Rio Bravo Association, DAB No. 1088 (1989)

DEPARTMENTAL APPEALS BOARD

Department of Health and Human Services

SUBJECT: Rio Bravo Association DATE: August 21, 1989 Docket No.
89-76 Decision No. 1088

DECISION

The Rio Bravo Association (RBA) of El Paso, Texas, appealed a
determination by the Centers for Disease Control (CDC) of the Public
Health Service, denying RBA's application for a non-competing
continuation award for an AIDS project. CDC based its decision on a
finding that RBA had made insufficient progress toward establishing a
regional consortium to provide AIDS education and information to the
Hispanic communities within the four-State area addressed by RBA's grant
agreement.

RBA did not dispute that it was required to establish a consortium. The
dispute here centers primarily on when RBA was required to have written
agreements with other consortium members. For reasons stated below, we
find that there was no binding requirement that written agreements be
obtained prior to the May 1989 date set in RBA's workplan (a goal which
RBA met), nor was the execution of such agreements prior to that date
essential to meeting project objectives. We further find that RBA
showed that it had made substantial progress in establishing a
consortium and that the bases on which CDC found otherwise are
unsupported.

Accordingly, we reverse CDC's finding on the consortium issue. Our
decision here is limited to that issue; we do not address other
allegations made about RBA's conduct of the project. As RBA is aware,
CDC is not required to grant the continuation award based on our
decision, but may issue another determination denying the award if it
finds that other allegations are adequately supported.

Below, we first provide a summary of the issues and the basis for our
decision. We then provide a more complete analysis of the various
subissues and our findings on those issues.

Summary of decision

The CDC Grants Management Specialist who issued the decision appealed
here notified RBA by telephone on April 28, 1989 of the denial of
continuation funding and followed this with a written determination
dated May 1, 1989. The bases for CDC's determination were that
obtaining consortium agreements prior to award was a criterion for
eligibility for the award; that the lack of agreements was a failure to
meet the paramount objectives of the project; and that RBA had failed to
meet the requirements of its workplan. During Board proceedings, CDC
argued that it had repeatedly told RBA that it must have consortium
agreements as a condition for continuation funding. CDC also argued
that a panel of independent consultants found in April that RBA had not
made progress in establishing a consortium, and that RBA's lack of
ability to effectively form and work with a consortium was evidenced by
the fact that the organizations from which RBA ultimately obtained
agreements were different from those mentioned in the grant application
and by documents indicating that RBA had had problems in relating to two
Texas organizations.

Our findings may be summarized as follows:

o While the published notice of availability of funds referred to
the grantee organization having subcontracts with organizations in a
four-State area, the draft announcement sent to RBA indicated that
letters of commitment might be sufficient; it also explicitly stated
that a consortium need not be established and in operation at the time
of application. CDC argued that it had waived its "operating policy" of
requiring agreements prior to award, but expected RBA to establish the
consortium shortly after the award. Yet, CDC did not communicate this
to RBA at the time of the award (nor set a new deadline as a term of the
grant award). Instead, CDC asked for letters of support, which RBA
provided.

o The paramount objective of the project was to provide AIDS
information and education to Hispanic gay/bisexuals. While CDC (and
RBA) clearly contemplated that there would be collaboration and
coordination with other agencies in the four-State region, neither CDC's
program announcements nor its arguments here provide a basis for finding
that having written agreements by April was essential to meeting project
objectives. Indeed, CDC never adequately explained what the function
of such agreements should be.

o Since CDC had found the original workplan to be insufficiently
specific, RBA developed a revised workplan in January 1989 and again
revised it in February 1989. Although none of the workplans submitted
called for actually obtaining agreements before May 1989, after the end
of the first budget period, CDC never informed RBA that the workplans
were unsatisfactory.

o The record shows that the first written communication about
consortium agreements was dated April 14, 1989 (about two weeks prior to
the end of the budget period); this is insufficient notice under the
circumstances. We also find that CDC's reliance on alleged oral
communications is misplaced and that the allegations are not
sufficiently supported in any event.

o The record does not support CDC's assertion about a panel
consensus. The report of the panel's visit (which is not signed by the
panel) indicates only what the Project Officer's findings were, based on
her misconception that written agreements had been required.

o Although RBA applied for a grant in June 1988, it did not
receive any funds until January 1989. This delay hampered RBA's
consortium-building efforts since meanwhile one of the organizations
described in the application had disbanded and another had begun a
different project and could not participate. In these circumstances,
RBA was reasonable in taking some time to assess which organizations
could best meet project goals before actually entering into
subcontracts. The fact that RBA achieved subcontracts in May, as
required by the workplan, together with other undisputed assertions by
RBA about the contacts it made and letters of support it had received,
show that substantial progress had been made by April. CDC's evidence
is not sufficient to show that RBA could not effectively build and
maintain a consortium in the four-State area.

We note that CDC's decision was apparently colored by verbal allegations
of financial improprieties made against RBA's Executive Director. RBA
effectively argued that such allegations should be viewed skeptically
given the nature of the project here and the community involved. CDC
certainly would be reasonable in deferring a funding decision until such
allegations could be thoroughly investigated, but was arbitrary in
precipitously denying funding on bases which it could not support.

CDC's Announcements Did Not Clearly Require Agreements.

CDC administers a National AIDS Minority Information and Education
Program authorized under sections 301(a) and 318 of the Public Health
Service Act, as amended. Section 301(a) is the general grant-making
authority given to the Public Health Service (PHS); section 318
specifically authorizes grants "to public and nonprofit private entities
for information and education programs" on AIDS (acquired
immunodeficiency syndrome). CDC did not cite (and we are not aware of)
any program regulations implementing this authority.

CDC's position that establishing a consortium through written agreements
was an eligibility requirement and a term of the grant award to RBA was
based on its Program Announcement and Federal Register Announcement.
The Program Announcement was sent to RBA and other potential applicants
with a letter dated April 11, 1988, soliciting project applications.
The transmittal letter stated:

In order to expedite this project, the Program
Announcement and Application Information is issued in
draft form. Please proceed in preparing your
application with this draft. We expect no changes;
however, if there are any you will be advised. Once the
Program Announcement is approved in final it will be
published in the Federal Register.

RBA Ex. A-1. The announcement was published in the Federal Register on
May 3, 1988. 53 Fed. Reg. 15734, CDC Ex. A. Although there are some
differences between the draft (which CDC referred to as the Program
Announcement) and the Federal Register notice, CDC apparently did not
consider these differences substantive. CDC described the Program
Announcement as generally containing all the information in the Federal
Register Announcement, as well as additional requirements and other
relevant information. CDC brief, second unnumbered page.

CDC asserted that the clear language of both announcements established
the requirement that an applicant must be either an established national
or regional minority organization or be a participant in a regional
consortium. This assertion is not supported by a careful examination of
the Federal Register Announcement. Under "Eligibility Requirements,"
that announcement indicates that an application may be submitted by "a
group of two or more organizations" so long as one is designated as the
primary recipient of the award. The announcement then states that an
eligible applicant may be a "regional minority non-profit organization
or consortia or group of organizations . . . ." CDC Ex. A (emphasis
added). The Program Announcement states that "regional groups of
organizations need not have been established or in operation prior to
proposal submission . . . ." CDC Ex. B, p. 10.

In any event, RBA did not deny that it needed to form a consortium. The
real issue here is what was meant by forming a consortium. CDC alleged
that the announcements required that the recipient organization have
"consortium agreements" with participating organizations prior to award
of funds. We find the announcements to be confusing on whether a
consortium agreement was required and, if so, what its purpose was.

The Federal Register Announcement does not specifically refer to
consortium agreements. It does explain that the recipient organization
was to have "primary responsibility for submission of the application,
and any subsequent award, with appropriate subcontract arrangements with
participating organizations." Two sections of the Program Announcement
refer to subcontracts or agreements. The first is part of the
eligibility section, stating that qualifying organizations must --

Demonstrate a well-conceived structure through which the group of
organizations will direct, administer, and report grant activities,
including possession of subcontract agreements designating a
specific non-profit agency as lead agency for the application.

CDC Ex. B, p. 10.

The Program Announcement also included a section with guidelines for
preparing an application. Under "APPLICANT CAPABILITY AND COORDINATION
EFFORTS," this section requires an applicant to describe its ability to
work collaboratively and sensitively with targeted minority populations
and to coordinate efforts with state or local health departments. The
applicant is required to provide as attachments to the application:

* * *

3. If a consortium made up of several organizations, a list of
all participating organizations, with a written consortium
agreement designating a specific non-profit agency as lead
agency for the application;

4. If a joint or cooperative venture, letters of commitment
from all participating organizations, which are specific to
program content; . . .

CDC Ex. B, p. 31.

As discussed below, RBA did provide letters of support when CDC
requested it to do so. There is no evidence that RBA's failure to have
a consortium agreement designating it as lead agency for the application
hampered it in fulfulling that role and accepting the corresponding
responsibilities.

CDC said that its "operating policy" was that "all grantees whose
eligibility relied on the existence of a consortium should have the
consortium in place prior to grant award." According to CDC, it
"waived" this requirement for RBA, but RBA knew that it should form the
consortium by having consortium agreements from organizations from the
other three States of the four-State border region immediately after the
grant award. As we discuss next, the record simply does not support a
finding that CDC treated consortium agreements as a condition at the
time of award, nor that CDC communicated to RBA that it viewed its
actions as a temporary waiver of an award condition which then became a
condition for continuation funding. We also discuss below why we
conclude that having consortium agreements in the first few months of
the project was not so integral to meeting project objectives that RBA
should have known it was required.

CDC Did Not Require Agreements as a Term of the Award.

In its application (submitted June 10, 1988), RBA described itself as a
member of the Alianza Rio Bravo Coalition, listing itself as a
coordinating member together with three other organizations (one from
each of the States of New Mexico, Arizona, and California). CDC Ex. M.
The committee which reviewed the application highly recommended it for
approval, noting that the applicant "has developed a consortium" and
"represents the most active members and organizations involved with
target population [Hispanic gay/bisexual men] in the U.S." The
committee noted certain weaknesses (including lack of regional
experience) and made certain recommendations (including that the
applicant develop a more precise and detailed timetable).

CDC officials, however, had reservations about how RBA could perform and
engaged in discussions with RBA about its application. In a letter
dated September 22, 1988, the Grants Management Officer noted that these
discussions had identified three areas of concern; the third area of
concern was RBA's "ability to build an effective consortium of
organizations." CDC Ex. P. This letter said, however, that
satisfactory evidence to address this concern would be "letters of
support from the organizations which will become part of the
consortium." Id. CDC admitted that RBA had provided such letters of
support.

Apparently based on these letters and its investigation of the other two
areas of concern noted in the September 22 letter, CDC decided some time
in November that it probably would fund RBA's project (although it did
not actually provide funding until January). During November, several
RBA officials met with a CDC Project Officer and requested information
about grant requirements. Her letter dated November 20, 1988,
responding to this request, focused on the need for revision of RBA's
workplan, stating: "Revise your workplan if necessary. Develop
realistic goals, objectives, and activities. Provide a timetable for
completing each of these." CDC Ex. Q. No mention was made in this
letter of consortium agreements.

Finally, a notice of grant award was issued on December 21, 1988,
providing funding for RBA's project for the budget period 01/01/89
through 4/30/89 and approving the project for the project period
01/01/89 through 04/30/93. Neither the notice of grant award nor the
transmittal letter mentions consortium agreements.

In sum, contrary to what CDC argued, the written record does not support
a finding that written consortium agreements prior to award was an
eligibility requirement which CDC waived with the understanding that
they should be obtained right away.

RBA Acted Consistently with Program and Project Purposes and RBA's
Workplans.

As noted above, CDC's letter denying continuation funding for RBA's
project described establishing a consortium as one of the "paramount
objectives" of RBA's grant project. In this section, we discuss the
purposes of CDC's grant program in general and of RBA's project in
particular. We also discuss RBA's workplans describing the activities
through which RBA intended to meet those objectives.

In its brief, CDC relied on the purposes of the National AIDS
Information and Education Program as set out in its announcements. CDC
said that the requirement for a consortium was emphasized in the part of
the Federal Register Announcement section entitled "Program Purposes"
which states:

The purpose of the proposed program is: (1) To broaden the base
of minority community organizations involved in AIDS prevention
efforts at the local and regional level by funding HIV prevention
activities of national minority organizations and national or
regional minority consortia; (2) to support activities on a
national or regional basis which will complement and supplement
state and local efforts to inform and educate minorities at risk of
HIV infection; (3) to encourage alternative regional and national
approaches to health education and risk-reduction which are
sensitive and appropriate to the cultural needs of minority
populations . . . ."

CDC's brief, p. 3, citing 53 Fed. Reg. 15734 (May 3, 1989), CDC Ex. A
(CDC's emphasis).

Clearly, this contemplates that CDC will provide funding to support
activities of a national or regional scope (a purpose which RBA does not
dispute). When read in context, however, we do not think that CDC is
reasonable in relying on this statement as establishing formation of a
consortium through written agreements by a particular date as a
"paramount objective" of the grant.

The general purposes of the CDC program do not necessarily all need to
be fulfilled through one particular project. The Federal Register
Announcement provides that consideration will be given to regional
projects which include one or more of certain listed activities. Some
of those listed activities focus on creation of minority networks or
developing coordinated strategies; others focus more on activities such
as training minority community professionals, outreach workers, and
persons with HIV infections in providing AIDS-related information or
increasing the effectiveness of community-level volunteers.

The Program Announcement indicated that a grant application was to
specify project objectives and provide a workplan for meeting those
objectives, including projected dates by which steps necessary to meet
the objectives would be accomplished. RBA described its particular
approach as one of RBA further developing information and educational
materials and then training community specialists in the RBA model to go
into other target communities in the four-State region and either
implement the project there or train individuals in the target
communities to implement the project. Both RBA's stated objectives and
its workplan are consistent with this approach.

The objectives of the revised workplan were--

1) Organize the principal office and train personnel to
accomplish the objectives of the regional project. 2) Define
the scope of operations and undertake a preliminary assessment
of the target groups within the target cities through site
visits. 3) Maintain a 24 hour information line. 4) Develop
outreach model and activity documentation procedures. 5)
Develop a survey instrument and a methodology for acquiring
baseline data. 6) Gather sero-prevalence data. 7) Assess
services available to target groups and samples of materials
used. 8) Distribute printed and visual materials throughout
the region. 9) Establish coordination processes with
individuals and groups in the target cities.

RBA Ex. B. Both the workplan RBA developed in January, and its February
revision, called for obtaining cooperative agreements with regional
organizations in May 1989.

Although CDC alleged that RBA had failed to meet the "paramount
objectives" of the project, CDC did not state specifically how failure
to have written agreements was integral either to meeting the specific
project objectives or the general program purposes. The only stated
purpose of such agreements was to designate one organization as the lead
agency for application. Clearly, however, RBA took the lead in applying
for funding and was willing to assume the corresponding
responsibilities, without challenge from the other organizations
originally comprising the coalition. RBA explained its view that the
purpose of subcontracts was to provide actual funding to particular
regional organizations who would implement the project in the region and
that RBA was reasonable in first assessing what were the target cities
in the region and what organizations could best meet project objectives.
CDC did not say why this view was unreasonable, other than to restate
its general assertion that consortium agreements were an eligibility
requirement prior to award.

In spite of the fact that CDC indicated in its determination letter that
failure to have the written agreements was contrary to the workplan, CDC
provided no evidence of a workplan different from those submitted by
RBA. When the Board pointed out that those workplans set May as the
time period for obtaining agreements, CDC argued that RBA could not rely
on the workplans since CDC had not specifically approved them. Under
the circumstances here, however, where CDC had specified to RBA that
establishing a timetable through a revised workplan would address CDC's
concerns, CDC had an obligation to notify RBA if its timetable was
unsatisfactory and would result in a denial of continuation funding.

We note here that the primary objective of the program and project, read
in light of the congressional authorization, is to provide education and
information to the target population -- here, Hispanic gay/bisexuals in
the border region. CDC did not find that RBA failed to achieve
satisfactory progress in that regard and the record indicates that RBA
did have credibility with the target population and had developed
appropriate materials and a process for dissemination. While the
objectives and the workplan clearly required RBA to move forward in
establishing processes of coordination with other organizations in the
region, CDC did not base its determination on a failure in this regard,
and we agree with RBA that the fact that it actually met the workplan
goal of having agreements by May (and had letters of support from
numerous other organizations) is evidence of progress in this regard.

CDC Did Not Adequately Notify RBA That Consortium Agreements Were a
Condition for Continuation Funding.

As discussed above, the only mention of evidence of a consortium in
written communications prior to the April 14 letter is the requirement
for letters of support in November. We find that the April 14 letter
was too late to give RBA adequate notice, especially in view of RBA's
undisputed assertions that it takes time to achieve written agreements
with organizations of the type involved here.

CDC's reliance on alleged verbal communications by the Project Officer
to RBA is questionable, given the nature of what is at issue here. If
CDC considered production of written agreements within a particular time
period to be an eligibility condition or a term of the grant, it was
incumbent on CDC to formally communicate this to RBA, particularly in
light of the written workplan giving May as the time period for
achieving written agreements and in light of the proposed consequence of
failure to do so. Even assuming, however, that an oral communication
would be sufficient, the record does not support a conclusion that such
communications were clearly made.

RBA specifically denied that the Project Officer had communicated that
RBA should have all consortium agreements prior to the goal in the
workplan. RBA alleged that the Executive Director was told by the
Project Officer in March that one written agreement before the end of
the budget period would be sufficient (a goal which was met) and that
the first RBA learned that the Project Officer expected more than one
agreement was on receipt of the Project Officer's letter of April 14,
1989, which said: "We await your consortium agreements." RBA Ex. H.

CDC provided no affidavit or other signed statement by the Project
Officer in support of its assertion about verbal communications.
Instead, CDC relied on the Project Officer's "trip report" and on a
document which CDC identified as the Project Officer's notes of her
telephone contacts with RBA for the period January to June 1989.

The trip report has a background section which mentions the Project
Officer's site visit in March, and contains the conclusory statement the
site visit revealed an issue because "there was no evidence of a
regional consortium." This document does not address what the Project
Officer told RBA during the March visit about what satisfactory evidence
of a consortium would be and when it should be provided. The alleged
notes of telephone contacts are very cursory and do not always indicate
specifically that everything noted was actually stated in the
conversation. The notes do indicate that the Project Officer mentioned
to RBA the need for evidence of a consortium as early as February, but
the notes do not indicate that she specified the type of evidence or set
a deadline for providing it. An entry dated April 10 indicates she
explicitly referred to agreements, but this entry appears out of order.
CDC Ex. Y. We find these unsigned notes to be insufficient support for
CDC's assertions in light of RBA's specific denial, the lack of any
evidence that CDC told RBA that its workplan was unsatisfactory, and the
opportunity for misunderstanding, given what CDC had previously told RBA
about what evidence was required.

RBA Made Progress in Establishing a Consortium.

Even given CDC's failure to establish a deadline for written agreements
prior to May, CDC might be warranted in finding a lack of sufficient
progress in establishing a consortium on grounds other than failure to
have written agreements. CDC did not, however, show such grounds here.

First, we agree with RBA that the fact that it achieved agreements with
one organization in April and two others in May is the best evidence
that it had moved forward in the first months of the project in
establishing a consortium. Moreover, CDC did not deny RBA's assertions
that it had made numerous contacts with appropriate organizations across
the border region and had letters of support from many of those
organizations.

In addition to its finding that written agreements were not obtained,
CDC relied on its allegation that it was the consensus of a "panel of
consultants" which performed a site visit on April 13 that RBA had not
made progress in establishing a consortium, and on allegations about
problems RBA was having with other organizations in Texas. In the final
teleconference in the case, CDC also argued that the fact that the
organizations from which RBA ultimately obtained agreements were
different from the organizations listed as members of the Rio Bravo
Coalition in the initial application showed that RBA lacked
consortium-building ability.

We find for the following reasons that CDC failed to provide
satisfactory evidence that there was, in fact, panel consensus on the
consortium issue:

o The "trip report" of the panel visit, prepared by the Project
Officer, is not even signed and dated by the Project Officer, much less
by the full panel. CDC Ex. U.

o The report refers to a discussion with RBA's Executive Director
about consortium membership. No reference is made to a panel conclusion
about this issue.

o The Project Officer does state in her report that she
"reiterated the eligibility requirements under this funding initiative"
and that the Executive Director had been indicating since March that
"the agreements are on the way" but had "NO EVIDENCE OF A CONSORTIUM."
CDC Ex. U, p. 6. As discussed below, RBA disputed the Project Officer's
assertions about what she told RBA.

o The record supports RBA's assertion that the original purpose of
the panel visit was to provide limited technical assistance to RBA's
Board. RBA Exs. D, G. There is no evidence that the panel was
constituted for the purpose of evaluating RBA's progress in developing a
consortium.

o A letter from the Project Officer to RBA dated the day after the
site visit makes no mention of a panel finding that RBA had failed to
make satisfactory progress in establishing a consortium. RBA Ex. H.

o An internal CDC memorandum refers to the alleged panel consensus, but
was prepared June 8, 1989, after the decision here, and cites to nothing
to support the reference.

We also reject CDC's assertion that its evidence about RBA's
relationships with the Texas Department of Health (TDH) and the El Paso
Chicano AIDS Coalition showed that RBA was incapable of maintaining the
type of relationship necessary to implement the project.

The record shows that TDH did cut off some funding it had previously
provided to RBA. However, CDC knew about this and had investigated it
prior to making the original award. The primary dispute RBA had with
TDH was over whether RBA's Executive Director had committed a breach of
confidentiality; the record indicates the alleged breach was never
verified. More important, CDC itself had obviously determined
previously that this would not hamper RBA's ability to coordinate the
project with TDH and presented no evidence here that it had in fact done
so.

With respect to the El Paso Chicano AIDS Coalition, RBA acknowledged
that it had a "turf" battle with this group (which RBA said was caused
by its following its workplan). RBA argued, however, that its letters
of support showed that it had broad support among the target population
in Texas, as well as in the other States of the region, and that it was
undisputed that RBA was effectively dealing with the target population
in El Paso.

The evidence submitted by CDC is a letter dated March 6, 1989, from the
Executive Committee of the El Paso Chicano AIDS Coalition notifying RBA
that this coalition was "breaking all ties" with RBA because it was
"venturing into working with high risk 'gang' youth and drug addicts,"
which the coalition considered to be a violation of a "verbal
agreement." CDC Ex. T. The record indicates, however, that this
conflict was largely a personality problem and that (at the suggestion
of the Project Officer) RBA had agreed to change its structure to try to
minimize this conflict. CDC did not explain why this would not
satisfactorily address the problem. More important, this problem may
affect RBA's efforts to locally coordinate the program but CDC provided
no evidence that it affected RBA's efforts at building the regional
consortium through agreements with organizations in New Mexico, Arizona,
and California.

Finally, we reject CDC's view that the change in organizations shows
that RBA lacked consortium-building ability. RBA explained that between
June when it submitted the application and January when the project was
funded, the New Mexico organization had disbanded and the Arizona
organization had entered into an agreement through a county program
instead. RBA said that it thought it reasonable that it would continue
to work with a number of organizations (including those from which it
had received letters of support), but take the time to assess which
agencies would be most capable of achieving project objectives before
entering into agreements. RBA also asserted that it was the only
grantee being held to agreements with four State organizations.

CDC did not deny RBA's assertions, but argued that its evaluation of the
initial application was based on the qualities of the organizations
listed in the application. CDC did not allege that the organizations
would not be effective consortium members, however. Moreover, the fact
that two of the original consortium members were no longer viable
members at the time of the award supports RBA's assertion that its
workplan projection of May for achieving agreements was reasonable.

In sum, CDC allegations about RBA's failure to make progress or lack of
ability to build a consortium are unsupported, and RBA's evidence
indicates that it was making progress in establishing a consortium.

Conclusion

For the reasons stated above, we reverse CDC's determination that RBA
had failed to make satisfactory progress in establishing a consortium.


_____________________________ Donald F. Garrett


_____________________________ Norval D. (John) Settle


_____________________________ Judith A. Ballard Presiding Board