixture with other
populations. In order to do this, the degree of admixture from these
other populations on the Mexican populations had to be determined.
Because the populations to be studied included an African gene pool, as
stated in the original grant application and the continuation
application at the heading "New Directions," the (5) investigator
stated
that it was necessary to obtain an African baseline for comparative
purposes. See, Appellant's Appeal File, Tab 2, p. 5; Tab 3; and Tab
4, p. 9. The Black Carib population was chosen because of their
historically documented African ancestry.Therefore, filed work was
conducted in Guatemala in the summer of 1975 and Belize in the summer of
1976 to collect dental casts and blood samples for sickle cell trait and
other African baseline data. Tab 8, p. 41.
The investigator further contended that in order to "factor out"
the
African component in the Mexican populations, it was necessary to know
what the African stating point was. The investigator asserted that
while the collection of dental casts of the Black Caribs in Guatemala
and Belize was important in order to compare the African teeth with the
Mexican teeth, African admixture could not be determined by teeth.
Therefore, hereditary traits had to be used for this purpose. The
investigator argued that these traits would include the frequency of the
sickle cell trait. Therefore, in order to determine the agree of
African admixture of the Black Carib populations studied, the principal
investigator determined the frequency of the sickle cell trait. Tab 8,
p. 41. The Black Carib material, as stated in the continuation
application, would provide a more thorough analysis and understanding of
the impact of African admixture on the Mexican populations. Tab 4, p.
9.
The principal investigator further asserted that the Black Caribs are
known to have some English-Irish and South-American Indian admixture as
well, and therefore that it was necessary to compute the European
component in the Black Carib gene pool. The investigator contended that
the Irish anthropometric data was used for this purpose. The data used
was Irish data collected in the 1930's and obtained by the investigator
from the Peabody Museum. This data was utilized in this project to
represent the European baseline or "parental" population.
The investigator presented letters from recognized experts
substantiating the use of Irish data in establishing a genetic baseline
in the study of a group such as the Black Caribs, as well as letters on
the appropriateness of the use of genetic traits such as the sickle cell
trait, which are (6) discernably by analysis of human blood samples, to
determine genetic admixture rates. See, Appellant's Appeal File, Tab 9.
The University further argued that its position as well as the
position of the principal investigator was that the work done on the
Irish anthropometric data and on the Black Carib serologically data was
essential in analyzing genetic admixture effects on dental evolutionary
development in the Mexican populations, especially since the grant
objectives were, in part, to determine the relative roles of genetics
and environment in dental formation and to determine the heritability of
dental traits. See, Appellant's Brief, pp. 1-5 and Tab 8, p. 40.
The appellant also argued that the principal investigator requested
from NIDR a change in direction when he requested a transfer of funds
for the purpose of conducting field work in Guatemala. See, Appellant's
Appeal File, Tab 3. The University claimed that the principal
investigator contacted NIDR officials by telephone, and later in
writing, requesting approval of a field trip to obtain baseline parental
data for the project and that this request was approved in writing.
Appellant's Appeal File, Tab 3. The University also argued that in the
continuation application, which the Agency approved, the principal
investigator outlined his plan to pursue the activities questioned in
the sections headed "New Directions," and "Summary." Appellant's
Appeal
File, Tab 4.
The appellant contended that the NIH decision attempts to impose a
narrow concept of "scope of the grant" by limiting the work to be
carried out to the description of planned grant work set out in the
grant application. Appellant's Appeal File, Tab 11, p. 8. The
appellant also argued that it was unable to find in the regulations a
definition or explanation of the concept, "scope of the grant," although
this concept was the basis for the disallowance here. The appellant
contended that the only definition provided by the Agency of this
concept is the Agency's narrow interpretation that "scope of grant"
means the grant purpose as contained within the original proposal
approved by the Agency. The appellant disagreed with this
interpretation and cited provisions of the PHS Grants Administration
Manual, Chapter 2-400, which permit a principal investigator some
flexibility to change methods and procedures employed (7) in performing
research without the need to make special reports on proposed actions to
obtain granting Agency approval. Appellant's Brief p. 8; Appellant's
Appeal File, Tab 1. The University claimed that the principal
investigator was exercising the latitude recognized by HHS and the
responsibility of the principal investigator to pursue necessary and
appropriate scientific procedures to fulfill grant objectives. The
appellant explained, citing regulations and offering supporting
documentation, that the principal investigaror proposed a project, that
he undertook the research proposed and proceeded in a scientifically
appropriate fashion in pursuing the development of those research
findings, that he discussed and sought approval by the Agency of the
research development through contracts, correspondence, and through the
formal continuation application process, and that this entire process
produced a "scope of grant" which may have differed from the original
plan, but which was representative of the grant supported research
relationship. The University argued further that the questioned
activities did not represent a change in grant scope or objectives and
therefore did not require prior approval. The University also claimed
that while the Agency concluded that the questioned activities were not
within the scope of the grant, no rationale for this conclusion was ever
provided.
The appellant also argued that the Agency, in making its finding,
relied upon information derived from employees working on the project
who were not in a position to fully know or judge the ultimate objective
of the work, or who were biased in their views. The appellant argued
that although federal costs principles allow effort reporting by a
person in a supervisory or managerial position, the NIH decision was
based on the fact that "employees know best how they spent their time."
Appellant's Brief pp. 8-9. The appellant argued that under the effort
reporting system utilized by the University pursuant to the federal cost
principles, an employee is not required to report his or her effort in
recognition of the fact that such individual may not have full knowledge
of the relationship between what they are working on and how it relates
to the accomplishments of project objectives.
The Agency contended that, while the disputed activities may have had
relevance to the general direction of the principal investigator's
research interests, the costs disallowed for (8) the questioned
activities related to work substantially outside the scope of the
original approved project and, therefore, required prior approva. The
Agency pointed to the fact that the principal investigator in the grant
application stated that most of the data had already been collected and
that the grant reviewers in approving that application believed that all
the data was collected. The Agency further contended that an extension
of work to include "parental data" was not envisioned by the original
application. The agency therefore concluded that the collection and
analysis of this data constituted a change in the scope of the project
for which the applicable regulations, 42 CFR 52.20(b) and 45 CFR 74.102
(1976), expressly required grantees to obtain prior approval. The
Agency argued that prior approval was never obtained. See, Agency's
Brief, pp. 3-4.
The Agency, during the June 28, 1983 telephone conference call,
argued that the statements of employees working on the project were the
best evidence of the scope of the project. The Agency asserted that the
effort reporting system authorized by federal cost principles is less
reliable as evidence of work performed on a project. The Agency also
pointed out that in defining what might be considered within the scope
of a grant, there must be a certain amount of judgment used by the
Agency. The Agency contended that it was in favor of investigator
initiative but that NIH must balance the discretion allowed an
investigator against whether the grant funds are properly expended.
Discussion
Scope of the Grant
Both the Agency and the University rely on 42 CFR 52.20(a) and (b)
which state as follows:
(a) Use of funds. Any funds granted pursuant to Sec. 52.14 shall be
expended by the grantee solely for carrying out the approved project in
accordance with regulations of this part....
(b) Changes in project. The permissible changes by the principal
investigator in the approved project shall be limited to changes in
methodology, approach or other aspects of the project that would
expedite achievement (9) of the project's research objectives, including
changes that grow out of the approved project and serve the best
scientific strategy. Whenever the grantee and the principal
investigator are uncertain as to whether a change complies with these
provisions, the question shall be referred to the Secretary for a final
determination. /2/
The Agency's argument that "scope of the grant" refers to scope of
the grant as contained only in the original grant application is
unpersuasive. /3/ This argument overlooks the provisions of 42 CFR
52.20(b) which specifically recognize that changes may be made in the
approved project. The purpose of allowing changes in the approved
project as limited by 52.20(b) was to permit the researcher some
flexibility in pursuing research projects. One of the purposes of the
regulation, as stated in the preamble, was to preserve "the scientific
or professional freedom of research personnel to pursue effectively the
projects they have presented for Federal support." 28 Fed. Reg. 10420,
September 26, 1963. If we were to accept the Agency's argument here
that "scope of the grant" refers only to the description of the grant
project contained in the original grant application, we would have to
ignore the provisions of 42 CFR 52.20(b) which recognize that certain
changes may be made in an approved project during the course of pursuing
the research project's objectives.
(10) We recognize that 42 CFR 52.20(b) limits the types of changes a
principal investigator or grantee is permitted to make in the approved
project to changes in methodology, approach or other aspects of the
project that would expedite achievement of the research objectives,
including changes that grow out of the approved project and serve the
best scientific strategy. However, the University here has offered
detailed scientific explanations, including letters from recognized
experts in the field, that the work on sickle cell trait and the Irish
data represented reasonable changes in approach in order to achieve the
research objectives, and therefore, the types of change recognized by 42
CFR 52.20(b) as permissible. While we agree with the Agency that an
investigator's initiative must be balanced against whether the grant
funds are properly expended, the Agency here has not rebutted the
University's testimony and has not provided any argument to support its
conclusion, based upon the statements of the employees, that the work
performed by these employees did not constitute the type of change
permitted by the regulation. Where the regulation allows certain
changes to be made to the approved project and the University has
provided evidence indicating that the changes made were the type
envisioned by the regulation, we cannot accept the Agency's argument
where the Agency has not provided sufficient rationale to support its
conclusion or rebut the University's testimony. We, therefore,
conclude, on the basis of the provisions of 42 CFR 52.20(b), that the
scope of the grant is not limited to the original grant application and,
further, that the changes made in the project were allowable under this
regulation.
The Agency also disallowed costs associated with certain other
activities performed by three employees. These activities included
typing a rough draft of some chapters on the Mexican populations,
working on a matter dealing with the Soviet Union, establishing a
serological laboratory, working on certain blood samples other than the
samples of the Black Caribs or Mexican populations, and work related to
preparing a paper on sickle cell anemia and sickle cell trait.
While the Agency argued that the employees know best how they spent
their time on a project, we find that the statements of employees made
to the Agency and solicited after the grant periods in question are less
persuasive than the contemporaneous effort reporting system used by the
(11) University in documenting the effort performed on the project. The
Agency has not argued that the University's reporting system was
defective or that the University failed to document properly the effort
performed. Furthermore, the principal investigator in response to the
draft report provided a reasonable explanation for these activities and
how they related to the grant in question. The Agency never directly
responded to his comments and, in fact, acknowledged in the final report
that the comments of the principal investigator directly contradicted
the information given by the employees without resolving this apparent
conflict. Furthermore, we agree with the University that insofar as the
statements of two of the employees might be biased, their statements are
less reliable than the contemporaneous effort reporting records required
by the federal cost principles. See, 45 CFR Part 74, Appendix D, Part
I, J.d. Also, we agree with the University that employees, such as
technicians and graduate students, are not necessarily in a position to
judge whether the work they performed was within the scope of a project.
For the reasons stated above, we conclude that the statements of the
individual employees alone are not sufficient to demonstrate that the
questioned activities were for work not within the scope of the grant
where the Agency has not provided any other documentation or evidence to
support its conclusion or rebut the University's argument.
Prior Approval
We do not agree with the Agency that there is even a requirement for
prior approval for certain changes in a research project which would
apply in this case. Under the provisions of 42 CFR 52.20(b), whenever
the grantee and principal investigator are uncertain as to whether a
change complies with the provisions of that section, the question must
be referred to the Secretary for a determination. This provision
reflects the latitude given to the grantee and principal investigator to
pursue necessary leads in conducting their research. This provision
also allows the grantee and principal investigator discretion in
determining whether a change complies with the provisions of that
section. We are unable to conclude that this provision requires a
grantee to obtain prior approval where the (12) provision leaves it to
the grantee's discretion to raise any questions regarding the necessary
for prior approval in a given situation. The only requirement for prior
approval by the Agency for a change in the project is contained in PHS
Grants Administration Manual (GAM), Chapter 2-400.40. That chapter,
however, specifies that the principal investigator should be permitted
to change methods and procedure employed in performing research without
the need to make special reports to obtain granting agency approval.
The chapter also states that significant changes in methods or
procedures need only be reported to the granting agency in periodic or
final technical reports. The only instances where prior approval is
necessary are where the stated objectives of the research effort are to
be changed or where the investigator plans to change the broad category
of research. See, PHS GAM, Chapter 2-400.40.A-C. See, also, McLean
Hospital, Decision No. 322, June 30, 1982. As we discussed above, the
Agency has not shown that the changes in the project were changes to the
stated objectives of the research or plans to change the broad category
of the research. Therefore, we cannot conclude on the basis of 42 CFR
52.20(b) and the provisions of the Grants Administration Manual that
prior approval for the questioned changes was required.
The Agency also argued that under the provisions of 45 CFR 74.102
(1976), the principal investigator or grantee was required to request
prior approval for the changes made. That section, at 74.102(b),
requires inter alia, that a grantee request prior approval promptly from
grantor agencies for budget revisions whenever the revision results from
changes in the scope or the objective of the grant-supported program.
At the outset, we cannot accept the Agency's argument here. This
section requires prior approval for budget revisions arising from
changes in the scope of the grant. Under 42 CFR 52.51, Subpart L of
Part 74, which contains section 74.102, is not among the subparts of
Part 74 made applicable to this grant. In addition, the Agency did not
argue here that the grantee had revised its budget without approval.
Instead, the Agency has argued that the grantee had made changes in the
project without approval. Therefore, we conclude that on the facts of
this dispute this section is inapplicable.
(13) Even though we find that the regulations did not require prior
approval for the changes in the project here, we take note that the
record indicates that the Agency had been informed of the changes in
question here and indicated its approval. The record indicates that
during the first year of the grant, the principal investigator requested
the Agency in writing for a transfer of funds for "Salaries and Wages"
to "Foreign Travel" category of the grant. In this same letter, the
principal investigator indicated the necessity to collect "parental
data" in order to make an analysis of hybridization relative to the
grant objectives. The Agency, by subsequent letter, approved the
investigator's request. Furthermore, in the application for the
continuation grant for the second year of the grant, which the Agency
also subsequently approved, the principal investigator indicated in the
section headed "New Directions," that he was pursuing certain changes
in
methodology or approach. Therefore, the Agency in approving both the
request for transfer of funds and the continuation application gave its
approval for the questioned changes.
The Agency, in the June 28, 1983 telephone conference call, argued
that the approval of the request and the continuation application did
not constitute "prior approval." The Agency argued that "prior
approval"
here required the type of approval given by peer review for an original
grant application. The Agency also stated that NIH policy is that the
project should be resubmitted as a different project and subject to
re-review when the circumstances of the original peer approval have
changed. We find this argument unpersuasive. The Agency has not cited
any authority for this argument and we are unable to find, either in the
regulations or the Grants Administration Manual, any requirement that
prior approval must be made by peer review. /4/ Furthermore, the Agency
has not demonstrated that the questioned activities changed the project
to the extent that the circumstances for the original peer review
approval were significantly different. The Agency contended that
approval of the original grant (14) application was based on the
statement in the application that most of the data had been collected.
However, the fact that the grant application requested funds for a
future field trip to collect data and that a written request to transfer
funds to pursue further data collection was subsequently approved as
well as statements in the approved continuation application, indicate
that the fact that most of the data had been collected was not a
critical factor in approving the original application. Therefore, we
conclude that approval of the request by the principal investigator and
of the continuation application was, in fact, prior approval from the
Agency.
Conclusion
For the reasons stated above, we grant the University's appeal and
overturn the Agency's disallowance. /1/ Although the report addressed
other findings relative to the grant in question, this Board's
review is limited solely to the disallowance of funds charged to the
grant. To the extent that the NIH reports and subsequent Agency
response in this matter contain references to these other findings, the
Board has not considered these matters in making its determination here.
/2/ As originally proposed, the last part of the first sentence read:
"including changes that grow logically out of the approved project and
serve the best scientific strategy." 28 Fed. Reg. 5434, June 1, 1963. No
reason is given in the preamble to the final regulation for the omission
of the word "logically." The change apparently indicates that
considerable latitude was to be given the principal investigator.
/3/ The Board asked the Agency during a June 28, 1983 telephone
conference call to cite its authority for this argument. The Agency was
unable to provide any specific authority. /4/ The Agency was
also requested to provide the Board its authority for its argument here
during the June 28, 1983 conference call. The Agency did not provide
any specific authority for its literpretation of prior approval.
JULY 07, 1984