GAB Decision 362
November 30, 1982 Health Systems Agency of Southwestern; Docket No.
82-137 Settle, Norval; Teitz, Alexander Garrett, Donald
The Health Systems Agency of Southwestern Pennsylvania (HSASP)
appealed a decision by an ad hoc review committee of the Health
Resources Administration (Agency) to disallow $5,664 of costs under an
Agency grant to HSASP. Because the sum involved is not over $25,000, we
review the decision of the ad hoc committee to determine whether or not
it was clearly erroneous. 45 CFR 16.12(d)(1).
Background
In 1978 HSASP occupied space in an office building under a lease.
Toward the end of the year HSASP entered into a new lease of larger,
substitute space in the same building at a higher rental rate. HSASP
paid rent at the higher rate for three months before actually moving
from the old space to the new. The reason why HSASP was not in the new
space during those three months is that the space was not ready; a labor
strike and floor plan changes had delayed preparation. The Agency
disallowed the three months' rent differential, $5,664, on the ground
that during those months the new space was "idle facilities", the
cost
of which is generally unallowable.
Analysis and Conclusion
The cost principle on which the Agency relied is set forth at 45 CFR
74, Appendix F, Section G.13 (1978). It defines "idle facilities"
as
completely unused facilities that are excess to the institution's,
HSASP's in this case, current needs. Nothing in the record shows that
the new office space was excess to HSASP's current needs or that the
Agency ever questioned HSASP's current need for it. HSASP, in its
submission to the Agency's ad hoc review committee, stated -- with no
dispute indicated in the record -- that before HSASP leased the new
space it had determined that more space would be required and a decision
was made to expand into the new space. In a statement to us HSASP
asserts, "Needing more (2) space, we negotiated a subsequent lease"
on
the new, larger space. The Agency has not disputed this assertion. * We
conclude that the Agency clearly erred in disallowing the questioned
cost as cost of "idle facilities". Since no other basis was given
for
the disallowance, we find that the ad hoc review committee's decision
was clearly erroneous.
* Moreover, it is far from clear why the provisions in Section G.13
concerning "idle capacity" would not justify allowing this cost.
OCTOBER 22, 1983