Scott Sheffler (firstname.lastname@example.org) received his B.A. in May 2002 from The George Washington University, his J.D. in May 2005 from the University of California, Los Angeles School of Law, and his LL.M. in Government Procurement Law in January 2017 from The George Washington University Law School. Mr. Sheffler is a partner with the law firm Feldesman Tucker Leifer Fidell LLP and previously served as a federal procurement attorney with the Department of Navy’s Military Sealift Command. He wishes to thank Christopher R. Yukins and Edward T. Waters for their insight and critique throughout the drafting of this Article. Their insights into federal grant law, procurement law, and administrative law generally, have been invaluable.
In 2016, the federal government obligated $668 billion1 in the form of federal grant and cooperative agreement awards. The majority of grant dollars are awarded to states and state agencies,2 in part because of the substantial size of the Medicaid program.3 Still, many awards are made to local governments, institutions of higher education, and nonprofit organizations.4
The magnitude of federal expenditures in the form of grants has been growing steadily since the 1930s5 — a matter acknowledged in nearly every study of the grant system.6 Despite this growth, however, the legal regime underlying grant awards has remained primitive and fragmented, in particular providing for little agency accountability and little incentive for agencies to consistently interpret and enforce grant requirements.
In 1979, in his survey of the federal grant system entitled “Rights and Remedies Under Federal Grants,” Temple University School of Law Professor Richard Cappalli presciently cautioned that the combined growing magnitude of federal grant awards and the apparent lack of due process in the associated legal system was particularly problematic.7 In fact, his book concludes with a chapter aptly entitled “No Man’s Land,” which begins with the following quote from a 1968 Harvard Law Review article:
[I]n this area of overriding significance, the traditional checks to human fallibility are strangely absent … We are confronted then with a vast no man’s land at the heart of our legal system — territory off limits to the courts and beyond the ken of the traditional [legal] process. This is more than [an] anomaly — such a no man’s land is the antithesis of democracy itself.8
Unfortunately, now nearly forty years later, the law of grants can still be described in these terms. There are two primary structural reasons for the continued existence of this “no man’s land.” First, until recently, the governmentwide administrative requirements for federal grant agreements were badly fragmented. Second, no truly effective dispute system has ever been established.
The developmental failures in the grant system are particularly noteworthy when juxtaposed against the comparative evolution of the federal procurement system. Facing similar challenges with respect to uniformity and agency accountability in the late 1960s, Congress authorized the Commission on Government Procurement to study federal procurement laws and processes and recommend improvements.9 Among the Commission’s recommended reforms, two shape the bedrock of our modern procurement system: (i) a single set of government-wide procurement regulations,10 and (ii) a statutorily prescribed disputes system that provides basic contractor rights that agencies cannot dilute or revoke through agency-specific regulations or contract clauses.11
The Commission’s first recommendation, a unified procurement regulation, came to fruition in 1984 in the form of the now ubiquitous Federal Acquisition Regulation (“FAR”).12 The second, a statutory unified disputes systems that places contractors on more equal footing with contracting agencies, came into being in the form of the Contract Disputes Act of 1978 (“CDA”).13
Conversely, in the grant system, a single government-wide grant administration regulation was only achieved in December 2014 with the promulgation of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”).14 While these rules — derived from similar but varying rules applicable to different classes of grantees through a number of previously applicable OMB Circulars — are less detailed, often less clear, and still somewhat less unifying than the FAR, they represent a significant achievement on the path to a comprehensive unified grant system.
The federal grant system remains, however, without a unified dispute system. Grant disputes are characterized by administrative appeals to agencycontrolled officials or boards,15 with judicial review that is limited in many material ways.16 Particularly at the administrative appeal level, available appeal rights and procedures differ by agency, with the most common attribute being firm agency control.17 Having maneuvered one’s way through an administrative appeal, judicial review presents legal ambiguities with respect to jurisdiction and standards of review and almost inevitably leads to a decision citing deference to the federal agency’s administrative review as the guiding principle.18
To remedy the fragmentation, ambiguity, and deference to agency action faced by grantees, this Article proposes simply copying the CDA — a statute which has proved to be a successful solution to similar problems in the government contracts sector.19 In particular, this Article proposes enacting a “Grant Disputes Act” that would provide grantees with a choice of de novo judicial review of agency final decisions by the Court of Federal Claims (“COFC”) or independent administrative review by the Civilian Board of Contract Appeals (“CBCA”).20
The benefits of such a system — as proven by the success of the CDA — are twofold. First, providing for genuinely independent de novo review in disputes will incentivize clear agency articulation of grant requirements and less arbitrary treatment of grantees. Second, over time, the establishment of a unified precedential system will aid in developing a cohesive body of federal grant law.
In short, a statutory unified disputes system is badly needed in the federal grant system and can be easily established by copying the CDA.
This Article is organized into five sections. Section I describes the evolution of the federal grant system, and relevant aspects of the procurement system, from the late 1960s through the present. This section displays the important unifying improvements made in the procurement system while showing that repeated efforts toward uniformity in the grant system made little to no progress. Sections II through IV describe the current state of the grant disputes system — with Section II explaining how grant disputes arise, Section III describing the current state of administrative review, and Section IV discussing judicial review of final agency enforcement actions. Building upon the information set forth in Sections I through IV, Section V proposes, and describes the basic contours of, a statutory unified grant dispute system based upon the approach used in the CDA.
Though drawing upon the CDA as a model may make this point unnecessary, it should be noted that this Article addresses only performance disputes and does not suggest any system for award disputes (commonly referred to as “bid protests”). Additionally, throughout this Article, references to “grants” should be understood to mean both “grants” and “cooperative agreements.”21 Where, to the limited extent it is necessary to differentiate between the two, more specific distinctions are made.
I. Brief History of the Grant System and Relevant Parallel History of the Procurement System
Federal assistance in the form of conditional grants has existed since at least 1862 when, under the Morrill Act, Congress made land grants to states for the establishment of colleges.22 By the 1960s, the number and value of federal grant programs began to rapidly increase.23 In the late 1960s and early 1970s, the government undertook two major reviews of federal spending systems: (i) the Federal Assistance Review, a three-year program initiated by the President to evaluate the federal government’s approach to financial assistance,24 and (ii) the Commission on Government Procurement, an approximately two-year study initiated by Congress to evaluate the federal government’s approach to procurement of goods and services.25
The differences between the report issued at the conclusion of the Federal Assistance Review and the report issued by the Commission on Government Procurement are reflective, in tone and content, of the differences between the two systems and of subsequent efforts to improve them. In fact, in many ways, the two reports are reflective of the differences in the two systems today. The Commission’s report is a four-volume, eight hundred and one-page digest of well-articulated and practical recommendations for improvements to the procurement system.26 The Federal Assistance Review report is a thirteen-page memorandum outlining a number of broad structural changes and focusing on the interplay of state-federal relations.27
Below, relevant aspects of the Commission on Government Procurement are described, followed by a brief discussion of the Federal Assistance Review and subsequent efforts to improve the federal grant system.
A. The Commission on Government Procurement
In 1969, Congress enacted Public Law 91-129, establishing the Commission of Government Procurement to study federal procurement statutes, policies, and practices and to issue a report on its findings.28 Its goals were, among other things, enhancing uniformity across the system, “promoting fair dealing and equitable relationships among the parties in [g]overnment contracting,” and improving the “efficiency,  and effectiveness of [g]overnment procurement organizations and operations.”29
From 1970 through 1972,30 the Commission studied numerous aspects of federal procurement, including: the general system, research and development acquisitions, major systems acquisitions, commercial product acquisitions, construction and architect-engineering services, federal grant-type assistance, legal remedies, certain liability issues, and intellectual property rights.31 Within these broader categories, and relevant to this Article, the Commission examined (i) a lack of government-wide uniformity;32 (ii) the then-existing scheme applicable to contract disputes;33 and (iii) agency decision-making between grants and procurement contracts as proper instruments for accomplishing specific federal goals.34 Each is addressed in turn below.
1. Commission Study of Procurement Uniformity
The Commission noted that though generally managed by the General Services Administration (“GSA”) for non-defense procurements and by the Department of Defense (“DoD”) for defense procurements, the overall procurement system lacked uniformity and standardization across agencies. Specifically, the Commission observed:
Multiple and nonuniform regulations complicate contract administration for offices that serve many agencies. These offices must tailor their practices and adapt their personnel to the various contract clauses, policies, and procedures established by the different purchasing agencies.
For the same reasons, the present system also is complicated for contractors dealing with different agencies, for they must adjust their pricing, negotiating, and contracting practices to the variable requirements and regulations of the different agencies or determine that differences in contract clauses are not significant.35
As a result, the Commission recommended establishment of “a system of [g]overnment-wide coordinated, and to the extent feasible, uniform procurement regulations”36 under the purview of a newly created “Office of Federal Procurement Policy.”37 It also recommended harmonization of the Armed Services Procurement Act of 1947 (“ASPA”)38 and Federal Property and Administrative Services Act of 1949 (“FPASA”)39 — the statutes under which the separate civilian and defense procurement regulations were authorized.40
In 1974, in response to these Commission recommendations, 41 Congress enacted the Office of Federal Procurement Policy Act.42 As implied by its name, the Act established the Office of Federal Procurement Policy (“OFPP”) within the executive Office of Management and Budget (“OMB”)43 and directed OFPP to “provide overall direction of procurement policy.”44 Echoing — almost word for word — the Commission’s recommendation for uniform regulations, the Act tasked OFPP with, among other things, “establishing a system of coordinated, and to the extent feasible, uniform procurement regulations for the executive agencies.”45
After some initial delay, this task was accomplished.46 On September 19, 1983, under the direction of OFPP’s Policy Letter 80-5 and the still existing authority of FPASA, ASPA, and the National Aeronautics and Space Act of 1958, GSA, DoD, and National Aeronautics and Space Administration (“NASA”) jointly issued the uniform government-wide Federal Acquisition Regulation (“FAR”) with an effective date of October 1, 1984.47 The FAR remains in force today, serving as the fundamental overarching governmentwide procurement regulation upon which the U.S. federal procurement system is based.48 It is maintained by OFPP and the FAR Council, the latter of which is comprised of representatives of GSA, DoD, and NASA.49 OFPP now even has statutory authority to rescind inconsistent procurement regulations promulgated by individual agencies.50
2. Commission Study of Procurement Disputes
The Commission also studied the nature of the dispute system available at the time to contractors aggrieved by agency action.51 The Commission observed eleven separate agency boards of contract appeals,52 the jurisdiction of which was derived from agency contract clauses and general agency authority.53 More importantly, the Commission observed that the eleven boards were not uniform,54 with the drawback of being overly formal at times;55 and while ostensibly independent, that they were not entirely separated from the contracting agencies party to the disputes.56
Despite perceived shortcoming of the agency boards, contractors were prevented in most cases57 from seeking judicial review of their claims until they had exhausted their administrative remedies under their contracts — including the board appeals.58 Moreover, the Commission noted that under the Wunderlich Act, as then applied,59 “[t]he boards, in effect, [had] become the final arbiters of fact, while the courts [could] only inspect the board record to determine if the findings of fact were ‘fraudulent, arbitrary, capricious or unsupported by substantial evidence.’ ”60
The Commission expressly recognized the fundamental unfairness of this system in which executive agencies inserted themselves as the adjudicating bodies for disputes to which they were parties:
… direct access to the courts should be restored to the contractor to assure it of a day in court, a fully-judicialized, totally independent forum that historically has been the forum within which contract rights and duties have been adjudicated. The rationale of the Tucker Act, which ended to a great degree the doctrine of sovereign immunity, is that the [g]overnment acting as a buyer subjects itself to this judicial scrutiny when it enters the marketplace, and should not in all cases be administratively the judge of its own mistakes, nor adjust with finality disputes to which it is a party.61
Taking all of the above-described factors into account, the Commission recommended that contractors be provided the option of seeking redress either administratively, which potentially offered an effective informal review process, or through direct judicial action.62 The Commission explained:
Justice and efficient operation of the contract disputes-resolving system can be obtained best with a flexible system that provides alternative forums for resolution of particular kinds of disputes. The claimant should be able to choose a forum according to the needs of his particular case; that is, one where the degree of due process desired can be balanced by the time and expense considered appropriate for the case. To this end, we conclude that alternate forums, each with special characteristics, should be maintained for initial resolution of disputes above the [C]ontracting [O]fficer and informal agency review level.63
In 1978, Congress implemented this recommendation64 through the Contract Disputes Act (“CDA”).65 In doing so, the Senate Committees on Governmental Affairs and the Judiciary reiterated and expounded upon the Commission’s concerns about fairness and efficiency:
The … means for resolving disputes under [g]overnment contracts [was] a mixture of contract provisions, agency regulations, judicial decisions, and statutory coverage. Basically the methods and forums for handling such disputes exist[ed] by executive branch fiat …66
Furthermore, the present system is often too expensive and time consuming for the efficient and cost-effective resolution of small claims and, on the other hand, often fails to provide the procedural safeguards and other elements of due process that should be the right of litigants.
The CDA remains the cornerstone of the federal procurement disputes system. As largely envisioned by the Commission, it requires contractors to first seek adjudication of their claims by the Contracting Officer67 but then gives contractors the option of challenging the Contracting Officer’s final decision through an agency board or directly in federal court.68 Critically, if a contractor exercises its option to proceed directly to court, the action “proceed[s] de novo”69 — i.e., the contractor is afforded an opportunity for judicially directed discovery, and the court is not bound by agency findings of fact or conclusion of law.
3. Commission Study of Grant and Contract Distinctions
Though the Commission’s primary purpose was reviewing the federal procurement system, it also conducted a “limited review of [f]ederal granttype assistance” to assess whether the use of grant-type instruments and procurement contracts were in fact interchangeable and whether procurement regulations should be applied to grants.70
In broad terms, the Commission found the grant system to be a fragmented web of individual assistance programs spread among numerous federal agencies with limited centralized control and guidance:
Federal grant-type activities are a vast and complex collection of assistance programs, functioning with little central guidance in a variety of ways that are often inconsistent even for similar programs or projects. This situation generates confusion, frustration, uncertainty, ineffectiveness, and waste. This disarray can be traced to three basic causes:
- Confusion of grant-type assistance relationships and transactions with procurement relationships and transactions[,]
- Failure to recognize that there is more than one kind of grant-type relationship or transaction[, and]
- Lack of [g]overnment-wide guidance for [f]ederal grant-type relationships and transactions.71
The Commission concluded that to reduce the confusion over the nature of the agency-grantee relationship, a statute should be enacted describing the purpose of such relationships, creating a category of agreements called “cooperative agreements,” and differentiating “grants,” “cooperative agreements,” and “procurement contracts” from each other.72
It also recommended greater standardization among grant program rules and requirements, concluding “[t]here is a need to spell out the basic assistance policies and procedures in the way that procurement regulations spell out basic procurement policies and procedures.”73 It then recommended a separate study of the “feasibility of developing a [g]overnment-wide system of guidance for all [f]ederal assistance programs.”74
In 1978, the passage of the Federal Grant and Cooperative Agreement Act of 1977 (“FGCAA”) accomplished the Commission’s recommendation to clarify by statute when an agency should use a grant instrument versus when it should use a procurement contract.75 As stated in September 1977 by the Senate Committee on Governmental Affairs in its report on the FGCAA, approximately one-third of the federal budget was a combination of procurement contracts and grants,76 and the FGCAA was intended, in part, to (i) bring consistency to the decisions of federal agencies in using grant, cooperative agreement, or procurement contract instruments, and (ii) serve as a basis for government-wide clarification of grant system requirements.77
The FGCAA seems to have been successful in achieving the first goal, consistency in instrument selection. It sets forth purpose-based criteria to guide agencies in choosing between a financial assistance instrument and procurement instrument for their intended activities.78
Less was achieved with respect to the second goal, government-wide clarification of grant system requirements. The Committee report noted that the grant system was underdeveloped as compared to the procurement system of even the 1970s, explaining:
The requirements of this legislation will also provide a basis upon which the need to make the [f]ederal assistance system more rational may be addressed. Compared to the [f]ederal procurement system, the so-called grant system is primitive and underdeveloped. The study required should lead to additional improvements in the overall management of assistance programs.79
Presumably in response to this identified deficiency, the FGCAA directed the OMB to conduct a further study to, among other things, “determine the feasibility of developing a comprehensive system of guidance for [f]ederal assistance programs.”80 It instructed that, in doing so, the OMB “shall include a thorough consideration of the findings and recommendations of the Commission on Government Procurement.”81 Unfortunately, no clear evidence exists of its undertaking any significant efforts to do so.82
B. The Federal Assistance Review
President Nixon initiated the Federal Assistance Review as part of his agenda to improve the federal financial assistance system, which according to the Federal Assistance Review report, had by the late 1960s “become a highly fragmented system of almost 1,000 separate programs administered by scores of different [f]ederal agencies,” each with “its own particular requirements and procedures.”83 Where the Commission on Government Procurement was a technical study of systems and administrative law issues, the Federal Assistance Review report merely describes various cooperative federalism initiatives attempted over the prior three years.84 In fact, the Federal Assistance Review’s final report to the President was entitled, “Responsive Federalism: Report to the President on the Federal Assistance Review.”85
Despite its broader focus on federalism, at least one aspect of the Federal Assistance Review did specifically involve the administrative legal apparatus underpinning the grants system. Namely, consistent with the findings of the Commission on Government Procurement, the report acknowledged the proliferation of differing administrative requirements applied by different grant making agencies as one of the primary impediments to an effective system.86
C. Subsequent Grant System Reform Efforts
Beginning in 1968, in the midst of the Federal Assistance Review and at least partially in response to congressional direction under the Intergovernmental Cooperation Act of 1968, OMB and groups of federal agencies have periodically attempted to enhance uniformity in grant administration, with Congress occasionally interjecting — often in areas where state and local governments have complained. However, progress over the past fifty years has been slow and fitful.
From the 1970s through the 1990s, the most notable developments were (i) the above-described enactment of the FGCAA,87 (ii) the periodic alteration of existing OMB Circulars governing grant management and the issuance of new ones,88 and (iii) the enactment and subsequent amendment of the Single Audit Act of 1984 (“SAA”).89
Though representing a partial effort at uniformity, the various OMB Circulars created a still largely fragmented system, with administrative requirements and cost principles differing depending upon the nature of the grantee entity: OMB Circular A-21 provided cost principles for institutions of higher education (“IHEs”);90 OMB Circular A-87 provided cost principles for state, local, and tribal governments;91 and OMB Circular A-122 provided cost principles for non-profits other than IHEs.92 Similarly, OMB Circulars A-102 and A-110 provided grant funds administration requirements, but Circular A-102 applied to governmental recipients93 while Circular A-110 set forth the rules applicable to IHEs and other non-profits.94 OMB Circular A-133 set forth audit requirements under the SAA,95 and for a time, OMB Circular A-128 set forth audit requirements for governmental entities.96
The SAA itself was the most significant and successful unifying effort during this period and, perhaps, throughout the whole history of grant system reform. As with the Intergovernmental Cooperation Act of 1968 and OMB Circular A-102, this statute was inspired by complaints from states and local governments of overly burdensome requirements.97
The SAA created a single statutory annual financial audit requirement and eliminated all recipient obligations to conduct or support any agency or program-specific financial audits.98 To ensure the effectiveness of its statutory direction, Congress included in the Act provisions that: (i) effectively voided all existing inconsistent statutory or regulatory financial audit require ments99 and (ii) directed the Comptroller General to monitor any new financial audit requirements proposed in future grant program authorizing legislation for consistency with the SAA.100
With the grant administration system remaining fragmented at the end of the twentieth century, in 1999, Congress commenced a new effort at uniformity with passage of the Federal Financial Assistance Management Improvement Act (“FFAMIA”).101 The FFAMIA did not directly call for or implement any unifying legal requirement as had the Intergovernmental Cooperation Act of 1968, the FGCAA, or the SAA. Rather, it directed executive agencies to make streamlining efforts and participate in yet more interagency uniformity efforts led by OMB.102 The most well-known result of the FFAMIA-induced efforts was the establishment of “grants.gov,” a single government website through which a significant number of grant opportunities are advertised.103 Little other actual uniformity came from this effort. When the Government Accountability Office (“GAO”) evaluated progress under FFAMIA in 2005, the GAO found that while some progress had been made, results were mixed and consultation with grantees about reforms had been minimal.104
By 2009, Congress — apparently dissatisfied with efforts made under the FFAMIA of 1999 — passed Senate Bill 303, entitled the “Federal Financial Assistance Management Improvement Act of 2009,” in an attempt to: (i) reauthorize the FFAMIA of 1999;105 (ii) require a single government-wide website through which entities could apply for grants and then subsequently submit all required reports;106 (iii) require robust reporting to Congress on implementation of FFAMIA 2009 efforts;107 and (iv) require OMB to establish and report on a strategic plan that would generally cover (a) establishment of uniform application and reporting forms and (b) common terms and conditions across grant-making agencies.108 Despite S. 303 passing both houses of Congress, the President never signed it into law.109
President Obama instead issued a Presidential Memorandum on February 28, 2011, which acknowledged that state, local, and tribal government recipients of federal assistance still faced burdensome and often inconsistent requirements110 and directed a renewed executive branch effort be made to remove such burdens.111 In particular, the memorandum acknowledged:
… my Administration has heard from these governments that the array of rules and requirements imposed by various [f]ederal programs and agencies may at times undermine their efforts to modernize and integrate program delivery. While appropriate data collection requirements are important to program accountability, some of these requirements are unduly burdensome, may not property align compliance requirements with outcomes, are not synchronized across programs, and fail to give governments and taxpayers meaningful information about what works and what needs to be improved or be stopped.112
In part a result of this memorandum, OMB engaged in a renewed effort to simultaneously streamline financial assistance requirements and improve the effectiveness of federal oversight — leading to the issuance of a single combined set of administrative requirements, cost principles, and audit requirements for all federal grant recipients regardless of whether they are governments, institutions of higher education, or nonprofits.113 These requirements — initially proposed by OMB on December 26, 2013114 and subsequently implemented with revisions as an interim final rule on December 19, 2014115 — are entitled the “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” and commonly referred to as the “Uniform Guidance.”116
This unifying regulation is a significant milestone in grant system reform. It is codified at 2 C.F.R. Part 200, with pre-award requirements appearing in its Subpart C, administrative requirements in Subpart D, cost principles in Subpart E, and audit requirements in Subpart F.117 Though differences in requirements are noted for certain categories of grantees, or highlighted in a number of appendices,118 the requirements are now largely uniform.119
Additionally, with the exception of the Department of Health and Human Services (“HHS”), all of the major federal grant-making agencies implemented the Uniform Guidance within Title 2 of the Code of Federal Regulations by cross-referencing and adopting the requirements set forth at 2 C.F.R. Part 200 and making changes explicitly in supplemental regulations.120 Though acknowledging adoption at 2 C.F.R. § 301.1, HHS codified its implementation of the Uniform Guidance by reproducing the full text with minor changes at 45 C.F.R. Part 75.121
In general, this manner of organizing the Uniform Guidance — similar to the FAR and agency supplements within Title 48 of the Code of Federal Regulations — makes grant management regulations far more accessible than they were when codified within individual agency code titles.
D. The Next Step Must Be a Statutory Unified Disputes System
The increased uniformity brought about by the Uniform Guidance makes further systemic unification and modernization possible but does not achieve it on its own. As is the result with any regulation, no matter how carefully crafted, many of the principles articulated in the Uniform Guidance’s administrative requirements are subject to differing interpretations and applications — including, for example, differences relating to important concepts such as federal interest,122 program income,123 and cost sharing.124
As government contractors know from long experience with FAR Subpart 31.2, cost principles and cost allocation requirements can also be the subject of widely different interpretations by different implementing agencies.125
These gray areas make the rights of grantees in the event of disputes critically important. First, without reasonable means of contesting agency assertions or determinations, the system devolves to one of mere grantee subservience to federal direction regardless of whether the direction is proper or principled. Second, providing grantees with reasonable and enforceable rights to challenge agency actions incentivizes agencies to establish clear terms and conditions under which programs must be managed and federal funds used. Presently, grantee rights are limited in this regard.
In many ways, the disadvantages faced by grantees are similar to the disadvantages the Commission on Government Procurement identified with respect to contractors in the early 1970s, namely: (i) agency boards and personnel serving as adjudicatory authorities for disputes to which their agency is a party; (ii) inconsistent administrative review rights and procedures across agencies; (iii) considerable expense in exhausting mandatory administrative review processes; and (iv) substantial limitations on effective judicial review.126
II. The Genesis and Nature of Federal Grant Performance Disputes
Grant disputes and procurement contract disputes both involve an administrative final decision enforced by some form of monetary claim or suspension or termination of the agreement.127 However, the genesis of a grant dispute is somewhat different than the genesis of a procurement contract dispute.
Procurement contracts generally require the seller (contractor) to provide the buyer (government) with a satisfactory good or service. Though similar in that it is an agreement of federal payment in return for performance of a specified activity in accordance with specified terms and conditions, the relationship established by a grant agreement is different in an important respect. Grants generally provide federal support where no easily measurable deliverable to the funding agency exists.128 As a result, agency evaluation of performance is characterized by oversight of how the grantee manages and expends the provided federal resources.129 In such a system, disputes tend to arise out of audit findings, agency inspections in the form of site visits, and whistleblower complaints rather than from a perceived failure to deliver a required good or service.130
A. Single Audit Act Audit Process
Each year, every grant recipient that expends $750,000131 or more in federal awards, must hire an independent auditor132 to conduct a “Single Audit Act audit” — also commonly referred to as an “A-133 audit” after the OMB Circular133 that, until recently, governed such audits or a “Subpart F audit” after the subpart of the newly adopted Uniform Guidance134 that replaced Circular A-133.
The grantee is responsible for “prepar[ing] financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited.”135 In the course of preparing such financial statements, the grantee must also prepare a schedule of expenditures of federal awards (“SEFA”) that displays all federal award funds spent during the period covered by the financial statements.136 The grantee is then required to hire an independent auditor to evaluate the accuracy of the financial statements and SEFA and test the grantee’s compliance with programmatic, regulatory, and statutory requirements applicable to its grant.137 The auditor must generate a report addressing:
- Questioned costs in excess of $25,000138
- “Known or likely fraud affecting a federal award …”139
- Any qualification or adverse opinion regarding whether the financial statements were prepared in accordance with Generally Accepted Accounting Principles (“GAAP”)140
- Any qualification or adverse opinion regarding the grantee’s compliance with statutes and regulations applicable to its federal programs141 and
- Whether any “significant deficiencies or material weaknesses” in internal controls were observed.142
The grantee is provided an opportunity to comment on the auditor’s findings,143 but if the auditor determines the findings remain after the grantee has provided any available additional information, the grantee must provide a corrective action plan that becomes part of the audit report.144 The final audit report — due no later than nine months after the end of the fiscal year audited145 — is sent to a government-wide clearing house which in turn makes the report available to the cognizant funding agency.146
The funding agency then, at least in theory, follows up on any findings to ensure correctness, whether through accomplishment of the grantee’s corrective action plan or through some more substantial corrective action.147 This process is typically referred to as the “audit resolution process.”148
Some agencies have specific audit resolution regulations or policies. For example, the Department of Labor (“DoL”) has issued brief but specific regulations at 29 C.F.R. Part 96, Subpart E, which provide that before the issuance of a final decision on audit findings, “[t]he recipient/contractor shall have a reasonable period of time (as determined by the DoL official(s) responsible for audit resolution) from the date of issuance of the initial determination to informally resolve those matters in which the contractor/recipient disagrees …”149 Similarly, HHS’s Grants Policy Statement describes a process by which the responsible grant making operating division within HHS will contact the grantee regarding any audit findings, and the grantee will generally have thirty days to provide a response before any final decision is issued.150 If the grantee is unable to resolve any finding to the agency’s satisfaction, the agency will issue a final decision taking some form of enforcement action.151 Enforcement will generally be in the form of: (i) disallowance of the cost of the noncompliant activity; (ii) withholding funds pending correction of the noncompliance; (iii) imposition of special award conditions (such as switching from an advance payment system of payment to reimbursement only); or (iv) suspension or termination of the grant award.152 In some situations, it may result in the entity’s suspension or debarment from receipt of any federal awards.153
B. Programmatic Monitoring
Programmatic monitoring is not specifically required of federal agencies under any single federal statute or the Uniform Guidance. However, such monitoring is not prohibited either,154 and grantees in many federal programs are subject to periodic monitoring visits conducted by their funding agencies.
For example, within HHS, the Bureau of Primary Health Care (“BPHC”) currently conducts a comprehensive monitoring visit called an “Operational Site Visit” for each of its Health Center program155 grantees within the grantee’s first fourteen months of operation and generally, once every three years thereafter.156 Consultants — with federal employee “project officers” attending if able — usually conduct the Operational Site Visits.157 If findings are reported from the programmatic site visits, responsible agency officials generally follow up with the grantees in the same way as described for SAA audit findings.158 As with SAA audit findings, each reported finding is either resolved or a final decision is issued by the agency to carry out its chosen method of enforcement, frequently a cost disallowance.159
C. Office of Inspector General Investigations
Pursuant to the Inspector General Act of 1978, each major department of the executive branch160 has an Office of Inspector General (“OIG”) charged with “conduct[ing], supervis[ing], and coordinat[ing] audits and investigations relating to the programs and operations of [the department].”161 In addition to agency authority to access a grantee’s grant-related records under regulatory grant management requirements,162 OIG special agents are empowered to issue subpoenas, seek and execute warrants and conduct searches, carry firearms, and make arrests.163
OIGs may initiate investigations or audits of grantee programs and operations for any number of reasons, including reports of misconduct from whistleblowers and others,164 agency or congressional requests,165 or the occurrence of newsworthy events.166 Investigations or audits may also simply result from routine OIG work plan activities, with no initiating allegation or indicia of misconduct. For example, the HHS OIG promulgates an annual work plan that sets forth matters on which it will focus each year.167 In conducting an investigation or audit, the responsible special agent may simply arrive at the grantee’s facility requesting access or may issue a subpoena demanding records.168
Upon conclusion of an OIG investigation or audit, the OIG typically will generate a draft report upon which the entity under review may comment.169 Then, taking the entity’s responses into account,170 the OIG will generate a final report with recommendations to the agency personnel responsible for managing the grant at issue.171 Absent pursuit of criminal liability, the agency will proceed to its audit resolution process or directly to a final enforcement decision.
III. Administrative Appeals
Once an agency issues a formal final decision, the grantee may either accept it or challenge it under the agency’s administrative dispute process. Such processes differ significantly among agencies. In 1982, not long after Cappalli invoked the Cahns’ “no man’s land” analogy,172 Tersh Boasberg and Jacqueline Leifer commented optimistically that some agencies, seemingly acting of their own volition, had “recogniz[ed] the existence of the due process wasteland”173 in the federal grant system and had begun creating agency mechanisms for dispute adjudication.174
However, in 1982, despite the significance of agencies adopting administrative appeal mechanisms,175 the mechanisms adopted by various agencies were, and remain, far from uniform in procedure, or equal in the rights or protections they offer.176 The disparate practices and systems in place among federal agencies for grant disputes, and the practical impact of those differences, can be most effectively demonstrated by first describing the system used by HHS, the largest grant-making agency177 — and the agency credited by Boasberg and Leifer as well as other respected commentators as the “pioneer” in establishing an agency grant appeal board178 — then describing differences in approaches adopted by other major grant-making agencies.
This section therefore provides a description of an HHS administrative appeal, followed by discussions of different approaches employed by DoL, the U.S. Agency for International Development (“USAID”), Department of Education (“ED”), Department of Defense (“DoD”), and Department of Energy (“DoE”).
A. HHS Administrative Appeals
1. Standard HHS Department Appeals Board Appeals
HHS maintains an administrative Departmental Appeals Board (“DAB”)179 to which aggrieved grantees may appeal agency final decisions, including, but not limited to, disallowances and grant terminations.180 Under the DAB’s standard rules, within thirty days of receipt of an adverse final decision, a grantee may submit a notice of appeal to the DAB.181 The notice need only advise the DAB generally of the appeal, provide a copy of the final decision, describe the amount in dispute, and give a basic statement of the grantee’s disagreement.182 The DAB will then issue instructions to the appellant and to the respondent HHS operating division providing a date by which the grantee’s initial brief and supporting documentation are due.183 The operating division is provided an opportunity to submit a response brief and supplement the record, with the appellant generally afforded a reply.184
The DAB’s procedures are relatively informal. The process is designed to be a review of the written record established by the submissions described above, also providing for informal conferences at which the DAB may allow oral presentations or the questioning of parties to the dispute. More robust hearings may be provided in cases involving “complex issues or material facts in dispute[,] the resolution of which would be significantly aided by a hearing —”185 Hearings, when convened, are themselves informal, with the DAB admitting any offered evidence that is not “clearly irrelevant, immaterial or unduly repetitious …”186 The standard of proof is generally preponderance of the evidence.187
Three aspects of grant appeals before the DAB are critical to understanding the nature of proceedings before it: (i) the DAB considers itself limited to applying applicable laws and regulations188 and will not consider equitable arguments no matter how compelling the circumstances may be;189 (ii) the grantee bears the burden of proving compliance with all pertinent terms and conditions of the grant;190 and (iii) the respondent operating division is permitted to raise new grounds for its enforcement action during the proceedings “as long as the appellant is afforded an opportunity to respond.”191 With the myriad detailed requirements applicable to management of federal funds, this last characteristic can result in a DAB appeal becoming a “running battle” as the agency’s position on why a cost is unallowable shifts to maneuver around evidence that the originally cited basis is unfounded.192
2. Non-Standard Appeals
In many cases, the “standard” rules described above are altered or supplemented by additional rules from particular grant programs. Two significant examples of such alteration are (i) appeals in certain Public Health Service programs and, until recently, (ii) Head Start program grant termination appeals.
i. Preliminary Appeal Requirement for Certain Public Health Service Grants
Pursuant to 42 C.F.R. Part 50, Subpart D, “all grant and cooperative agreement programs, except block grants, which are administered by the National Institutes of Health, The Centers for Disease Control and Prevention; the Agency for Toxic Substances and Disease Registry; the Food and Drug Administration; and the Office of Pubic Health and Science”193 are covered by a preliminary appeal process that must be exhausted prior to appealing to the DAB.194 According to HHS regulations, the purpose is to provide an “informal preliminary procedure for resolution of disputes in order to preclude submission of cases to the [DAB] before an agency [covered by these regulations] has had an opportunity to review decisions of its officials and to settle disputes with grantees.”195
This preliminary appeal is available, and thus required before the DAB will hear a case,196 for termination decisions, a finding that a grant is void, disallowances, and denials of noncompetitive refunding197 (actions similar to terminations).198 The review itself is completed by an agency review committee, which may be a standing body or ad hoc committee but cannot include the agency program officials responsible for issuing the original final decision.199 As with standard DAB appeals, the grantee’s request for review must be submitted within thirty days of receipt of the initial final decision.200 The grantee may, but need not, be invited to discuss the underlying issues, and the committee ultimately issues a written decision which the grantee may then appeal to the DAB.201
ii. Head Start Termination Appeals
As is common in federal grant programs, for Head Start grants, the Head Start Act — the program’s authorizing statute — alters the rules otherwise applicable to HHS grant funds. Pertinent to disputes and appeals, Section 9841 provides:
The Secretary shall prescribe — … (3) procedures to assure that financial assistance under this subchapter may be terminated or reduced, and an application for refunding may be denied, after the recipient has been afforded reasonable notice and opportunity for a full and fair hearing including:
- (A) a right to file a notice of appeal of a decision not later than 30 days after notice of the decision from the Secretary and
- (B) access to a full and fair hearing of the appeal, not later than 120 days after receipt by the Secretary of the notice of appeal202
Until recently amended to follow more “standard” DAB appeal procedures,203 the Head Start program regulations implementing this provision stated that a grantee’s initial appeal submission, which still must be made within thirty days of receipt of its notice of termination, was required to “[s]pecifically identify what factual findings [were] disputed; [i]dentify any legal issues raised, including relevant citations; [and] [i]nclude an original and two copies of each document the grantee believe[d] [was] relevant and supportive of its position …”204 As interpreted by the DAB, that meant the appellant’s full appeal brief and all supporting documentation had to be submitted within thirty days of receipt of the notice of termination205 or else the appellant would be susceptible to a motion to dismiss206 or for summary judgment207 by the respondent operating division — the Administration for Children and Families (“ACF”).208
iii. Other DAB Cases
Though the DAB’s Appellate Division appears to issue more grant dispute decisions than any other administrative adjudicatory body,209 grant disputes are not its exclusive focus. The DAB’s Appellate Division also has administrative jurisdiction over numerous other HHS disputes, including certain fraud determinations and appeal of certain civil penalties.210
B. Administrative Disputes Within Other Agencies
As can be seen from the description above, HHS’s administrative dispute system lacks internal uniformity and entails key procedures that favor respondent operating divisions over grantees. Against this comparative backdrop, the procedures of other major grant-making agencies — DoL, USAID, ED, DoD, and DoE — are discussed.
1. Department of Labor
Like the HHS system, the DoL disputes system is robust. In fact, it generally provides more formal appeal procedures than the HHS DAB.211 DoL’s supplement to the Uniform Guidance provides that each DoL grant making division must elect, in its internal regulations or other guidance, one of two possible appeals processes for both SAA audits findings as well as non-compliances uncovered through other mechanisms.212 The first option is for the DoL grantmaking division to provide for appeal of a final decision to the division’s head or his or her designee, with the division head required to provide a hearing.213 The second option is for the DoL division to offer an appeal to DoL’s Office of Administrative Law Judges (“OALJ”), under the OALJ’s established procedures.214 DoL’s Employment Training Administration (“ETA”), the DoL division responsible for twenty-five of DoL’s fifty-two grant programs,215 has elected the latter approach — appeal to the OALJ.216
The OALJ’s procedural regulations, available at 29 C.F.R. Part 18,217 provide for a very formal appeals process. Unlike the HHS DAB, the OALJ’s regulations specifically acknowledge applicability of Administrative Procedure Act (“APA”) procedural requirements218 and provide for application of the Federal Rules of Civil Procedures where the OALJ’s specific procedural rules are silent.219 Additionally, the OALJ’s discovery mechanisms are robust, permitting interrogatories and depositions,220 providing for subpoenas,221 and authorizing sanctions for failure to comply with disclosure and discovery obligations.222 The OALJ’s regulations do not specifically address which party bears the burden of persuasion, though it appears that the program regulations for many DoL programs provide for the burden to fall on the grantee.223
The timeframes applicable to filings before the OALJ are similar to cases before the HHS DAB. A notice of appeal must be filed within twenty-one days of receipt of a DoL agency final decision.224 The OALJ’s decision becomes the DoL’s final decision, unless the grantee files “exceptions” to the decision with the Secretary of Labor within twenty-one days of its issuance, though the Secretary is not obliged to accept a case for review.225
Also like the HHS DAB, the OALJ’s jurisdiction and caseload is not limited to grant disputes.226 According to the OALJ’s website, “[h]earings concerning claims under the Black Lung Benefits Act and the Longshore and Harbor Workers’ Compensation Act constitute the largest part of the office’s work.”227
2. U.S. Agency for International Development
USAID’s administrative dispute system is very basic. All grant disputes are initially decided by the cognizant USAID Agreement Officer.228 The Agreement Officer is required to issue a written decision,229 generally within sixty calendar days230 with no requirement that the decision contain any analysis or explanation of the Agreement Officer’s determination.231 Unless appealed within thirty calendar days of its receipt, the decision is final.232
Unlike within HHS and DoL, the appeal is merely a paper appeal to USAID’s Assistant Administrator for the Bureau of Management, or his or her designee.233 There is no specific deadline by which the Assistant Administrator must issue a decision, merely a requirement that he or she (or his or her delegee) coordinate with counsel and other divisions and notify the grantee of its status within sixty days.234 USAID’s regulations make clear that while “the recipient will be given an opportunity to submit written evidence in support of its appeal … [n]o hearing will be provided.”235 The decision of the Assistant Administrator or his or her designee is the final decision of USAID, with no further administrative appeal available.236
3. Department of Education
Within ED, grant recipients under direct financial assistance programs may, in some circumstances, appeal adverse final decisions to the OALJ within ED’s Office of Hearings and Appeals (“OHA”).237 The ED OALJ, established by statute,238 conducts hearings regarding any agency action resulting from a disallowance or withholding of funds from the recipient239 and acts as the arbiter of any complaint by the agency that the recipient is otherwise failing to meet its legal obligations.240
Similar to the formality of DoL’s OALJ, pursuant to the ED OALJ’s authorizing statute, the regulations setting forth the OALJ’s hearing procedures must be consistent with the procedural requirements of the APA.241 Unlike DoL’s OALJ, however, the “hearing” afforded by ED’s OALJ may be merely a review of written submissions and documentary evidence unless the presiding administrative law judge determines that either oral testimony or oral argument is needed to clarify a material matter in the case.242 The Federal Rules of Evidence do not apply,243 and discovery is initially informal, though the ALJ may compel production — including responses to interrogatories and submission to depositions.244 The ALJ may also issue subpoenas.245
For disallowance appeals, the grantee must file its appeal within sixty days of receipt of the disallowance decision.246 Like a standard HHS DAB appeal, the initial filing must merely include a “short and plain statement” of disputed facts and the grantee’s legal position,247 and the ALJ will schedule dates for further submissions.248 The recipient may then present its full case with supporting documentation.249 The recipient bears the burden to prove the disallowance was improper.250
The ALJ will issue a written decision setting forth his or her “findings of fact, conclusions of law, and reasoning on all material issues.”251 The recipient may, within thirty days of its issuance, further appeal that decision to the Secretary of Education.252 Without an appeal, the ALJ’s initial decision is the final decision of ED.253 If reviewed by the Secretary, the Secretary’s decision becomes the final decision of ED.254
Finally, as HHS’s DAB and DoL’s OALJ, ED’s OHA is not limited to hearing grant disputes. Other divisions within ED’s OHA are the Office of Higher Education Appeals (“OHEA”), which hears disputes involving student financial aid programs,255 and the Civil Rights Reviewing Authority (“CRRA”), which hears cases involving certain non-discrimination laws.256
4. Department of Defense
DoD favors resolution of grant disputes at the grants officer level or by some form of alternative dispute resolution (“ADR”). Its grant management regulations expressly state this preference:
DoD policy is to try to resolve all issues concerning grants and cooperative agreements by mutual agreement at the grants officer’s level. DoD Components therefore are encouraged to use ADR procedures to the maximum extent practical. ADR procedures are any voluntary means (e.g., mini-trials or mediation) used to resolve issues in controversy without resorting to formal administrative appeals … or to litigation.257
If the grants officer and recipient are unable to resolve a matter through “unassisted negotiations,” the grants officer is required to encourage ADR.258
This preference notwithstanding, DoD’s regulations do provide recipients the option to submit formal written “claims” to grants officers259 and the right to appeal grants officers’ decisions to designated “Grant Appeal Authorities” within each DoD Component.260 For a formal appeal, the recipient must submit its written notice of appeal to the grants office and the Grant Appeal Authority within ninety days of receipt of the final decision, and the grants officer then forwards an “appeal file” to Grant Appeal Authority that includes “all documents relevant to the appeal.”261 The grants officer and recipient may each supplement the appeal file with additional relevant documents and a “memorandum in support of its position.”262 The review will be based upon the written file unless “the Grant Appeal Authority decides to conduct fact-finding procedures or an oral hearing …”263 DoD’s regulations do not address which party bears the burden of proof or provide for any form of disclosure or discovery.264
5. Department of Energy
For many years, the DoE offered appeals to a formal “Financial Assistance Appeals Board.”265 However, since at least 2009, it has not.266 Presently, DoE’s procedures are much like DoD’s. Like DoD, DoE provides within its regulations an express preference for informal resolution of disputes:
Whenever practicable, DoE shall attempt to resolve informally any dispute over the award or administration of [f]ederal financial assistance. Informal resolution, including resolution through an alternative dispute resolution mechanism, shall be preferred over formal procedures, to the extent practicable.267
Also much like DoD, if informal negotiations cannot resolve the dispute, the Contracting Officer — within DoE, the authority to award grants is reserved to Contracting Officers268 — is to issue a final decision.269 The recipient may then appeal that determination, within ninety days of receipt, to the “Senior Procurement Executive (SPE) for either DoE or the National Nuclear Security Administration (NNSA).”270 The SPE’s decision is then the final decision of the DoE.271 The DoE regulations, again like DoD, provide no mechanism for disclosure or discovery and do not address which party bears the burden of proof.272
C. Summary of Administrative Review
In sum, the administrative review procedures offered by different agencies vary broadly and generally reflect substantial agency control of the process. Though semi-judicial board procedures are offered by some, the effectiveness of any such procedures necessarily depends upon the independence of the hearing officials. If genuinely independent, the process may be effective. If, however, such officials are likely to favor the agency for which they work, this formality is likely to simply increase cost and delay in the process of working toward a final agency decision that the grantee may challenge in court.
IV. Judicial Review
If a grantee does not prevail in its administrative challenge, it may contest the board’s or senior reviewing official’s decision in federal court. Most conventionally, such suits are brought in district court under the APA and challenge the final decision as “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law …”273 Despite substantial historical confusion on this point, when involving a disallowance or other monetary claim, suit can presently also be brought in the Court of Federal Claims (“COFC”) under its Tucker Act jurisdiction.274
Regardless of where a grantee files suit, it (i) may face a challenge over the court’s jurisdiction; (ii) is almost certain to be required to have exhausted its administrative remedies; and (iii) will likely have to litigate standards of review — in particular, the extent to which the court should decide the case on mere deference to the federal agency’s decision.
Given that the federal government expended $668 billion in the form of grants and cooperative agreements in 2016,275 such basic impediments to due process are hard to justify. Moreover, to the extent that courts decide grant cases on the basis of mere deference to agency decisions, they are actively perpetuating the vast “no-man’s land” Richard Cappalli cautioned against.276
A. Jurisdictional Ambiguity
As noted above, agency final decisions on grant matters are often challenged through judicial review under the APA, 5 U.S.C. § 701 et seq.277 Pursuant to 5 U.S.C. § 702:
A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof. An action in a court of the United States seeking relief other than money damages and stating a claim that an agency or an officer or employee thereof acted or failed to act in an official capacity or under color of legal authority shall not be dismissed nor relief therein be denied on the ground that it is against the United States or that the United States is an indispensible party.278
Also, on its face, the Tucker Act, 28 U.S.C. § 1491, seems to provide both a waiver of sovereign immunity for most, if not all, grant cases and vest jurisdiction over such cases in the COFC. As a general matter, the Tucker Act’s waiver of sovereign immunity permits suits against the United States under contracts, as well as under any “money mandating” statute or regulation.279 28 U.S.C. § 1491 provides in relevant part:
The United States Court of Federal Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort.280
The extent to which a grant suit may be brought under Tucker Act “contract” jurisdiction is one of the systemic ambiguities grantees face and is addressed in detail below.281 Regardless, most grant disputes fit within the Tucker Act’s separate money-mandating statute or regulation jurisdictional basis. A money-mandating statute or regulation is one that “can fairly be interpreted as mandating compensation by the [f]ederal [g]overnment for the damages sustained.”282 Since most grant suits entail demands for money — and all grants arise under statutorily authorized programs283 involving a cost-reimbursement system set forth in regulations284 — this relatively low standard is easily met.
Still, notwithstanding the clear language of the Tucker Act, whether grant disallowance suits may, or must, be brought in district court under the APA or in the COFC under the Tucker Act has been a matter of considerable ambiguity since the Supreme Court’s 1988 decision in Bowen v. Massachusetts.285 The distinction has been the subject of a number of law review articles,286 including the somewhat extraordinary article, Money and Power: Observations on the Jurisdiction of the Court of Federal Claims, by Federal Circuit Court of Appeals Senior Circuit Judge Plager,287 in which he proposed the means by which the Federal Circuit could subtly depart — and, at the time of his writing, recently had departed — from Bowen.288 The evolution and current state of this jurisdictional conundrum are detailed below.
1. Ambiguity from Bowen to Suburban Mortgage, and Beyond
i. Bowen and Suburban Mortgage
In 1988, in Bowen v. Massachusetts,289 the State of Massachusetts successfully challenged a Medicaid disallowance in district court.290 The federal defendant challenged both the district court’s jurisdiction under the APA and its substantive ruling on appeal. The First Circuit ruled both that the district court had jurisdiction over the matter and had reached the correct result.291 The federal government appealed the First Circuit’s ruling on jurisdiction to the Supreme Court,292 arguing that 5 U.S.C. § 702 did not permit an action seeking money damages and that even if § 702 otherwise permitted the suit, it was barred by 5 U.S.C. § 704’s prohibition of APA suits where another court offers an adequate remedy.293 Section 702 is reproduced above. In relevant part, § 704 [Actions reviewable.] provides: “Agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review.”294
The Supreme Court concluded APA review in the district court was proper.295 First, the Court reasoned that the state’s suit was not a suit for “money damages” because it was a suit to force the agency to make a payment owed under the grant program rather than a suit for compensatory damages.296 Second, the Court concluded that the Claims Court could not provide adequate relief because the suit involved an issue that would impact the state and federal government’s prospective relationship in Medicaid — a complicated ongoing grant program.297 According to the Supreme Court, the Claim’s Court’s powers were insufficient to provide full relief because it lacked “the general equitable powers of a district court to grant prospective relief.”298
Justice Scalia dissented, arguing that the Court’s parsing between compensatory money damages and specific relief in the form of an order to pay money owed would create a great deal of confusion about the extent of the Claims Court’s jurisdiction.299 In his view, any suit for a sum past due could be cast as a suit for specific relief.300 He further argued that, notwithstanding its general lack of equitable powers, a decision by the Claims Court would provide adequate prospective relief because the Claims Court’s ruling would be honored in the future conduct of the federal agency and because the decision itself “would have not only precedential but collateralestoppel effect.”301
As predicted by Justice Scalia, jurisdiction over suits seeking non-compensatory federal payments has been unclear since Bowen. Jurisprudence in the Federal Circuit is particularly compelling on this issue because the Federal Circuit is vested both with general appellate authority over the COFC, as well as with exclusive jurisdiction over interlocutory appeals of district court transfers of cases to the COFC. Specifically, 28 U.S.C. § 1292(d)(4)(A) provides:
The United States Court of Appeals for the Federal Circuit shall have exclusive jurisdiction of an appeal from an interlocutory order of a district court of the United States, the District Court of Guam, the District Court of the Virgin Islands, or the District Court for the Northern Mariana Islands, granting or denying, in whole or in part, a motion to transfer an action to the United States Court of Federal Claims under section 1631 of [Title 28].302
From the 1988 Bowen decision until 2007, the Federal Circuit appears to have applied the Supreme Court’s money due versus compensatory damages distinction as the primary determinant of jurisdiction in such cases.303 In 2007, however, it departed from this approach in Suburban Mortgage Associates v. United States.304
In Suburban Mortgage, a commercial mortgage lender brought suit against the United States under the APA to force the Department of Housing and Urban Development (“HUD”) to make payment on a statutorily prescribed loan guarantee.305 Expressly critical of the Bowen decision306 and emphasizing that Congress had granted it — in the form of the exclusive interlocutory appeal authority described above307 — a special authority to address this problem, the Court announced a different, though not entirely inconsistent, approach to the jurisdictional analysis. It instructed that the first inquiry must be whether suit in the COFC would offer an adequate remedy.308 If it would, the jurisdictional question would be resolved, pursuant to 5 U.S.C. § 704, in favor of suit before the COFC.309 The Court reasoned that whether monetary relief was requested for purposes of 5 U.S.C. § 702 could not be the determining factor because — impliedly disregarding Bowen’s damages versus money owed distinction — “monetary relief, however defined, may nevertheless be within the jurisdictional scope of the Tucker Act.”310
The Federal Circuit also distinguished Bowen factually in a way important to grants disputes involving states. It explained that APA jurisdiction was appropriate in Bowen (as the Supreme Court had held) because Bowen involved a dispute between a state and the federal government under a “major federal grant, the Medicaid program, involving enormous sums of money and complex interactions between the governments and the beneficiaries.”311
In sum, in the wake of Suburban Mortgage, it seems that, aside from claims by states involving major federal grant programs,312 grant suits involving monetary demands are more appropriately brought in the COFC. As described below, however, Suburban Mortgage does not appear to have led to a consensus among federal courts on this jurisdictional issue.
ii. Post-Suburban Mortgage in the COFC
A survey of grant cases brought in the COFC since 2008 revealed that few grant disputes were brought in the COFC overall, including only one somewhat traditional disallowance case, Lummi Tribe of the Lummi Reservation v. United States.313 In 2011, a number of Indian tribal entities challenged a calculation by HUD that resulted in the reduction of prior grant amounts and an associated effort by HUD to “recapture” those amounts from the grantees.314 From a jurisdictional standpoint, the case interestingly followed a number of similar cases brought in district court under the APA.315 The federal government cited Bowen, arguing that the case was not properly before the COFC because the case sought a right to future payments as opposed to merely retrospective damages.316 The COFC, however, held that it had jurisdiction and instructed that in Bowen:
… the Supreme Court did not alter the long-standing rule that where a plaintiff seeks payment under a money-mandating statute, [the COFC] has jurisdiction over its claim. Rather, the [Supreme] Court concluded that where the essence of the relief sought was not merely a claim for money owed, but was primarily an effort to define an ongoing relationship between the parties going forward, the district court was the appropriate forum to hear the claim.317
Concluding that the grant program at issue in Lummi Tribe differed from the Medicaid program because it “does not establish a ‘complex ongoing relationship between the parties,’ involving open accounts and ‘constantly shifting balance sheets,’”318 the COFC reasoned it was merely a suit for money under a money-mandating statute and therefore, within its jurisdiction.319
The COFC, like the Federal Circuit Court of Appeals above it, seems likely to assert jurisdiction in grant disallowance cases. Interestingly, however, the district courts also remain willing to assert jurisdiction under the APA.
iii. Post-Suburban Mortgage in the D.C. Circuit
The District of Columbia Circuit — which in practice has special status in matters involving suit against the federal government320 — remains willing to entertain grant disallowance cases. In addition to routinely hearing Medicaid program disallowances,321 a matter consistent with the “major state grant” exception carved out in Suburban Mortgage, it also seems quite willing to hear “lesser” grant disputes.
In 2010, in Massachusetts Manufacturing Extension Partnership v. Locke,322 the U.S. District Court for the District of Columbia heard an APA challenge to a disallowance in a Department of Commerce grant program administered by the National Institute of Standards and Technology (“NIST”), with no apparent objection to jurisdiction raised by the federal defendant.323 In 2016, in Texas Neighborhood Services v. United States HHS,324 a private non-profit grantee challenged a Head Start program grant disallowance under the APA without any apparent challenge by the federal defendant over jurisdiction.325
iv. Post-Suburban Mortgage in Other District Courts
District courts outside of Washington also seem to be retaining jurisdiction over cases involving both major grants to states326 and “lesser” grant cases. For example, in 2009, in Disability Rights Center of Kansas, Inc. v. Leavitt,327 the plaintiff brought an APA suit in the U.S. District Court for Kansas challenging an HHS disallowance under a protection and advocacy system grant, with no apparent jurisdictional challenge raised by the federal defendant.328 In 2013, in Shiprock Associated Schools v. United States,329 the U.S. District Court for the District of New Mexico entertained a suit by an Indian tribe seeking a declaratory judgment that a Department of Interior disallowance was based upon an unreasonable interpretation of the grant authorizing statute — interestingly without ever mentioning the APA.330
From these cases, and the D.C. Circuit’s Lummi Tribe case described above, it might begin to appear that the Department of Justice would not challenge jurisdiction when a disallowance case is brought in district court under the APA; but then, in 2016, it did. In the U.S. District Court for the Northern District of Illinois, in R&B Receivables Management Corp. v. United States HHS,331 a grantee challenged, under the APA as well as under a number of other theories, the federal government’s refusal to award it a continuation grant.332 The government argued the APA challenge must be dismissed for lack of jurisdiction because suit in the COFC would offer an adequate remedy.333 Citing to Bowen, the Northern District of Illinois rejected the government’s arguments and retained jurisdiction.334
v. Summary of Bowen and Suburban Mortgage Jurisdictional Ambiguity
As can be seen, basic jurisdictional issues in grant cases remain unsettled. Though there appears to be a tendency by all courts to find in favor of having jurisdiction, a grantee may reasonably expect to litigate whether it has brought its suit in the proper court regardless of whether it files suit in district court or the COFC — a matter often cited as a waste of judicial and litigant resources.335
Unfortunately, the jurisdictional ambiguity faced by grantees is not limited to even this major Bowen-Suburban Mortgage distinction. Rather, the extent of the COFC’s jurisdiction over grant agreements under its “contract” jurisdiction has been yet another area of considerable litigation. Though currently the Federal Circuit and the COFC seem likely to consider grants to be government “contracts” for purposes of Tucker Act jurisdiction, any grantee failing to clearly plead the elements of its contract — i.e., offer, acceptance, and consideration — may find itself facing a jurisdictional challenge.
2. Tucker Act Jurisdiction Based on the Existence of a “Contract”
In the mid-1970s through early 1980s, it seemed the question of whether a grant agreement could be a “contract” for purposes of Tucker Act jurisdiction had been simply resolved. In 1976 and 1980, respectively, the Court of Claims held in Texas v. United States336 and Manassas Park v. United States337 that, though binding the federal government only to its “express undertakings” under the agreements, grant agreements are enforceable government contracts.338
More recently, this issue was litigated in Thermalon Industries v. United States339 and Trauma Service Group v. United States.340 Though different COFC judges came to different conclusions in these cases — Judge Andewelt in Thermalon Industries finding a grant agreement was a contract341 and Judge Weinstein in Trauma Service Group finding a memorandum of agreement was a cooperative agreement and therefore not a contract342 — Judge Andewelt’s view prevailed. The Federal Circuit cited to Thermalon Industries in overturning Judge Weinstein’s Trauma Service Group decision on appeal.343 Applying the common law definition of a contract as the standard, the Federal Circuit instructed:
… any agreement can be a contract within the meaning of the Tucker Act, provided that it meets the requirements for a contract with the [g]overnment, specifically: mutual intent to contract including an offer and acceptance, consideration, and a [g]overnment representative who had actual authority to bind the [g]overnment.344
Though this standard has been repeatedly reiterated in finding grant and grant- like agreements to be Tucker Act “contracts,”345 carefully pleading the contract elements of offer, acceptance, and consideration appears to be important. A number of cases have arisen in which certain of these elements — though hard to imagine not actually present — were challenged by the government to frustrate jurisdiction. For example, in 2001, in Pennsylvania Department of Public Welfare v. United States,346 the COFC concluded that the Commonwealth of Pennsylvania failed to sufficiently plead in its complaint that the HHS official who approved its state plan — i.e., the state’s grant agreement347 — under Title IV of the Social Security Act “had authority to bind the government in contract.”348 Similarly, in 2007, in Rick’s Mushroom Service v. United States,349 the Federal Circuit affirmed a decision by the COFC to dismiss a breach suit brought under a “cost sharing” agreement (determined by the COFC to be a cooperative agreement),350 reasoning that the plaintiff had failed to demonstrate the agreement provided for damages as a possible remedy351 — despite substantial precedent that money damages are presumed to be available in all contract cases.352
3. Summary of Jurisdictional Ambiguity
Notwithstanding seemingly clear statutory standards, jurisdiction over grant disputes remains unsettled. With the exception of a state bringing a dispute under a major federal grant program in district court, a grantee faces the real possibility of a government challenge to jurisdiction regardless of whether the grantee brings its suit in district court under the APA or in the COFC as a claim under a contract, money mandating statute, or both.
In this regard, grantees face even greater challenges than contractors did in the early 1970s. At least then, contractors could be fairly certain that they would not have to litigate whether the court in which they sued, regardless of where they sued, had jurisdiction on the basis of an overly technical “money due” versus “damages” distinction or technical examination of whether they actually held a “government contract.”
Having established that it is in the proper court, a grantee also must establish that it has exhausted all of the administrative prerequisites to suit set out by the federal defendant. As discussed below, this exhaustion hurdle is statutory in APA suits and of judicial creation in cases before the COFC.
1. APA Statutory Exhaustion
Judicial review under the APA is available only for a “final” agency action.353 If a grantee has not exhausted its administrative remedies, including appeal through processes such as those described in Section III above, courts generally will not accept the matter for judicial review.354 Moreover, if some form of administrative review is possible, and a grantee does not timely utilize that process, the court may conclude that the grantee waived its cause of action altogether.355
Similarly, a reviewing court may deem any argument not made in the administrative appeal to have been waived.356 This can be particularly problematic where an agency’s administrative review procedures place the burden of proof on the grantee and provide truncated time periods for the grantee to set forth its case. A good example of this disadvantage is a Head Start grant termination appeal, wherein, as described in Section III(A)(2) above, the grantee was until recently required to submit its entire appeal brief with all supporting evidence within thirty days of receipt of the agency’s initial final decision.357
2. Prudential Exhaustion
Although suit under the Tucker Act entails no statutory exhaustion requirement, the COFC may nonetheless still require exhaustion of administrative remedies. As explained at length in 2005 in White & Case LLP v. United States,358 to both bolster agency administrative authority and seek judicial economy, the COFC will generally apply a “prudential exhaustion” requirement as a prerequisite to suit.359 This requirement will be excused only where the plaintiff can show it would be prejudiced by exhausting its administrative remedies,360 the administrative remedy is “inadequate ‘because of some doubt as to whether the agency was empowered to grant effective relief,’ ”361 or if “it can be shown that the administrative body is prejudiced or has otherwise predetermined the issue before it.”362
3. Summary of the Exhaustion Dilemma
While resource-saving for courts, exhaustion requirements can be resourcedraining for litigants. Lengthy litigation before agency-controlled boards or agency officials, as a mandatory prerequisite to independent judicial review, can be a substantial practical hurdle to due process. Moreover, in the ebb and flow of the administrative litigation, which by definition is part of simply getting to the final agency action (and associated underlying justification), the aggrieved grantee must be cautious that any argument not pursued before the agency may later be considered barred by waiver. These conditions can incentivize costly administrative litigation of all possible issues and theories to preserve them for judicial review.With courts’ willingness to assert prudential exhaustion as a barrier even in the absence of statutory requirements, these impediments are only likely to be overcome by statutory elimination.
C. Standards of Review and Deference
The standard of review in a grant dispute is, at worst, highly disadvantageous and, at best, a matter the grantee will have to litigate. Under APA review within district courts, the standard of review seems over time to have grown increasingly deferential to federal agencies,363 amatter consistent with ever increasing Chevron deference across the federal litigation landscape.364 Within the COFC, a grantee is likely to be able to secure a more balanced standard of review,365 but the matter remains somewhat unsettled. These issues are discussed in detail below.
1. District Court Deference
One of the hallmarks of litigation against any federal agency is judicial deference. The extent to which a court will decide a case on the basis of mere deference to the federal agency’s decision is likely to be a significant matter in the litigation. In a grant dispute, deference to the federal agency arises on three distinct but interrelated matters: (i) interpreting the terms of the agreement; (ii) establishing the facts before the court; and (iii) adjudicating the ultimate issue of whether the agency’s action was proper.
i. Deference to the Agency’s Interpretation of the Terms of the Agreement
The terms of a grant agreement are based almost entirely on specific programmatic and financial management statutes and regulations with which the grantee agrees to comply by accepting the grant.366 As a result, in 1985, the Supreme Court held in Bennett v. Kentucky Department of Education367 that interpretation of grant agreements made up of such terms must be approached as a matter of statutory interpretation rather than as a matter of contract interpretation.368 The practical result has been that courts generally afford great deference to federal agency interpretations of any ambiguous aspect of the terms,369 particularly when the subject matter being interpreted is a complex statutory scheme370 or a regulation issued by the agency.371
Whether the Supreme Court’s holding in Bennett v. Kentucky Department of Education actually should have led to such deference is highly questionable. The Court in that case, while declining to construe the ambiguous terms of a grant program statute against the government,372 also expressly declined to extend deference in favor of the government.373
Only four years earlier in Pennhurst State School & Hospital v. Halderman,374 the Supreme Court held that since the terms of grants were based upon Congress’s spending power, the conditions that the federal government attached to the funds — i.e. the terms of the grant agreement established through statutes and regulations — were much in the nature of contractual terms and had to be unambiguously stated to be binding.375 The grantee had to be on notice of the terms to “voluntarily and knowingly” accept them.376
Moreover, in Bennett v. New Jersey,377 a case argued and decided on the same day as Bennett v. Kentucky Department of Education,378 the Supreme Court reiterated its Pennhurst contract analogy and held that the statutory requirements in force on the date the grant was made, not the statute as subsequently amended, established the terms of the grant.379 The Court reasoned “New Jersey gave assurances that the money would be distributed to local education agencies for programs that qualified under the existing statute and regulations.”380
Peter J. Smith381 and David F. Engstrom382 have put forth views on the interplay between Pennhurst and Bennett v. Kentucky Department of Education (and by direct implication Chevron). Focusing on state grantees, Mr. Smith suggests that Chevron deference can coexist with Pennhurst’s notice requirement to the extent that agency interpretations of statutory requirements are issued prior to the state’s acceptance of the grant.383 Though opining that the question of whether binding retroactive agency interpretations might be appropriate in certain circumstances is a close one,384 he rejects binding application of subsequent interpretations, explaining:
Although … cases of retroactive rulemaking have no perfect solution, I am largely persuaded that Chevron deference should not apply to agency interpretations issued after the state accepts funds under the grant program. The potential unfairness to state recipients — especially in cases in which the state already has, in good faith reliance on its own reasonable interpretation of the grant condition, spent the grant funds when the agency issues its view, or in cases in which the agency reverses its prior view, on which the state has relied in allocating funds — strongly suggests that … retroactive rules should not bind the state — at least not until the state again agrees to accept funds under the program.385
Mr. Engstrom also focuses on state grantees and takes the position that “categorical use of [either] a Chevron or Pennhurst rule is inadequate …”386 He proposes a fairly complex scheme of electing between the two approaches depending on (i) the nature of the grant program (suggesting a Pennhurst approach for state-delivered social services programs where states are theoretically less able to reject grant funds in future years and a more flexible Chevron approach for other grant programs);387 (ii) the nature of the requirement (suggesting a Chevron approach is more appropriate to “cross-cutting” general requirements);388 and (iii) whether the condition is attached through a program designed for “conditional preemption” of state law (suggesting that in such cases a Chevron approach is again more appropriate).389
As may be evident from the arguments made in this Article, the author favors a more strict Pennhurst analysis in all cases.390 The posture of the grantee vis-à-vis the federal agency is very similar to that of a contractor in a contract dispute, yet a contractor is afforded de novo interpretation of the terms of its agreement under the CDA391 and even occasionally, benefits from having ambiguous terms of the government-drafted agreement construed against the federal drafter.392 In procurement contracts, such an approach is widely accepted as a reasonable risk allocation doctrine.393 Since the government drafter can write essentially whatever it wants, it bears the risk associated with any unclear terms.
Allowing a federal agency to adopt any reasonable interpretation of the terms of a grant agreement, without articulating those terms prior to acceptance of the federal funds, has three harmful effects: (i) it disincentivizes agencies from establishing clear requirements, (ii) it empowers agencies to arbitrarily construe and enforce the terms of grant agreements, and (iii) it discourages valid disputes by responsible grantees. In short, agencies under an extraordinarily deferential regime are not, and will not become, accountable in their management of federal grant programs.
As acknowledged by Mr. Smith, if deference were limited to interpretations of ambiguous statutory terms set forth in regulations or publicly available agency guidance before funds were accepted by the grantee — i.e., as prescribed in Bennett v. New Jersey and implied by a strict reading of Pennhurst,394 deference would pose little, if any, practical harm. There would be advance notice of the terms.
Unfortunately, as detailed in Thomas W. Merrill’s and Kristin E. Hickman’s Chevron’s Domain,395 the extent to which a federal court might apply Chevron deference to an agency’s position — be it stated in regulation or subregulatory guidance or established in an administrative adjudication immediately proceeding the federal law suit396 — is unclear, with a tendency toward broad deference.397 In many instances, courts will decide grant cases by simply deferring to the agency’s position; and regardless of outcome, a grantee is almost certain to have to litigate the extent to which its case should be decided on mere deference to the agency.398
This deference to the agency’s interpretation of ambiguous grant requirements goes beyond the challenges faced by contractors pre-CDA and is not warranted by the Supreme Court’s precedent in this area. It may, however, be resolved by prohibiting judicial deference to agency interpretations not publicly promulgated at the time the grant was made.
ii. Deference to the Agency’s Facts
In disputes over the underlying facts, judicial review is again limited. A grantee must ensure the factual record is well-established at the agency administrative review level, as courts both directly and indirectly offer deference to the factual record established by the agency. As an example of direct deference to agency-established facts, in APA review of a Medicaid disallowance in New York v. Shalala,399 the U.S. District Court for the Southern District of New York stated:
… the [HHS Departmental Appeals Board]’s formal findings of fact may not be overturned unless they are unsupported by substantial evidence in the record. Thus, the agency’s factual findings will not be disturbed unless the Court determines after examining the record that “no rational trier of fact could reach the conclusions drawn by the [agency].”400
Courts extend factual deference less directly by limiting APA review to examination of the administrative record prepared by the agency401 and prohibiting the plaintiff from submitting additional evidence during the judicial review proceedings.402
In this regard, the dilemma faced by grantees is very similar to that faced by contractors prior to the CDA.403 Unlike with the interpretational deference discussed above, this dilemma may be resolved simply by providing for de novo judicial review in the same manner the CDA provides for de novo review.
iii. Deference to the Agency’s Final Action
Having determined the terms of the grant agreement with deference to the agency’s interpretation and having accepted the agency’s factual record, a court will review the agency’s decision. Again, however, review will be only against a limited deferential standard. Most commonly, the APA standard applied is whether the agency’s action was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”404 Establishing that an agency decision violates this standard can be difficult. A court’s review will generally be limited to consideration of “whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.”405 The court will review whether there is a “rational connection” between the facts in the agency record and the agency’s decision406 but will not substitute its judgment for that of the agency.407
This limitation can be particularly problematic in a grant dispute where the posture at the administrative board level is often characterized by (i) a grantee bearing the burden to demonstrate it met subjective standards such as “reasonableness” or “adequate documentation” of an incurred cost against an allegation by an agency that it did not408 and (ii) the agency being allowed to advance new theories in support of its ultimate determination of noncompliance throughout the administrative proceeding.409 With only such deferential judicial review available, agency boards can function to simply “clean up” the agency’s record prior to the grantee being permitted independent review by a court.
iv. Summary of District Court Deference
Though not exactly the same deference dilemmas as faced by contractors prior to the CDA, grantees’ deference dilemmas are similar and, in fact, even more pronounced. Contractors faced the challenge of broad Wunderlich Act deference to Contracting Officer findings of fact.410 The challenge faced by grantees is threefold: deference to the agency’s interpretation of the terms of the agreement, deference to the facts set forth in the agency record, and deference to the agency’s chosen course of action.
In Section V below, this Article proposes a statutory correction to this imbalance. Based upon the model of the CDA, it proposes a statutory grant dispute regime that provides both (i) de novo judicial review and (ii) construction of the applicable terms and conditions of the grant agreement without deference to any agency interpretation that was not stated in formal regulations or publicly available subregulatory guidance on the date the grant was awarded.
This proposed solution is entirely consistent with the Supreme Court’s holdings in Pennhurst State School v. Halderman and Bennett v. New Jersey and the original holding of Bennett v. Kentucky Department of Education discussed above.411 It is also consistent with § 706 of the APA which — though now substantially undermined by courts’ application of Chevron412 — states “&hellilp; the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.”413
2. Standard of Review Before the COFC
Given the difficulty inherent in seeking to overturn an agency’s determination through an APA challenge, suit under the Tucker Act in the COFC may be a better option. As explained below, the standard of review applicable at the COFC seems to be de novo but is not entirely clear.
In 1990, in County of Suffolk v. United States414 — an Environmental Protection Agency (“EPA”) grant dispute, Judge Andewelt of the Claims Court held that “[t]he Claims Court typically considers allegations that a party did not fulfill its obligations under a contract [in this case a grant agreement]415 on a de novo basis.”416
One year later, however, in Fallsburg v. United States,417 Judge Bruggink of the Claims Court essentially held the opposite in a case brought under a similar EPA grant agreement.418 Relying on the Supreme Court’s analysis and holding in Bennett v. Kentucky Department of Education419 and the fact that the agency was empowered by the pertinent grant program’s regulations to withhold payments in instances of non-compliance,420 Judge Bruggink concluded that though the relationship was essentially a contractual one, de novo review should not be provided.421 Rather, he instructed that review should be limited to “review [of] the [agency’s] actions only for abuse of [the] discretion granted by the terms of the agreement”422 and equated that review to review for “whether [the agency’s] decision was arbitrary or capricious, contrary to law, or not based on substantial evidence.”423 In other words, he essentially applied the APA standard.
Though not stating it as clearly as one might like, the Federal Circuit seems to support de novo review. In 2003, in a dispute brought in the COFC by San Juan City College relating to its participation in a federal student financial aid program, the government relied on Bennett v. Kentucky Department of Education424 to argue that the standard of review should be limited to the APA standard.425 The COFC ( Judge Bruggink again) expressly declined to rule on the matter,426 holding against the grantee on a different but similarly reasoned basis — that the traditional contract remedy of damages was not available because “[t]he normal confines of ‘bilateral contract governing a discrete transaction’ are not appropriate for a contract incorporating federal grants.”427
The Federal Circuit disagreed. In holding that contract damages were available, the court treated the grant agreement as a traditional contract, instructing: “There is no reason to believe that, because federal grant programs may be ‘in the nature of a contract,’ special and different rules govern the determination of damages for a breach of a formal written contract that involves a federal grant of funds to educational institutions.”428 Though the court heavily relied on the existence of a formal written agreement in that case,429 its reasoning seems to clearly indicate that grant agreements, when meeting the definition of a contract, should be treated just as other contracts by the COFC.
This reasoning also implies review should be de novo. On remand the parties continued to dispute the applicable standard of review, but the COFC (now with Judge Horn presiding over the case) declined to rule on the issue.430 Avoiding it, the COFC held that the plaintiff ’s particular claim would fail even under a de novo standard of review.431
In sum, it appears that a grantee is more likely to obtain de novo review of the terms of a grant agreement within the Federal Circuit, where Bennett v. Kentucky Department of Education has been more narrowly applied. This seems particularly likely if the grantee is careful to establish that its grant agreement is a contract, rather than merely relying on the COFC’s money mandating statute basis of jurisdiction.432 Still, as demonstrated by San Juan City College, the exact state of the law before the COFC remains unclear.
V. Statutory Solution — The CDA Model
As discussed in Section I, prior to adoption of the CDA, the dispute system available to government contractors was characterized by (i) mandatory exhaustion of administrative appeal requirements; (ii) administrative appeals over which agency boards of questionable independence presided and which varied in form across agencies; (iii) broad agency authority to limit contractor rights through regulations and contract clauses; and (iv) substantial judicial deference to agency decisions.433
As discussed at length in Sections III and IV, grantees presently face all of these dilemmas. Additionally, grantees are faced with (i) ambiguity over fundamental jurisdictional questions;434 (ii) district court deference to agency interpretations of the terms of their agreements;435 (iii) uncertainty over the standard of review to be applied by the COFC;436 and (iv) a limited body of federal grant law.
The CDA remedied the challenges faced by contractors by providing much needed balance in procurement contract disputes. As described just after the twentieth anniversary of the CDA in The Contract Disputes Act: Solid Foundation, Magnificent System:
The CDA is a remarkable milestone in the field of government contracts for several reasons, including the fact that it lifted the disputes process out of the discretionary realm of agency clauses and placed the process squarely within a fixed statutory framework. Prior to the CDA, government clauses dominated the disputes process. In the absence of a comprehensive contract disputes statute, the Supreme Court’s decisions in Bianchi, Grace, and Utah Construction [cases on important issues of procedure and standards of review] rested primarily on interpretations of agency-drafted provisions …
The Act also released contractors from the limited confines of administrative law by providing direct access to a judicial forum with maximum due process protections. This critical step eliminated procedural delays and returned the focus of the disputes process to the merits of claims. Direct access was a fundamental part of the [Commission on Government Procurement]’s recommendations, as well as both the House and Senate bills leading up to the Act.437
The CDA contains five key elements making it elegantly effective — all of which could be easily applied to the grant dispute system: (i) a Contracting Officer’s final decision serving as a clear formal decision;438 (ii) a statutory source of administrative board authority that is independent of agencies’ organic authority;439 (iii) contractor election of appeal to either an administrative board or the COFC;440 (iv) an explicit de novo standard of review at the COFC;441 and (v) appeal of either a board or COFC decision exclusively to the Federal Circuit.442
Below, this Article proposes implementing a nearly identical statutory grant dispute system through a “Grant Disputes Act.” First, this Article proposes a CDA-like institutional framework with broad applicability and clarifying jurisdictional terms. Second, it proposes CDA-like administrative and judicial review provisions, including direct appeal to the COFC and prescription of more balanced standards of review.
A. Institutional Framework
The CDA (i) applies broadly to procurement contract performance disputes of all executive agencies;443 (ii) requires that final agency decisions be issued by clearly designated Contracting Officers;444 and (iii) provides statutory authority for establishment of four administrative boards of contract appeals445 with the power to conduct hearings, order formal discovery, and issue subpoenas.446 There are currently three such boards, the Civilian Board of Contract Appeals (“CBCA”), the Armed Services Board of Contract Appeals (“ASBCA”), and the Postal Service Board of Contract Appeals.447 At the time of the Commission on Government Procurement’s report, there were eleven boards of contract appeals,448 and in 2007, the CBCA replaced the boards of contract appeals of the General Services Administration (“GSA”) and the Departments of Transportation, Agriculture, Veterans Affairs, Interior, Energy, Housing and Urban Development, and Labor.449 At the same time, jurisdiction over contract disputes from HHS and USAID was transferred from the ASBCA to the CBCA.450
Given the similarity of the problems faced by grantees in their existing dispute system and the apparent effectiveness of the CDA in establishing a basic infrastructure for procurement disputes, copying the CDA’s broad applicability, clear statement of authority for issuance of final decisions, and independent authorization of an administrative board system with formal powers and procedures is both a logical and simple solution.
With respect to applicability and the issuance of final decisions, a Grant Disputes Act should apply to all performance disputes under grants and cooperative agreements — as such legal instruments are defined by the FCGAA — and should entail a grant management officer-based final decision framework.
A challenge to uniformity in the grant system is the fact that, as touched upon in Sections III and IV, the terms and conditions of a grant agreement are, to a large extent, established by the grant program’s authorizing statute.451 Such terms can include specific statutory provisions for dispute jurisdiction,452 special standards of review,453 or as demonstrated by the discussion of the Head Start Act’s grant termination requirements in Section III(A) (2)(ii),454 special dispute procedures. Therefore, any unifying Grant Disputes Act must override dispute-related provisions in existing statutes and provide safeguards against future dispute-specific terms in grant authorizing legislation that might undermine the uniformity.
While seemingly a daunting task, as discussed in Section I, something very similar was accomplished in 1984 with the SAA.455 Enacted to override and unify numerous independent audit requirements, the SAA both (i) specifically voided inconsistent audit requirements and (ii) created a review process under which the Comptroller General would police new enactments for offending terms.456 Similar provisions could, and should, be included in a Grant Disputes Act.
With respect to the administrative board system, rather than continuing to rely on existing grant appeal tribunals — such as the HHS’s DAB or the DoL’s or ED’s OALJ,457 administrative appeal authority should be vested exclusively in the CBCA. Combining grant appeals within a single administrative body will facilitate development of a cohesive body of grant law. Moreover, consolidating the appeals within the CBCA will enhance independence in adjudication. Finally, as can be seen from the list of agencies for which the CBCA already adjudicates contract disputes, many of the major grant making agencies (Departments of HHS, Labor, Energy, Agriculture, Transportation, and Interior, as well as USAID) have existing relationships with the CBCA.
The text for such provisions of a Grant Disputes Act could be based largely upon 41 U.S.C. §§ 7102 (Applicability)458 and 7103 (Decision by Contracting Officer)459 of the CDA. No equivalent of 41 U.S.C. § 7105, which provides authority for the three existing boards to hear appeals as well as employ subpoenas and order discovery, would be necessary, as the CBCA has already been established and granted the necessary powers.460
B. Appeal Rights and Procedures
As discussed throughout this Article, and as noted by Clarence Kipps, Tom Kindness, and Cameron Hamrick in the excerpt from The Contract Disputes Act: Solid Foundation, Magnificent System reproduced above, the key achievement of the CDA was “lift[ing] the disputes process out of the discretionary realm of agency clauses and plac[ing] the process squarely within a fixed statutory framework.”461 The core CDA provisions accomplishing this result are 41 U.S.C. §§ 7104 (Contractor’s right of appeal from decision by Contracting Officer)462 and 7107 (Judicial review of agency board decisions).463
Section 7104 sets forth two key contractor rights. First, a contractor may elect either an administrative appeal to an agency board or direct suit in the COFC.464 Second, it provides that suit in the COFC “shall proceed de novo.”465
Providing contractors with the option to elect suit directly in the COFC substantially mitigates the risk posed by any particular agency board being biased in favor of the agency within which it is housed. It further directly mitigates the problem of the cost and delay of exhausting an administrative review process before proceeding to independent judicial review. As grantees face exactly the same problems of questionable board independence and costly delay that were remedied for contractors through this election of direct suit,466 the same right should be extended to grantees.
Similarly, the CDA’s prescribing that judicial review shall be de novo addressed a dilemma faced by contractors that is even more pronounced for grantees. As discussed in Section IV(C) above,467 contractors faced deference to Contracting Officer’s factual determinations because of the Wunderlich Act. Grantees, on the other hand, face overwhelming judicial deference to agency interpretations of the terms of the grant agreement, the factual record developed by the agency, and the agency’s final decision.468 For this reason, while the de novo review standard applied in the CDA should be adopted in a Grant Disputes Act, such Act should further explicitly prohibit deference to any agency interpretation of the terms of grant agreements that were not formally promulgated and publicly available at the time the grant or cooperative agreement was made. Such a statutory limitation would be entirely consistent with the Supreme Court’s express reservations in Bennett v. Kentucky Department of Education and Bennett v. New Jersey.
Aside from this necessary additional language, the statutory language for a Grant Disputes Act section setting forth the appeal rights described above could be based largely upon 41 U.S.C. § 7104.
C. Judicial Review of CBCA Decisions
Finally, to ensure the grant and cooperative agreement system is structured in such a way as to encourage development of a unified body of binding federal grant law, this Article proposes that appeals of all CBCA decisions should, like under the CDA, be directly to the Federal Circuit. As that court is inherently the appeal authority for the COFC,469 this approach would unify grant appeals within a single appellate circuit. Moreover, the Federal Circuit is particularly well-suited to hear grant appeals because it (i) has experience considering the nature of the grant relationship and the status of grants within the broader federal spending system;470 (ii) has substantial experience with suits seeking monetary relief from the federal government; and (iii) is located in a geographically convenient location, i.e., Washington, D.C., for suits against federal agencies.
This unification of appellate authority can be achieved by, again, drawing from the CDA. Language for this provision of a Grant Disputes Act could be based largely upon 41 U.S.C. § 7107.
D. Small Claims, Payment of Claims, Interest, and Detailed Provisions for Contracting Officer (Grant Management Officer) Decisions
Beyond the core structural features described above, the CDA provides expedited procedures for small claims and addresses payment of claims and interest.471 It also contains detailed administrative provisions relating to final decisions of Contracting Officers — including certification requirements, limitations on authority with respect to fraudulent claims, and alternative dispute resolution provisions.472
While these items might also be addressed in a Grant Disputes Act, this Article takes no position on their necessity. The critical dilemma faced by grantees, the lack of meaningful checks on agency authority within the grant system, may be mitigated through the mere adoption of the structural components and basic protections described above.
Nearly forty years have passed since Richard Cappalli cautioned against a “vast no man’s land” growing within our federal legal system.473 At the time, the federal government expended an estimated $85 billion through federal grant programs.474 In 2016, the federal government obligated nearly eight times as much, about $668 billion, in federal grant funds,475 yet the legal regime underlying this system remains primitive and fragmented.
The 2014 issuance of the Uniform Guidance — a single government-wide set of grant management regulations addressing grant administration, cost principles, and audit requirements for all grant recipients — was a major achievement in unifying and modernizing the regulatory regime.476 Yet, without an effective dispute system to ensure agency accountability and harmonize interpretation of the requirements applied by different federal agencies, the modernizing and unifying impact of the Uniform Guidance will be hampered. Agencies will remain empowered to administer the myriad requirements attached to the federal funds they dispense by fiat rather than through balanced interpretation of the terms set forth in the grant agreements.
The CDA proved a highly successful solution to the same problems in the federal procurement system.477 It is time Congress adopt similar statutory dispute mechanisms for the federal grant system.
Lifting the grant “disputes process out of the discretionary realm of agency [regulations] and plac[ing] the process squarely within a fixed statutory framework”478 will (i) enhance agency accountability, incentivizing establishment of clearly stated requirements and their consistent application, and (ii) establish a federal judicial review system in which a federal grant common law can develop.
- Overview of Awards by Fiscal Year, USASPENDING, https://www.usaspending.gov/transparency/Pages/OverviewOfAwards.aspx [https://perma.cc/9SQT-43M6] (last visited Nov. 17, 2017). Comparatively, $474 billion was expended in fiscal year 2016 on procurement contracts. Id.
- See Grants: All Recipients—FY 2016, USASPENDING, https://www.usaspending.gov/Pages/TextView.aspx?data=FiscalYearMostFundedRecipientsByAwardType&AwardType=G&fiscalyear=2016 [https://perma.cc/GC6Q-DQ7A] (last visited Nov. 17, 2017).
- In fiscal year 2016, approximately $350 billion was expended in the form of Medicaid grants to states. Agency Profile: Department of Health and Human Services, Assistance Data, USASPENDING, https://www.usaspending.gov/Transparency/Pages/AgencyAssistance.aspx?agencycode=7500&fiscalyear=2016 [https://perma.cc/DK4Y-Z6C3] (last visited Nov. 17, 2017).
- See Grants: All Recipients—FY 2016, supra note 2.
- See discussion of increases in number and magnitude of grant programs since the 1960s infra Part I.
- See, e.g., JACOB A. STEIN & GLENN A. MITCHELL, ADMINISTRATIVE Law § 53.02 at 53–6 (2017); U.S. GOV’T ACCOUNTABILITY OFFICE, GGD-75-75, FUNDAMENTAL CHANGES ARE NEEDED IN FEDERAL ASSISTANCE TO STATE AND LOCAL GOVERNMENTS 4–9 (1975) [hereinafter U.S. GOV’T ACCOUNTABILITY OFFICE, GGD-75-75]; U.S. GOV’T ACCOUNTABILITY OFF., GAO-03-718T, FEDERAL ASSISTANCE: GRANT SYSTEM CONTINUES TO BE HIGHLY FRAGMENTED 2–4 (2003); U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-12-1016, GRANTS TO STATE AND LOCAL GOVERNMENTS: AN OVERVIEW OF FEDERAL FUNDING LEVELS AND SELECTED CHALLENGES 8–9 (2012).
- RICHARD B. CAPPALLI, RIGHTS AND REMEDIES UNDER FEDERAL GRANTS 359–63 (1979).
- Id. at 359–60 (quoting Edgar S. Cahn & Jean Camper Cahn, The New Sovereign Immunity, 81 HARV. L. REV. 929, 930, 971 (1968) (the exact original language used by Cahn and Cahn is slightly different, including instead the phrase, “territory off limits to the courts and beyond the ken of the traditional political process . . .” (emphasis added)).
- See discussion of Comm’n on Gov’t Procurement infra Part I.A.
- See discussion of development of Federal Acquisition Regulation infra Part I.A.1.
- See discussion of development of Contract Disputes Act of 1978 infra Part I.A.2.
- See discussion of development of Federal Acquisition Regulation infra Part I.A.1.
- See discussion of development of Contract Disputes Act of 1978 infra Part I.A.2.
- See discussion of development of Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards infra Part I.C.
- See infra Part III for a discussion of administrative appeals.
- See discussion of judicial review infra Part IV.
- See infra Part III for a discussion of administrative appeals.
- See discussion of judicial review infra Part IV.
- See proposed solution of a “Grant Disputes Act” infra Part V.
- Grants and cooperative agreements are very similar forms of federal financial assistance, differing primarily with respect to the extent of day-to-day federal involvement in the funded activities. See discussion of the Federal Grant and Cooperative Agreement Act infra Part I.3. Both are subject to the same administrative requirements, cost principles, and audit obligations. See 2 C.F.R. §§ 200.38 (defining “federal award”), 200.40 (defining “financial assistance”), and 200.101 (setting forth applicability of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards).
- U.S. GOV’T ACCOUNTABILITY OFFICE, GGD-75-75, supra note 6, at 1; see also STEIN & MITCHELL, supra note 6, § 53.02(1) (“The earliest [f]ederal grants were land grants awarded to the States in the late 1800’s for the development of agricultural colleges, railroad construction, and other public purposes. During the same period, Congress authorized the first [f]ederal grants of cash, targeting assistance for such diverse purposes as aid to the blind and the support of agricultural experimental stations.”).
- U.S. GOV’T ACCOUNTABILITY OFFICE, GGD-75-75, supra note 6, at 1.
- RESPONSIVE FEDERALISM: REPORT TO THE PRESIDENT ON THE FEDERAL ASSISTANCE REVIEW 1 (1973) [hereinafter RESPONSIVE FEDERALISM].
- 1 U.S. COMM’N ON GOV’T PROCUREMENT, REPORT OF THE COMMISSION ON GOVERNMENT PROCUREMENT vii–viii (1972) [hereinafter 1 U.S. COMM’N ON GOV’T PROCUREMENT].
- See generally id. In addition to its four substantive volumes, the report contains a detailed 142-page index and bibliography.
- See RESPONSIVE FEDERALISM, supra note 24, at 1.
- Pub. L. No. 91-129, § 4, 83 Stat. 269, 269–270 (1969).
- Id. § 1(6), (11), (12).
- The Commission’s report was transmitted to Congress on December 31, 1972. 1 U.S. COMM’N ON GOV’T PROCUREMENT, supra note 25, at ii (copy of E. Perkins McGuire Dec. 31, 1972, transmittal letter to the President of the Senate and Speaker of the House). Though the report does not specify a start date, the statute establishing the Commission was not enacted until near the end of 1969. Pub. L. No. 91-129, 83 Stat. 269 (1969).
- 1 U.S. COMM’N ON GOV’T PROCUREMENT, supra note 25, at v (Table of Contents).
- Id. at 34–35.
- 4 U.S. COMM’N ON GOV’T PROCUREMENT, REPORT OF THE COMMISSION ON GOVERNMENT PROCUREMENT, at Part G (1972) [hereinafter 4 U.S. COMM’N ON GOV’T PROCUREMENT].
- 3 U.S. COMM’N ON GOV’T PROCUREMENT, REPORT OF THE COMMISSION ON GOVERNMENT PROCUREMENT, at Part F (1972) [hereinafter 3 U.S. COMM’N ON GOV’T PROCUREMENT].
- 1 U.S. COMM’N ON GOV’T PROCUREMENT, supra note 25, at 35.
- Id. at 31 (recommending uniform government-wide procurement regulations under an Office of Federal Procurement Policy).
- See Armed Services Procurement Act of 1947, Pub. L. No. 80-413, 62 Stat. 21 (1948).
- Federal Property and Administrative Sercices Act of 1949, Pub. L. No. 81-152, 63 Stat. 377 (1949).
- 1 U.S. COMM’N ON GOV’T PROCUREMENT, supra note 25, at 15–17 (recommending establishment of OFPP and harmonization of ASPA and FPASA).
- S. REP. NO. 93-692, at 10 (1974).
- See Office of Federal Procurement Policy Act, Pub. L. No. 93-400, 88 Stat. 796 (1974) (codified with some differences in language at 41 U.S.C § 1101, et seq. (2012)).
- See id. § 5(a) (currently codified with some differences in language at 41 U.S.C. § 1101(a) (2012)).
- See id. § 6(a) (currently codified with some differences in language at 41 U.S.C. § 1101(b)(1) (2012)).
- See id. § 6(d)(1) (currently codified with some differences in language at 41 U.S.C. § 1122(a) (2012)).
- Apparent failure by OFPP to expenditiously carry out system-wide reforms led to the OFPP Amendments Act of 1979, which reiterated that OFPP was to establish “a system of simplified and uniform procurement policies, regulations, procedures, and forms[.]” Pub. L. No. 96-83, § 4, 93 Stat. 648, 649 (1979); see also H.R. REP. NO. 96-178, at 3, 13 (1979).
- KATE M. MANUEL ET AL., CONG. RESEARCH SERV., R42826, THE FEDERAL ACQUISITION REGULATION (FAR): ANSWERS TO FREQUENTLY ASKED QUESTIONS 10–11 (2015).
- See generally FAR.
- 41 U.S.C. §§ 1302(a), 1303(a)(1) (2012).
- Id. § 1303(a)(5).
- 4 U.S. COMM’N ON GOV’T PROCUREMENT, supra note 33, at Part G; see also Clarence Kipps, Tom Kindness & Cameron Hamrick, The Contract Disputes Act: Solid Foundation, Magnificent System, 28 PUB. CONT. L.J. 585, 588–89 (1999) (discussing the Commission on Government Procurement’s recommendations and the resulting CDA).
- 4 U.S. COMM’N ON GOV’T PROCUREMENT, supra note 33, at 14.
- Id. at 15.
- Id. at 18–19.
- Id. at 17–19.
- Id. at 18.
- Boards had jurisdiction over disputes for which a remedy was available under the contract, but not over disputes arising from breach, a distinction that was both difficult to define and criticized as potentially meaningless. Id. at 22. Suits for breach of contract could be brought directly in federal court. Id. at 23.
- Id. at 23–24.
- 41 U.S.C. §§ 321–322 (1964).
- 4 U.S. COMM’N ON GOV’T PROCUREMENT, supra note 33, at 24.
- Id. at 20, 23–25.
- Id. at 20.
- S. REP. NO. 95-1118, at 1–2 (1978).
- Contract Dispute Act of 1978, Pub. L. No. 95-563, §§ 7-10, 92 Stat. 2383, 2385–88 (codified with amendments at 41 U.S.C. §§ 7101–7109 (2012)).
- S. REP. NO. 95-1118, at 2, 4.
- 41 U.S.C. § 7103(a)(1) (2012).
- 41 U.S.C. § 7104(a), (b)(1) (2012).
- 41 U.S.C. § 7104(b)(4).
- 3 U.S. COMM’N ON GOV’T PROCUREMENT, supra note 34, at 153.
- Id. at 154.
- Federal Grant and Cooperative Agreement Act of 1977, Pub. L. No. 95-224, § 2, 92 Stat. 3, 3 (1978); 31 U.S.C. §§ 6303–6305 (1982).
- Id. at 2.
- Id. at 2–3.
- 31 U.S.C. §§ 6303–6305 (1982).
- S. REP. NO. 95-449, at 6.
- Federal Grant and Cooperative Agreement Act of 1977, Pub. L. No. 95-224, § 8, 92 Stat. 3, 5 (1978).
- Cappalli refers to a “major evaluation of the federal grant system” that is “under way” at the end of his 1979 article. Richard B. Cappalli, Federal Grant Disputes: The Lawyer’s Next Domain, 11 URB. LAW. 377, 395 (1979). The research conducted in preparing this Article did not reveal any clear indication of what such efforts, if any, may have ultimately been completed.
- RESPONSIVE FEDERALISM, supra note 24, at 2.
- See id. at 1.
- Id. The report’s areas of discussion fell into six broad categories entitled: The Beginning of the Federal Assistance Review, Moving Government Closer to the People, Increasing Reliance on State and Local Governments, Cutting Red Tape, Overcoming Fragmentation, and Building the New Partnership. Id. at Table of Contents.
- See id. at 10.
- See discussion supra Part I.A.3.
- See, e.g., Revisions to Circular A-21, “Cost Principles for Educational Institutions,” 56 Fed. Reg. 50,224, 50,228 (Oct. 3, 1991) (revising OMB Circular A-21 to cap IHE administrative cost rates at 26 percent of modified total direct costs); Cost Principles for Non-Profit Organizations, 60 Fed. Reg. 52,516, 52,521 (Oct. 6, 1995) (revising OMB Circular A-122 to make certain mortgage interest expenses allowable costs).
- Single Audit Act of 1984, Pub. L. No. 98-502, 98 Stat 2327 (establishing Chapter 75 of Title 31 of the U.S. Code); Single Audit Act Amendments Act of 1996, Pub. L. 104-156, § 7501, 110 Stat. 1396, 1396–97 (extending coverage of the SAA to all “non-Federal entity” recipients and defining “non-Federal entity” as “a State, local government, or nonprofit organization”).
- See Cost Principles for Education Institutions (OMB Circular A-21), 2 C.F.R. § 220 (2013) (codification of OMB Circular A-21 from 2005 through 2014).
- See Cost Principles for State, Local, and Indian Tribal Governments (OMB Circular A- 87), 2 C.F.R. § 225 (codification of OMB Circular A-87 from 2005 through 2013).
- See Cost Principles for Non-Profit Organizations (OMB Circular A- 22), 2 C.F.R. § 230 (codification of OMB Circular A-122 from 2005 through 2013).
- See Uniform Administrative Requirements for Grants and Cooperative Agreements to State, Local, and Tribal Governments, 45 C.F.R. pt. 92 (2014) (Department of Health and Human Services implementation of OMB Circular A-102); see also Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments, 53 Fed. Reg. 8079 (Mar. 11, 1988) (establishing 45 C.F.R. pt. 92).
- See Uniform Administrative Requirements for Awards and Subawards to Institutions of Higher Education, Hospitals, Other Nonprofit Organizations, and Commercial Organizations, 45 C.F.R. pt. 74 (Department of Health and Human Services implementation of OMB Circular A-110 from 1976 through 2014); see also Uniform Administrative Requirements for Awards and Subawards to Institutions of Higher Education, Hospitals, Other Non-Profit Organization, and Commercial Organizations; and Certain Grants and Agreements with States, Local Governments, and Indian Tribal Governments, 59 Fed. Reg. 43,754, 43,754 (Aug. 25, 1994) (implementing changes to 45 C.F.R. Part 74 and discussing its implementation of OMB Circular A-110 at Part 74 since the Circular was first issued in 1976).
- See OFFICE OF MGMT. & BUDGET, CIRCULAR A-133: AUDITS OF STATES, LOCAL GOVERNMENTS, AND NON-PROFIT ORGANIZATIONS 1 [hereinafter CIRCULAR A-133], available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A133/a133_revised_2007.pdf [https://perma.cc/X6BV-NS7Z] (last visited Dec. 20, 2017).
- See Audits of States, Local Governments, an Non-Profit Organizations, 62 Fed. Reg. 35,278, 35,278 ( June 30, 1997) (establishing uniform audit requirements for governmental and nonprofit recipients through revisions to OMB Circular A-133, which had previously only applied to non-governmental recipients, and rescinding OMB Circular A-128, which had separately set forth audit requirements for governmental recipients since 1985).
- H.R. REP. NO. 98-708, at 1–2 (1984) (“[N]umerous studies conducted over the past serveral years have clearly shown that [a] grant-by-grant audit approach is an inefficient use of scarce audit resources, and an ineffective means of assuring accountability in the use of [f]ederal tax dollars. As a result, [f]ederal, [s]tate and local officials have recommended that the myriad of overlapping, inconsistent, and duplicative [f]ederal requirements for audits of individual assistance programs be replaced by a uniform requirement for organization-wide audits of [f]ederal grant recipients.”).
- Single Audit Act of 1984, Pub. L. No. 98-502, 98 Stat 2327 (establishing Chapter 75 of Title 31 of the U.S. Code). The single audit obligation is currently set forth at 31 U.S.C. § 7502(a)(1)(A) (2012). The exemption from all other financial audits is set forth at 31 U.S.C. §§ 7502(a)(2) and 7503(a).
- 31 U.S.C. §§ 7502(a)(2)(A)(ii), 7503(a) (2012).
- 31 U.S.C. § 7506 (2012). Interestingly, in December 2016, this safeguard against erosion of the SAA’s strict harmonizing regime was repealed by the GAO Mandates Revision Act of 2016, Pub. L. No. 114-301, § 2, 130 Stat. 1514, 1514.
- See Federal Financial Assistance Management Improvement Act of 1999, Pub. L. No. 106-107, 113 Stat. 1486 (codified at 31 U.S.C. § 6101 (2012)). Despite the earlier efforts led by the executive branch, the FFAMIA commenced with a list of findings that expressly acknowledged continued fragmentation and complexity. Id. § 2, 113 Stat. at 1486.
- See id. §§ 5–6, 113 Stat. at 1487–88.
- See S. REP. NO. 111-7, at 2 (2009) (Senate Committee on Homeland Security and Governmental Affairs Report on S. 303, the proposed Federal Financial Assistance Management Improvement Act of 2009).
- U.S. GOV’T ACCOUNTABILITY OFF., GAO-05-335, GRANTS MANAGEMENT: ADDITIONAL ACTIONS NEEDED TO STREAMLINE AND SIMPLIFY PROCESSES 3 (2005) [hereinafter GAO-05- 35].
- See S. 303, 111th Cong. § 1–2 (as passed by House of Representatives, Dec. 14, 2009).
- See id. § 3(e)(1).
- See id. § 4.
- See id. § 5.
- See S.303—Federal Financial Assistance Management Improvement Act of 2009, CONGRESS. GOV, https://www.congress.gov/bill/111th-congress/senate-bill/303/actions [https://perma.cc/QC4U-CKKD] (last visited Nov. 17, 2017).
- Memorandum from Barack Obama, President, to the Heads of Executive Departments and Agencies (Feb. 28, 2011), https://www.whitehouse.gov/the-press-office/2011/02/28/presidential-memorandum-administrative-flexibility [https://perma.cc/MDN2-WC4B] (last visited Dec. 20, 2017).
- Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 78 Fed. Reg. 78,590, 78,590–91 (Dec. 26, 2013).
- Federal Awarding Agency Regulatory Implementation of Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 79 Fed. Reg. 75,872, 75,872 (Dec. 19, 2014).
- See generally Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. pt. 200 (2017).
- See, e.g., id. pt. 200 apps. iii–vii (promulgating differing requirements relating to establishment of indirect cost rate agreements and certain cost allocation plans).
- See generally id. pt. 200.
- See 2 C.F.R. §§ 200, 300, 400, 600, 700, 802, 910, 1000, 1201, 1327, 1402, 1500, 1800, 2300, 2400, 2500, 2600, 2701, 2800, 2900, 3002, 3187, 3255, 3374, 3474, 3603, 5900 (Federal Agency Regulations for Grants and Agreements).
- Federal Awarding Agency Regulatory Implementation of Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 79 Fed. Reg. at 75,889.
- 2 C.F.R. §§ 200.310–.316.
- Id. § 200.307.
- Id. § 200.306.
- FAR 31.201–.205.
- See generally supra Part I.A (regarding challenges faced by government contractors and discussion of the Commission on Government Procurement); infra Part III (regarding administrative appeals and varying procedures); and infra Part IV (regarding judicial review and associated limitations).
- See 2 C.F.R. § 200.338. Suspension or debarment of the non-federal party from receipt of federal contracts and financial assistance awards is another potential enforcement option but is not addressed in this Article. It entails separate regulatory procedures set forth in the OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), 2 C.F.R. pt. 180 (2017). That available enforcement option is also similar to the suspension and debarment option available with the federal procurement system. Cf. FAR 9.4.
- Cappalli, supra note 82, at 383.
- Id. at 384.
- See id. at 384, 386.
- 2 C.F.R. § 200.501(a).
- Id. §§ 200.508–.509.
- See CIRCULAR A-133, supra note 95, at 8.
- 2 C.F.R. §§ 200.501-1 (for all agencies except HHS); Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, 45 C.F.R. §§75.500–.501 (2016) (for HHS).
- 2 C.F.R. § 200.510(a).
- Id. § 200.510(b).
- Id. § 200.514(a)–(d).
- Id. § 200.516(a)(3)–(4).
- Id. § 200.516(a)(6).
- Id. § 200.515(d)(1)(i).
- Id. § 200.516(a)(2).
- Id. §§ 200.515(d)(1)(iv), 200.516(a)(1).
- U.S. GOV’T ACCOUNTABILITY OFF., GAO-12-331G, GOVERNMENT AUDITING STANDARDS §§ 7.32–7.38 (2011).
- 2 C.F.R. § 200.511(c).
- Id. § 200.512(a).
- Id. § 200.512(b)–(d).
- Id. § 200.513(c)(3).
- Id. § 200.25.
- 29 C.F.R. § 96.53(b) (2013).
- See DEP’T OF HEALTH & HUMAN SERVS., HHS GRANTS POLICY STATEMENT II-88 (2007).
- 2 C.F.R. § 200.338.
- See supra note 127.
- While the SAA prohibits other general financial audits, it does not prohibit separate programmatic monitoring or agreed upon procedures reviews. 31 U.S.C. §§ 7502–7503 (2012).
- See 42 U.S.C. § 254b(c)(1)(A) (2012) (authorizing community health center grants); 42 C.F.R. § 51c.301 (2007) (setting forth program requirements for grants for community health center operations).
- HEALTH RES. & SERVS. ADMIN., HEALTH CENTER PROGRAM SITE VISIT GUIDE i (2014) [hereinafter HEALTH CENTER PROGRAM SITE VISIT GUIDE]. Another example of direct agency oversight visits are those conducted under the Office of Head Start’s “Aligned Monitoring System.” Introduction to Monitoring, ECLKC, https://eclkc.ohs.acf.hhs.gov/federal-monitoring/article/introduction-monitoring (last visited Oct. 13, 2017).
- HEALTH CENTER PROGRAM SITE VISIT GUIDE, supra note 156, at ii.
- See, e.g., id. (“Site visits will result in a standardized site visit report that provides a comprehensive assessment of the health center’s compliance and/ or performance status . . . . The health center’s BPHC Project Officer will transmit this final site visit report to the health center in a timely manner, after the site visit is completed.”).
- See U.S. DEP’T OF HEALTH AND HUMAN SERVS., HHS GRANTS POLICY STATEMENT II-88 (2007).
- 5 U.S.C. app. § 12 (2012 & Supp. 2016).
- 5 U.S.C. app. § 4(a)(1) (2012 & Supp. 2016).
- Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. § 200.336 (2017) (Access to Records).
- 5 U.S.C. app. § 6(a)(4), (e)(1)–(2) (2012 & Supp. 2016).
- See, e.g., FAQs About OIG Investigations, U.S.DEP’T COMMERCE, https://www.oig.doc.gov/pages/faqs-about-oig-investigations.aspx [https://perma.cc/3K9C-PGA6] (last visited Nov. 17, 2017).
- See U.S. DEP’T OF HEALTH & HUMAN SERVS., HHS OIG WORK PLAN, at iii–iv (2017) [hereinafter HHS OIG WORK PLAN].
- See About the OIG, OIG, https://oig.ssa.gov/about-oig [https://perma.cc/RZ9N-BSX2] (last visited Nov. 17, 2017) (explaining the passage of the Inspector General Act of 1978 in the wake of the Watergate scandal).
- See HHS OIG WORK PLAN, supra note 165, at v.
- 5 U.S.C. app. § 6(a)(4) (2012 & Supp. 2016).
- See, e.g., U.S. DEP’T OF HEALTH & HUMAN SERVS. OFFICE OF INSPECTOR GEN., NORTH DAKOTA CLAIMED SOME UNALLOWABLE MEDICAID PAYMENTS FOR TARGETED CASE MANAGEMENT SERVICES, at iii, 8–9 (2016) (discussing comments provided by the state under review and stating “[a]fter reviewing the State agency’s comments, we maintain that all of our findings and recommendations remain valid.”).
- See, e.g., id. at 9.
- See, e.g., id. at 8 (recommending the Center for Medicare and Medicaid Services (“CMS”) work with OIG to “determine the allowability” of some claims).
- See Introduction supra (excerpt from Cappalli).
- See Tersh Boasberg & Jacqueline C. Leifer, An Update on Federal Agency Recognition of Grantee Due Process Rights, 59WASH. U.L.Q. 1139, 1139 (1982).
- Id. at 1140.
- Id.; see also Robert S. Catz, Due Process and Federal Grant Termination: Challenging Agency Discretion Through a Reasons Requirement, 59WASH. U.L.Q. 1067, 1072 (1982).
- Alissa Marque, A New Appeals Board: Providing Consistency and Clarity in the Growing World of Grants and Cooperative Agreements, 41 PUB. CONT. L.J. 129, 141 (2011) (“multiple agencies implemented internal grant appeal procedures . . . These procedures, however, vary from one agency to another, leaving [grant and cooperative agreement] applicants and recipients vulnerable to different interpretations of government-wide [grant and cooperative agreement] regulations.”).
- In fiscal year 2016, HHS awarded more than $454 billion in federal grant funds. See Agency Profile: Department of Health and Human Services, USASPENDING.GOV, https://www.usaspending.gov/Transparency/Pages/AgencySummary.aspx?AgencyCode=7500&FiscalYear=2016 [https://perma.cc/N92V-TJ5X] (last visited Nov. 17, 2017).
- Boasberg & Leifer, supra note 173, at 1142 (stating that HHS “pioneered this area by voluntarily establishing a Departmental Grant Appeals Board in 1972”); see also PAUL G. DEMBLING & MALCOLM S. MASON, ESSENTIALS OF GRANT LAW PRACTICE § 16.02 (1991) (describing the Department of Health Education and Welfare, predecessor of HHS, as a leading agency in establishing a grant appeals board and citing Richard Cappalli, Model for Case Management: The Grant Appeals Board, 1986 ACUS 663, in support of praise then offered of the Board’s processes).
- 45 C.F.R. § 16.1 (2016).
- Id. pt. 16, app. A.
- Id. § 16.7(a).
- Id. §§ 16.7(b), 16.8(a).
- Id. § 16.8(b)–(c).
- Id. § 16.11(a).
- Id. § 16.11(d).
- U.S. DEP’T OF HEALTH & HUMAN SERVS., APPELLATE DIVISION PRACTICEMANUAL, http://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/practice-manual/index.html?language=en [hereinafter APPELLATE DIVISION PRACTICE MANUAL].
- 45 C.F.R. § 16.14.
- See Prof ’l Counseling Res., Inc., DAB No. 2448, at 8 (2012) (quoting Bedford Stuyvesant Restoration Corp., DAB No. 2141, at 5 (2008) (“The Board is empowered to resolve legal and factual disputes. We cannot provide equitable relief; we are bound by all applicable laws and regulations.”)) (declining to consider equitable factors in a grant disallowance matter).
- APPELLATE DIVISION PRACTICE MANUAL, supra note 187 (“Every appellant that appeals a disallowance has the burden of identifying, documenting, and justifying its claimed costs and hence establishing its defense to the respondent’s disallowance. Thus, in the kind of cases that come before the Board under 45 C.F.R. Part 16, the appellant always bears a general burden of proof.”).
- Id. (citing Texas Health & Human Servs. Comm’n, DAB No. 2187, at 11 n.5, 13 (2008)).
- APPELLATE DIVISION PRACTICE MANUAL, supra note 187.
- See, e.g., Oregon Dep’t of Human Servs., DAB No. 2208, at 11–12 (2008) (The Centers for Medicare and Medicaid Services changing the basis for a disallowance, with permission of the DAB, during the course of the appeal).
- See id. § 50.403 (setting forth applicability); 45 C.F.R. § 16.3(c) (2016) (requiring exhaustion of this preliminary appeal before the DAB will hear a covered case).
- 42 C.F.R. § 50.403.
- See id.; see also APPELLATE DIVISION PRACTICE MANUAL, supra note 187 (“[T]he appellant must have finished any preliminary review process.”).
- 42 C.F.R. § 50.404 (2016).
- Id. § 50.404(a)(4).
- Id. § 50.405 (2016).
- Id. § 50.406(a) (2016).
- Id. § 50.406(g)–(h).
- Id. § 9841(a)(3).
- Head Start Performance Standards Final Rule, 81 Fed. Reg. 61,294, 61,445–46 (Sept. 6, 2016) (amending, among other things, termination procedures applicable to Head Start grants and moving the pertinent rules from 45 C.F.R. § 1303.14 to 45 C.F.R. § 1304.5).
- 45 C.F.R. § 1303.14(d)(2)–(4) (2015).
- Id. § 1303.14(d)(6) (2015).
- See id. § 1303.14(e)(1) (2015) (“The [DAB] sanctions with respect to a grantee’s failure to comply with the provisions of paragraph (d) [setting forth the appeal submission requirements] of this section are as follows . . . If in the judgment of the [DAB] a grantee has failed to substantially comply with the provisions of the preceding paragraphs of this section, its appeal must be dismissed with prejudice. . . .”) (emphasis added).
- See, e.g., Pinebelt Ass’n for Cmty. Enhancement, DAB No. 2611, at 12 (2014) (explaining that when faced with a motion for summary judgment by the Administration for Children and Families in a Head Start termination the appellant “may not rely on general denials in its pleadings or briefs, but must furnish evidence of a genuine dispute concerning a material fact . . . .” (internal quotes and citations omitted)).
- The Administration for Children and Families is the HHS operating division within which the Office of Head Start resides. See What We Do, OFF. HEAD START, https://www.acf.hhs.gov/ohs/about/what-we-do [https://perma.cc/29G5-4HZ9] (last visited Dec. 20, 2017).
- Though only a rough estimate given potential differences in terminology and jurisdictional coverage, a Westlaw search of administrative decision databases within the Departments of Labor (Administrative Review Board), Education, and Health and Human Services for the term “disallowance” results in hits on 124 Department of Labor decisions, 138 Department of Education decisions, and 1,930 Department of Health and Human Services decisions.
- The HHS DAB also adjudicates, among other disputes, certain TANF disputes, HHS OIG fraud and abuse determinations, Corporate Integrity Agreement penalties and exclusions, FDA civil money penalties, and HIPAA civil money penalties. Board Jurisdiction, U.S. DEP’T OF HEALTH & HUMAN SERVS., available at http://www.hhs.gov/sites/default/files/board_jurisdiction.pdf?language=es [https://perma.cc/6NHY-EB4T] (last visited Dec. 20, 2017).
- See Boasberg & Leifer, supra note 173, at 1143 (noting in 1982 that DoL’s procedures were particularly formal).
- See 2 C.F.R. § 2900.22 (2017). A similar election between these two options was provided in DoL’s pre-Uniform Guidance regulations at 29 C.F.R. § 96.63(b) (2013).
- See 2 C.F.R. § 2900.22(a).
- Id. § 2900.22(b).
- Catalog of Federal Domestic Assistance, CFDA.GOV, https://www.cfda.gov/?_so_list_aata345e59a09d0aa1d5eef16228ddd7b4c=250 [https://perma.cc/762T-G8AG] (last visited Dec. 27, 2016).
- U.S. DEP’T OF LABOR, ONE-STOP COMPREHENSIVE FINANCIAL ASSISTANCE MANAGEMENT TECHNICAL ASSISTANCE GUIDE PART II, at II-12-14 (2011).
- Rules of Practice and Procedure for Administrative Hearings Before the Office of Administrative Law Judges, 29 C.F.R. pt. 18 (2016).
- Id. §§ 18.10(b), 18.12(b).
- Id. § 18.10(a).
- Id. §§ 18.55, .60, .64, .65.
- Id. § 18.56.
- Id. § 18.57.
- See, e.g., U.S. Dep’t. of Labor v. City of Detroit, 1995 DoL Sec. Labor LEXIS 8, Secretary’s Decision and Order, at *7 (Dep’t of Labor July 31, 1995) (Secretary of Labor applying Comprehensive Employment and Training Act regulations which place the burden of persuasion on “the party requesting the hearing”); Massachusetts v. U.S. Dep’t of Labor, ARB No. 04-170, ARB’s Decision and Order, at 30–31 (Dep’t of Labor Mar.11, 2005) (applying Job Training Partnership Act regulations which place the burden of persuasion on the grantee); Westchester-Putnam Counties Consortium for Worker Educ. & Training, Inc. v. U.S. Dep’t of Labor, ARB No. 10-081, ARB’s Decision and Order, at 9 (Dep’t of Labor Oct. 18, 2010) (Administrative Review Board decision upholding OALJ disallowance decision and applying Workforce Investment Act regulations which place the burden of persuasion on the grantee).
- 2 C.F.R. § 2900.22(b) (2016).
- Id. § 2900.22(b)(4)–(5).
- According to the DoL OALJ website, the Office also adjudicates disputes relating to civil rights in the area of alien labor certifications and attestations; whistleblower complaints in a variety of regulatory subject matter areas; minimum wage requirements; enforcement actions involving migrant labor working conditions, child labor requirements, and mine safety requirements; and Employee Retirement Income Security Act (“ERISA”) recordkeeping requirements. United States Department of Labor, Office of Administrative Law Judges, U.S. DEP’T LAB., http://www.oalj.dol.gov/ALJMISSN.HTM [https://perma.cc/SBR2-FK2H] (last visited Nov. 17, 2017).
- 2 C.F.R. § 700.15(a) (2017); see also USAID, ADA CHAPTER 303: GRANTS AND COOPERATIVE AGREEMENTS TO NON-GOVERNMENTAL ORGANIZATIONS § 303.3.23 (2017) [hereinafter ADA CHAPTER 303] (providing for disputes involving grants and cooperative agreements to non-governmental organizations).
- Id. § 303.3.23.1.
- Id.; 2 C.F.R. § 700.15(a).
- ADA CHAPTER 303, supra note 228, § 303.3.23.
- Id.; 2 C.F.R. § 700.15(b).
- ADA CHAPTER 303, supra note 228, § 303.3.23.2.
- 235. 2 C.F.R. § 700.15(c).
- Id. § 700.15(d).
- 34 C.F.R. §§ 75.1, 75.901, 81.3 (2017).
- 20 U.S.C. § 1234(a) (2012).
- Id. §§ 1234(a), (e) (2012).
- Id. § 1234(f).
- 34 C.F.R. § 81.6.
- Id. § 81.15.
- Id. § 81.16.
- Id. § 81.37.
- Id. § 81.39.
- Id. § 81.40.
- Id. § 81.41.
- Id. § 81.42.
- Id. § 81.44.
- 34 C.F.R. §§ 668.81, .111 (2016); see also Dep’t of Educ., Organizations, OHA, http://oha.ed.gov/organizations.html [https://perma.cc/8TGT-8H8W] (last visited Nov. 17, 2017).
- Dep’t of Educ., supra note 255.
- 32 C.F.R. § 22.815(c) (2017).
- Id. § 22.815(c)(ii) (stating that if unable to resolve the dispute through “unassisted negotiations the grants officer shall encourage the recipient to enter into ADR procedures” (emphasis added)).
- Id. § 22.815(d).
- Id. § 22.815(e).
- Id. § 22.815(e)(3).
- Id. § 22.815(e)(3)(ii).
- See generally id. § 22.815.
- See STEIN & MITCHELL, supra note 6, § 54.05; see also Financial Assistance Rules, 61 Fed. Reg. 7164, 7172 (Feb. 26, 1996) (promulgating 1996 version of 10 C.F.R. § 600.22 (Disputes and Appeals), which provided for grant dispute appeals to a “Financial Assistance Appeals Board” and referencing then-existing 10 C.F.R. pt. 1024, which set forth the Board’s procedures).
- The disestablishment of the Financial Assistance Appeals Board may be due to the fact that its adjudications were a function of DoE’s Board of Contract Appeals (“DoE BCA”), and the DoE BCA was merged into the CBCA in 2007. See Dep’t of Energy, Delegation Order No. 0204-162 (1996), available at https://www.directives.doe.gov/delegations-documents/204.162.pdf/@@download/file [https://perma.cc/3SM4-SB7H] (assigning financial assistance appeals to the DoE BCA); see also The Board, U.S. CIVILIAN BOARD CONTRACT APPEALS, http://www.cbca.gsa.gov/board/index.html [https://perma.cc/N7S3-2ZE4] (last visited Nov. 17, 2017) (describing the combination of eight agency contract appeals boards into the CBCA in 2007).
- 2 C.F.R. § 910.128(a) (2017).
- Id. § 910.127.
- Id. § 910.128(c).
- Id. § 910.128(d).
- Id. § 910.128(e).
- See generally id. § 910.128.
- 5 U.S.C. § 706(2)(A) (2012).
- See infra Part IV.A.
- See discussion of overview of awards by fiscal year supra note 1.
- See discussion of an overview of awards by fiscal year supra note 1.
- 2 U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-06-382SP, PRINCIPLES OF FEDERAL APPROPRIATIONS LAW 10-117 (3d ed. 2004) [hereinafter GAO-06-382SP, PRINCIPLES OF FEDERAL APPROPRIATIONS LAW]. Of note, the APA is merely a waiver of sovereign immunity and cause of action. The District Court’s jurisdiction is derived from its “federal question jurisdiction” under 28 U.S.C. § 1331 (2012). Cohen v. United States, 650 F.3d 717, 723 (D.C. Cir. 2011) (“Our jurisdiction extends generally to case and controversies involving questions of federal law . . . The APA—a federal law—provides a generic cause of action in favor of persons aggrieved by agency action, though it is not an independent source of jurisdiction.” (internal quotations and citations ommitted)).
- 5 U.S.C. § 702 (2012) (emphasis added).
- See District of Columbia v. United States, 67 Fed. Cl. 292, 303–04 (2005).
- 28 U.S.C. § 1491(a)(1) (2012).
- See discussion of Tucker Act Jurisdiction Based on the Existence of a “Contract” infra Part IV.A.2.
- District of Columbia, 67 Fed. Cl. at 303 (quoting United States v. Testan, 424 U.S. 392, 400 (1976)).
- See GAO-06-382SP, PRINCIPLES OF FEDERAL APPROPRIATIONS LAW, supra note 277, at 10-4 (“a federal grant is a form of assistance authorized by statute”); see, e.g., 42 U.S.C. § 9833 (2012) (Head Start Act provision stating, “[t]he Secretary may, upon application by an agency which is eligible for designation as a Head Start agency . . . provide financial assistance to such agency for a period of 5 years for the planning, conduct, administration and evaluation of a Head Start program [.]”).
- See 2 C.F.R. pt. 200, Subpart E (2017) (setting forth robust cost reimbursement system for grants); 2 C.F.R. § 200.305 (setting forth the government’s payment obligation under grant agreements).
- Bowen v. Massachusetts, 487 U.S. 879 (1988).
- E.g., S. Jay Plager, Money and Power: Observations on the Jurisdiction of the U.S. Court of Federal Claims, 17 FED. CIR. B.J. 371, 374 (2008); Gregory C. Sisk, The Jurisdiction of the Court of Federal Claims and Forum Shopping in Money Claims Against the Federal Government, 88 IND. L.J. 83, 84 (2013) (discussing the “jurisdictional tug-of-war between the [COFC] (under the Tucker Act) and the District Court (under the APA)” in the context of recent Indian tribe breach of trust cases); Nora J. Pasman-Green & Alexis Derrossett, Twenty Years After Bowen v. Massachusetts—Damages or Restitution: When Does It Still Matter? When Should It?, 69 LA. L. REV. 749, 749–50, 780 (2009) (noting that the Supreme Court itself has continued to revisit the Bowen distinction, examining the approaches taken by various lower courts, and concluding that Bowen had at least partially outlived its usefulness); Daniel Thies, The Decline of the Court of Federal Claims in Nebraska Public Power District v. United States, 590 F.3d 1357 (Fed. Cir. 2010), 33HARV. J.L. & PUB. POL’Y 1203, 1204 (2010) (noting that Bowen had received “significant criticism for its unnecessary formalism” and that some lower courts had therefore construed it narrowly, though the Supreme Court had not overruled it, but opining that the Federal Circuit’s decision in the article’s subject case represented a missed opportunity to move more clearly away from the formalism of Bowen).
- Plager, supra note 286. Judge Plager notably wrote the opinion in Suburban Mortgage Ass’n v. United States Department of Housing and Urban Development, 480 F.3d 1116, 1117 (2007), discussed in detail infra Part IV.A.1.
- See Plager, supra note 286, at 373 (“Prior to Suburban one of the judges on our court had opined that we had two choices —either play the verbal games of Bowen or underrule the Supreme Court. In Suburban we suggest a third option . . . start out by asking whether [the] plaintiff can have an adequate remedy in the Court of Federal Claims, the § 704 test . . .”).
- See Bowen, 487 U.S. 879.
- See id. at 909.
- See id. at 888–90.
- See id. at 890.
- Id at 891.
- 5 U.S.C. § 704 (2012) (emphasis added).
- See Bowen, 487 U.S. at 909.
- See id. at 909–10.
- See id. at 904–05.
- See id. at 905.
- See id. at 930 (Scalia, J., dissenting) (“[t]oday’s decision is a potential cornucopia of waste. Since its reasoning cannot possibly be followed where it leads, the jurisdiction of the Claims Court has been thrown into chaos.”).
- See id. at 915–16 (Scalia, J., dissenting).
- Id. at 926 (Scalia, J., dissenting) (citing Montana v. United States, 440 U.S. 147, 157–58, 162–63 (1979)).
- 28 U.S.C. § 1292(d)(4)(A) (2012) (emphasis added).
- See Alaska Airlines v. Johnson, 8 F.3d 791, 796–97 (Fed. Cir. 1993) (holding a district court had jurisdiction over an APA suit that resulted in an order to pay money because the payment was of funds unlawfully withheld by the government); see also District of Columbia v. United States, 67 Fed. Cl. 292, 308–15 (2005) (providing a detailed discussion of the Federal Circuit cases applying Bowen through 2005); cf. Kanemato v. Reno, 41 F.3d 641, 645–46 (Fed. Cir. 1994) (holding plaintiff ’s case belonged in the Court of Federal Claims because it involved a demand for payment in circumstances having only retroactive effect and therefore the relief afforded by the Court of Federal Claims would be “adequate”); Nat’l Ctr. for Mfg. Scis. v. United States, 114 F.3d 196, 200 (Fed. Cir. 1997) (holding plaintiff ’s suit under the APA proper because it was “seeking funds to which it claim[ed] it [was] entitled . . . not seeking money in compensation for losses that it suffered . . .”).
- See Suburban Mortg. Assocs. v. United States, 480 F.3d 1116, 1128 (Fed. Cir. 2007).
- Id. at 1116, 1119.
- Id. at 1122.
- Id. at 1125, 1128.
- Id. at 1125.
- Id. at 1127.
- See, e.g., Virginia v. Johnson, 609 F. Supp. 2d 1, 2 (D.D.C. 2009) (involving a Medicaid disallowance challenge by the Commonwealth of Virginia under the APA with no apparent jurisdictional challenge by the federal government); Kan. Health Policy Auth. v. United States, 798 F. Supp. 2d 162, 164 (D.D.C. 2011) (Medicaid disallowance challenge by an agency of the State of Kansas under the APA with no apparent jurisdictional challenge by the federal government); Va. Dept. of Med. Assistance Servs. v. U.S. Dep’t of Health & Human Servs., 779 F. Supp. 2d 129, 131 (D.D.C. 2011) (Medicaid disallowance challenge by an agency of the Commonwealth of Virginia under the APA with no apparent jurisdictional challenge by the federal government); N.M. Dep’t of Info. Tech. v. U.S. Dep’t of Health & Human Servs., 577 F. Supp. 2d 347, 348–49 (D.D.C. 2008) (Medicaid disallowance challenge by an agency of the State of New Mexico under the APA with no apparent jurisdictional challenge by the federal government); Ga. Dep’t. of Cmty. Health v. U.S. Dep’t of Health & Human Servs., 79 F. Supp. 3d 269, 276 (D.D.C. 2015) (Medicaid disallowance challenge by an agency of the State of Georgia under the APA with no apparent jurisdictional challenge by the federal government).
- See Lummi Tribe of the Lummi Reservation v. United States, 99 Fed. Cl. 584, 584 (2011).
- Id. at 587–88.
- Id. at 586.
- Id. at 594.
- Id. at 596.
- Id. (quoting Bowen v. Massachusetts, 487 U.S. 879, 928 (1988)).
- Id. at 597; see also Cole Cty. Reg’l Sewer Dist. v. United States, 22 Cl. Ct. 551, 555–56 (1991) (distinguishing a grant disallowance case from Bowen and citing Kentucky ex rel. Cabinet for Human Res. v. United States, 16 Cl. Ct. 755 (1989), “and the cases cited therein” for the proposition that the Claims Court had long held jurisdiction over grant disallowance cases).
- Eric M. Fraser et al., The Jurisdiction of the D.C. Circuit, 23 CORNELL J.L. & PUB. POL’Y 131, 137–40 (2013) (“More than 30% of filings in the D.C. Circuit are administrative appeals, compared to 16% nationwide.”); John G. Roberts, Jr., What Makes the D.C. Circuit Different? A Historical View, 92 VA. L. REV. 375, 389 (2006) (“Whatever combination of letters [for an agency acronym] you can put together, it is likely that jurisdiction to review that agency’s decision is vested in the D.C. Circuit.”).
- See Ga. Dep’t. of Cmty. Health v. U.S. Dep’t of Health & Human Servs., 79 F. Supp. 3d 269, 269 (D.D.C. 2015); Kan. Health Policy Auth. v. United States, 798 F. Supp. 2d 162, 163 (D.D.C. 2011); Va. Dep’t of Med. Assistance Servs. v. U.S. Dep’t of Health & Human Servs., 779 F. Supp. 2d 129, 131 (D.D.C. 2011); N.M. Dep’t of Info. Tech. v. U.S. Dep’t of Health & Human Servs., 577 F. Supp. 2d 347, 347 (D.D.C. 2008); Va. Dep’t of Med. Assistance Servs. v. Johnson, 609 F. Supp. 2d 1, 1 (D.D.C. 2009).
- See Mass. Mfg. Extension P’ship v. Locke, 723 F. Supp. 2d 27, 29 (D.D.C. 2010).
- See id. at 32.
- Tex. Neighborhood Servs. v. U.S. Dep’t of Health & Human Servs., 172 F. Supp. 3d 236 (D.D.C. 2016).
- Id. at 242–43.
- See, e.g., W. Va. Dep’t of Health & Human Res. v. Sebelius, 709 F. Supp. 2d 487 (S.D. W.Va. 2010) (Medicaid disallowance challenge by an agency of the State of West Virginia under the APA with no apparent jurisdictional challenge by the federal government); Pennsylvania v. Sebelius, No. 09-808, 2010 WL 4053848, at *1 (W.D. Pa. Oct. 14, 2010), aff ’d 674 F.3d 139 (3d Cir. 2012) (Commonwealth of Pennsylvania challenge to an Aid to Families with Dependent Children program disallowance under the APA with no apparent jurisdictional challenge); New York ex rel. Office of Children & Family Servs. v. U.S. Dep’t of Health & Human Servs. Admin. for Children & Families, 556 F.3d 90 (2d Cir. 2009) (appeal of district court action in which New York employed the APA to challenge the disallowance of certain foster care maintenance payments under a federal foster care and adoption assistance program).
- Disability Rights Ctr. of Kan., Inc. v. Leavitt, No. 07-2333-JTM, 2009 WL 395212, at *1 (D. Kan. 2009).
- Shiprock Associated Schs., Inc. v. United States, 934 F. Supp. 2d 1311 (D.N.M. 2013).
- Id. at 1315, 1324.
- R&B Receivables Mgmt. Corp. v. United States HHS, No. 15-C-8109, 2016 U.S. Dist. LEXIS 130599 (N.D. Ill. 2016).
- Id. at *1–15.
- Id. at *6, *13–14.
- Id. at *14–17.
- See, e.g., Bowen v. Massachusetts, 487 U.S. 879, 930 (1988) (Scalia, J., dissenting) (“Nothing is more wasteful than litigation about where to litigate, particularly when the options are all courts within the same legal system that will apply the same law.”). Note also that, in the wake of United States v. Tohono O’odham Nation—in which the Supreme Court held that if two cases arise out of the same factual circumstances, regardless of the legal theories advanced, 28 U.S.C. § 1500 would require dismissal of the suit in the COFC if suit were pending in district court—a plaintiff has considerably less flexibility to protect its interests by filing both in the COFC and district court. See Sisk, supra note 286, at 131–34 (discussing United States v. Tohono O’odham Nation, 131 S. Ct. 1723, 1727–31 (2011)).
- Texas v. United States, 537 F.2d 466 (Ct. Cl. 1976).
- Manassas Park v. United States, 224 Ct. Cl. 515 (1980).
- See Texas, 537 F.2d at 471; Manassas Park, 224 Ct. Cl. at 520 (“Our leading recent case on grant agreements, [Texas], holds that such an agreement is a contract enforceable in this court, but in such enforcement the government is bound only by its express undertakings.”).
- Thermalon Industries v. United States, 34 Fed. Cl. 411, 413 (1995).
- Trauma Service Group v. United States, 104 F.3d 1321, 1326 (Fed. Cir. 1997), affirming Trauma Serv. Grp. v. United States, 33 Fed. Cl. 426 (1995).
- Thermalon Indus., 34 Fed. Cl. at 413, 415.
- Trauma Serv. Grp., 33 Fed. Cl. at 429–30.
- Trauma Serv. Grp., 104 F.3d at 1326.
- See, e.g., D’Andrea Bros. LLC v. United States, 96 Fed. Cl. 205, 214 (2010) (Firestone, J., applying this standard to a Cooperative Research and Development Agreement (“CRADA”) to find that it was a contract for purposes of Tucker Act jurisdiction); United States v. President & Fellows of Harvard Coll., 323 F. Supp. 2d 151, 164–65 (D. Mass. 2004) (in which the court applied this standard to conclude a cooperative agreement was a binding contract under which the federal government could sue for breach); Higgins v. United States, No. 12-922C, 2013 U.S. Claims LEXIS 2147, at *3 (Fed. Cl. 2013) (treating a federal grant as a contract enforceable under Tucker Act jurisdiction).
- See Pa. Dep’t of Pub. Welfare v. United States, 48 Fed. Cl. 785 (2001).
- See Medicaid State Plan Amendments, MEDICAID.GOV, https://www.medicaid.gov/state-resource-center/medicaid-state-plan-amendments/medicaid-state-plan-amendments.html [https://perma.cc/9QU2-X7R2] (last visited Dec. 28, 2016) (“A Medicaid and CHIP state plan is an agreement between a state and the [f]ederal government describing how that state administers its Medicaid and CHIP programs. It gives an assurance that a state will abide by [f]ederal rules and may claim [f]ederal matching funds for its program activities.”).
- See Pa. Dep’t of Pub. Welfare, 48 Fed. Cl. at 788–89.
- Rick’s Mushroom Serv., Inc. v. United States, 76 Fed. Cl. 250 (2007), aff ’d 521 F.3d 1338, 1340 (Fed. Cir. 2008).
- Id. at 258, aff ’d 521 F.3d 1338, 1340 (Fed. Cir. 2008).
- Rick’s Mushroom Serv., 521 F.3d at 1343–44. Notably, the COFC and Court of Appeals in this case seem to have been preoccupied with the distinction between procurement contracts and cooperative agreements because the plaintiff attempted to justify jurisdiction by asserting its suit was brought under the CDA, seemingly to avoid a requirement to exhaust administrative remedies otherwise applicable to its claim. Rick’s Mushroom Serv., 76 Fed. Cl. at 254–56. Had the plaintiff exhausted those administrative prerequisites, and not attempted to invoke the CDA, it seems likely it would have prevailed in its contract-based jurisdictional argument.
- Just three years prior to Rick’s Mushroom Service, in San Juan City College v. United States, the Federal Circuit had reiterated in a non- procurement contract dispute involving an agreement with no specific terms relating to damages that there is a general presumption that damages are available in a breach of contract action before COFC. San Juan City Coll. v. United States, 391 F.3d 1357, 1361 (Fed. Cir. 2004) (“The fact that this contract covers government financial grants does not warrant a different standard. If the government has breached the Agreement, the College is entitled to seek whatever damages it is entitled to receive. As this [c]ourt has stated, ‘in the area of government contracts, as with private agreements, there is a presumption in the civil context that a damages remedy will be available upon the breach of an agreement.’ ” (quoting Sanders v. United States, 252 F.3d 1329, 1334 (Fed. Cir. 2001)).
- 5 U.S.C. § 704 (2012) (specifying only “final agency action” is reviewable under the APA).
- See Bastek v. Fed. Crop Ins. Corp., 145 F.3d 90, 93–94 (2d Cir. 1998).
- See, e.g., id. at 93–95 (2d Cir. 1998) (holding that where there was a statutory requirement to exhaust administrative appeals and plaintiffs failed to do so, plaintiffs’ suit in district court was barred, and acknowledging that plaintiffs would be left without relief because the statute of limitations had since run on the administrative appeals).
- STEIN & MITCHELL, supra note 6, § 43.02 (“as a general rule, the courts will not consider issues raised for the first time on appeal”); see, e.g., W. Va. Dep’t of Health & Human Res. v. Sebelius, 709 F. Supp. 2d 487, 493–94 (S.D. W.Va. 2010) (holding the plaintiff to have waived arguments not raised before the HHS DAB in a Medicaid disallowance dispute under the APA); Franklin Cty. Emp’t & Training Admin. v. Donovan, 707 F.2d 41, 44–45 (2d Cir. 1983) (“We perceive no reason peculiar to this appeal to depart from the general rule that all issues which a party contests on appeal must be raised at the appropriate time under agency practice.”).
- See supra Part III.A.2.ii.
- See White & Case LLP v. United States, 67 Fed. Cl. 164 (2005).
- Id. at 170 (quoting McCarthy v. Madigan, 503 U.S. 140, 145 (1992)) (“In a prudential exhaustion case, exhaustion of administrative remedies is often required where the ‘twin purposes of protecting administrative agency authority and promoting judicial efficiency’ are served.”).
- Id. (quoting Gibson v. Berryhill, 411 U.S. 564, 576 n.14 (1973)).
- Id. at 171 (citing McCarthy, 503 U.S. at 148).
- See discussion of Bennett v. Ky. Dep’t of Educ., 470 U.S. 656 (1985), infra Part IV.C.1.
- Thomas W. Merrill & Kristin E. Hickman, Chevron’s Domain, 89 GEO. L.J. 833, 838 (2001) (“By and large, the history of the Chevron doctrine has been one of triumphal expansion.”); see also 3 STEVEN A. CHILDRESS & MARTHA S. DAVIS, FEDERAL STANDARDS OF REVIEW § 17.02 (4th ed. 2010).
- See infra Part IV.C.2 (discussion of the COFC standard of review).
- CAPPALLI, supra note 7, at 54; Cappalli, supra note 82, at 379–80.
- See Bennett v. Ky. Dep’t of Educ., 470 U.S. 656 (1985).
- Id. at 669.
- See, e.g., Mass. Dep’t of Educ. v. U.S. Dep’t of Educ., 837 F.2d 536, 541–43 (1st Cir. 1988). Only three years after Bennett v. Kentucky Department of Education, in a suit brought by the Commonwealth of Massachusetts to contest a Department of Education disallowance, the First Circuit afforded the federal defendant Chevron deference in its interpretation of a program statute that set forth specific requirements relating to the period for which the grant funds were available for obligation, although the agency appears to have asserted its interpretation only in the form of the disallowance and its subsequent litigation position. Id.
- New York v. Shalala, No. 96 Civ. 1330, 1996 U.S. Dist. LEXIS 2261, at *28 (S.D.N.Y. Feb. 28, 1996) (quoting Himes v. Shalala, 999 F.2d 684, 689 (2d Cir. 1993)) (“Courts have found deference especially due ‘the Secretary’s position with respect to legislation as intricate as [Medicaid].’”).
- Id. at *36 (quoting Udall v. Tallman, 380 U.S. 1, 16–17 (1965)) (“A court may overturn an agency’s interpretation of its own regulation only if that interpretation is ‘plainly erroneous.’ ”); Colo. Dep’t of Labor & Emp’t v. U.S. Dep’t of Labor, 875 F.2d 791, 797 (10th Cir. 1989) (“we . . . give considerable deference to an agency’s interpretation of its own regulations”); Merrill & Hickman, supra note 364, at 850 n.87 (stating that most courts apply only Seminole Rock deference to agency interpretations of their own regulations, but acknowledging Chevron is sometimes cited when rendering such deference).
- Bennett v. Ky. Dep’t of Educ., 470 U.S. at 669.
- Id. at 670 (quoting Chevron U.S.A. Inc. v. Nat. Res. Council, Inc., 467 U.S. 837, 844 (1984) in a limiting way, “We find it unnecessary here to adopt the [g]overnment’s suggestion that the Secretary may rely on any reasonable interpretation of the requirements of Title I to determine that previous expenditures violated the grant conditions. . . . In this particular context, we are reluctant to conclude that the States guaranteed that their performance under the grant agreements would satisfy whatever interpretation of the terms might later be adopted by the Secretary so long as that interpretation is not ‘arbitrary, capricious, or manifestly contrary to [Title I].’ ”); see also Richard B. Cappalli, Restoring Federalism Values in the Federal Grant System, 19URB. LAW. 493, 497 (1987) (interpreting the holding of Bennett v. Kentucky Dep’t of Education as limiting federal interpretive authority in 1987, only two years after the Supreme Court issued the opinion).
- See Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1 (1981).
- Id. at 17.
- See Bennett v. New Jersey, 470 U.S. 632 (1985).
- Bennett v. Ky. Dep’t of Educ., 470 U.S. at 669.
- Bennett v. New Jersey, 470 U.S. at 640–41.
- Id. at 639.
- See Peter J. Smith, Pennhurst, Chevron, and the Spending Power, 110 YALE L.J. 1187, 1188–89 (2001).
- David F. Engstrom, Drawing Lines Between Chevron and Pennhurst: A Functional Analysis of the Spending Power, Federalism, and the Administrative State, 82 TEX. L. REV. 1197, 1216–17 (2004).
- Smith, supra note 381, at 1190–91.
- Id. at 1240, 1245.
- Id. at 1191.
- Engstrom, supra note 382, at 1204.
- Id. at 1206.
- Id. at 1207.
- Notably, a more restrictive contract-like view seems also to currently have favor with the Supreme Court. The Pennhurst contract analogy has been revived recently in two major Supreme Court cases, National Federation of Independent Business v. Sebelius (“NFIB”) and Armstrong v. Exceptional Child Center, Inc. In 2012 in NFIB, the combined majority relied heavily on the Pennhurst contract analogy and associated requirement that acceptance of terms must be knowing and voluntary to declare a provision of the Patient Protection and Affordable Care Act (“PPACA”) that would permit the Secretary of HHS to revoke existing Medicaid funding from states that did not expand Medicaid in the manner required under PPACA unconstitutional. Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 584 (2012) (Roberts, J., quoting Pennhurst, “ ‘[t]hough Congress’ power to legislate under the spending power is broad, it does not include surprising participating States with postacceptance or ‘retroactive’ conditions.’ ”); id. at 676 (Scalia, J., dissenting) (concurring with Roberts on this issue and relying on Pennhurst for the proposition, “conditions must be unambiguous so that a State at least knows what it is getting into”). Similarly, in 2015 in Armstrong, in support of its conclusion that equitable remedies were not available to a plaintiff attempting to enforce a Medicaid funding condition against a state grantee, the Court invoked the grant- ontract analogy, explaining, “First, the sole remedy Congress provided for a State’s failure to comply with Medicaid’s requirements—for the State’s ‘breach’ of the Spending Clause contract—is the withholding of Medicaid funds by the Secretary of Health and Human Services.” Armstrong v. Exceptional Child Ctr., 135 S. Ct. 1378, 1385 (2015).
- 41 U.S.C. § 7104(b)(4) (2012).
- JOHN CIBINIC, JR., RALPH C. NASH, JR. & JAMES F. NAGLE, ADMINISTRATION OF GOVERNMENT CONTRACTS 213 (5th ed. 2016).
- Id. at 214 (quoting Sturm v. United States, 421 F.2d 723, 727 (1970)).
- See discussion of Bennett v. New Jersey, 470 U.S. 632 (1985) supra Part IV.C.1.i.
- Merrill & Hickman, supra note 364, at 849–52.
- See, e.g., Virginia v. Johnson, 609 F. Supp. 2d 1, 9 (D.D.C. 2009) (quoting Chevron U.S.A. Inc. v. Nat. Res. Council, Inc., 467 U.S. 837, 843 (1984)) (in a Medicaid disallowance, applying Chevron deference analysis to the HHS DAB’s decision as opposed to any underlying regulation or sub-regulatory guidance, instructing, “[g]iven its agreement that the statute is dense and provides no clarity here, the Court will move directly to step two of the Chevron analysis, i.e., whether the DAB’s position was ‘based on a permissible construction of the statute.’ ”).
- Merrill & Hickman, supra note 364, at 849–52 (noting Chevron’s relentless expansion and listing fourteen outstanding questions about Chevron application, including, importantly for grant disputes, whether Chevron applies to an agency’s interpretation of its own regulations, whether Chevron applies to an agency’s interpretation issued in an adjudication, and whether Chevron applies to an agency’s interpretation issued as a non-legislative interpretive rule); see also id. at 835 (“Throughout most of the post-Chevron period, the Supreme Court and the courts of appeals have paid little attention to the problem of defining the scope of the Chevron doctrine. The most the Supreme Court has had to say on the subject is that Chevron applies whenever an agency is ‘charged with administering’ a federal statute”); Smith, supra note 381, at 1188 (acknowledging pervasiveness of ChevonChevron analysis in administrative law); Engstrom, supra note 382, at 1211 (“While Pennhurst’s clear-statement rule is a lone and little-used exception in a jurisprudence that has left Congress’s spending power largely unconstrained, the Court’s decision in [Chevron] dominates modern administrative law.”).
- See, e.g., Udall v. Tallman, 380 U.S. 1, 16 (1965); cases cited supra notes 375–77. Also, as recently as 2011, the Third Circuit applied considerable deference to an HHS DAB Medicaid disallowance decision in Pennsylvania Department of Public Welfare v. United States HHS, explicitly stating “Our review of whether an administrative board committed an abuse of discretion is governed by Chevron . . .” and instructing that the court “ ‘need not conclude that the agency construction was the only one it permissibly could have adopted to uphold the construction, or even the reading the court would have reached if the question initially had arisen in a judicial proceeding.’ ” Pa. Dep’t of Pub. Welfare v. United States Dep’t of Health & Human Servs., 647 F.3d 506, 511 (3d Cir. 2011) (quoting Chevron, 467 U.S. at 843 n.11).
- New York v. Shalala, No. 96 Civ. 1330, 1996 U.S. Dist. LEXIS 2261, at *37 (S.D.N.Y. Feb. 28, 1996).
- Id. at 36 (citing 5 U.S.C. § 706(E) (2012)); Citizens to Preserve Overton Park, 401 U.S. 402, 414 (1971); Minnesota v. Heckler, 718 F.2d 852, 860 (8th Cir. 1983)) (quoting Nat’l Labor Relations Bd. v. Springfield Hosp., 899 F.2d 1305, 1310 (2d Cir. 1990)) (emphasis added).
- See, e.g., Pa. Dep’t of Pub. Welfare v. United States, No. 09-811, 2010 U.S. Dist. LEXIS 49644, at *7 (W.D. Pa. May 19, 2010), aff’d Pennsylvania v. United States, 419 Fed. App’x 181, 184 (3d Cir. 2011) (quoting Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 743–44 (1985) (instructing that in judicial review under the APA, “a reviewing court’s only task ‘is to apply the appropriate APA standard of review to the agency decision based on the record the agency presents to the reviewing court’ ”).
- See Shalala, 1996 U.S. Dist. LEXIS 2261, at *15, *21 (striking affidavits submitted by plaintiff for the first time upon judicial review and instructing “[j]udicial review of agency action is generally limited to review of the full administrative record that was before the agency at the time it rendered its decision”).
- See discussion of Commission on Government Procurement supra Part I.A.
- 5 U.S.C. § 706(2)(A) (2012).
- New York v. Shalala, 959 F. Supp. 614, 621 (S.D.N.Y. 1997) (quoting Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)); see also Conn. Dep’t of Children & Youth Servs. v. Dep’t of Health & Human Servs., 788 F. Supp. 573, 577 (D.D.C. 1992).
- Ga. Dep’t of Cmty. Health v. U.S. Dep’t of Health & Human Servs., 79 F. Supp. 3d 269, 277 (D.D.C. 2015) (quoting Motor Vehicle Mfrs. Ass’n of U.S., 463 U.S. at 43).
- See Shalala, 959 F. Supp. at 621 (citing Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971)); Conn. Dep’t of Children & Youth Servs., 788 F. Supp. at 577.
- See, e.g., Tex. Neighborhood Servs. v. U.S. Dep’t of Health & Human Servs., 172 F. Supp. 3d 236, 242 (D.D.C. 2016) (relying on the grantee’s burden to support questioned costs and the standards of “adequate documentation” and “reasonableness” to afford the DAB substantial deference in its determination).
- See discussion of HHS DAB procedures supra Part III.A.1.
- See discussion of Commission on Government Procurement’s examination of procurement disputes supra Part I.A.2.
- See discussion of Bennett v. Ky. Dep’t of Educ., 470 U.S. 656, 669 (1985), Bennett v. New Jersey, 470 U.S. 632, 641 (1985), Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 17 (1981), and Chevron U.S.A. Inc. v. Nat. Res. Council, Inc., 467 U.S. 837, 843 (1984), supra Part IV.
- See CHILDRESS & DAVIS, supra note 364, § 15.02 (“The breath of this [§ 706] grant is restricted, however . . . by the attitudes of the courts themselves.”); id. (“[A]lthough the general rule in dealing with questions of law is that under the statutes and by common law, courtsare to apply de novo review, that rule may have no place in statutory construction, and in any event, is considerably softened or even abandoned in consideration of other law questions. In the administrative law setting, de novo review now seems ruled by the application of principles of great deference.”).
- 5 U.S.C. § 706 (2012).
- See Cty. of Suffolk v. United States, 19 Cl. Ct. 295 (1990).
- Id. at 295.
- Id. at 299.
- See Fallsburg v. United States, 22 Cl. Ct. 633 (1991).
- Id. at 635, 642.
- See discussion of Bennett v. Ky. Dep’t of Educ., 470 U.S. 656, 669 (1985), supra Part IV.C.1.i.
- See Fallsburg, 22 Cl. Ct. at 641–42.
- Id. at 642.
- Bennett v. Kentucky Dep’t of Educ., 470 U.S. at 670.
- See San Juan City Coll., Inc. v. United States, 58 Fed. Cl. 26, 30 (2003).
- Id. at 32 (quoting Bennett v. Kentucky Dep’t of Educ. 470 U.S. at 669).
- San Juan City Coll. v. United States, 391 F.3d 1357, 1362 (Fed. Cir. 2004).
- Id. at 1361–62.
- San Juan City Coll. v. United States, 74 Fed. Cl. 448, 453 n.5 (2006).
- Whether the available standard of review might be different when bringing suit before the COFC under the “money mandating statute” prong of Tucker Act jurisdiction is unclear. In Lummi Tribe of the Lummi Reservation v. United States, the court appears to proceed de novo, but the issue is not squarely addressed. See Lummi Tribe of the Lummi Reservation v. United States, 99 Fed. Cl. 584, 584 (2011).
- See discussion of Commission on Government Procurement supra Part I.A.2.
- See discussions of Bowen-Suburban Mortgage distinction and COFC “contract” jurisdiction, supra Part IV.A.
- See discussion of district court standard of review supra Part IV.C.1.
- See discussion of COFC standard of review supra Part IV.C.2.
- Id. at 59.
- 41 U.S.C. § 7103(g) (2012).
- Id. § 7105 (2012).
- Id. § 7104(a)–(b) (2012).
- Id. § 7104(b)(4).
- Id. § 7107(a)(1)(A) (2012).
- Id. § 7102(a) (2012).
- Id. § 7103(a)(3) (2012).
- This independent source of authority for boards of contract appeals is perceived by some as having enhanced the likelihood that the boards would act independently of the agencies in which they were housed. See Michael J. Schaengold & Robert S. Brams, Choice of Forum for Government Contract Claims: Court of Federal Claims vs. Board of Contract Appeals, 17 FED. CIR. B.J. 279, 283–84 (2008) (citing various federal court and board decisions for the proposition that “[u]nder the CDA, the boards are established as ‘independent, quasi-judicial’ forums that do not act as representatives of and, in fact, are ‘quite distinct from’ their respective procuring agencies”).
- 41 U.S.C. § 7105(f) (2012).
- Id. § 7105(e); see also Schaengold & Brams, supra note 445, at 283–84.
- See discussion of Commission on Government Procurement supra Part I.A.
- See Schaengold & Brams, supra note 445, at 284.
- Id. at 287–88.
- See discussion of Tucker Act jurisdiction under money-mandating statutes supra Part IV.A; see also discussion of Bennett v. Ky. Dep’t of Educ., 470 U.S. 656 (1985), supra Part IV.C.1.i; discussion of appeals under the Head Start Act supra Part III.A.2.ii.
- See, e.g., Pa. Dep’t of Pub. Welfare v. Heckler, 730 F.2d 923, 925 (3d Cir. 1984) (discussing special statutory dispute procedures set forth in Aid to Families with Dependent Children (“AFDC”) program, including direct appellate court review of certain final decisions).
- See, e.g., Dep’t of Educ. v. Bennett, 872 F.2d 303, 306 (9th Cir. 1989) (applying a “substantial evidence” standard in review of a Department of Education disallowance, where the standard of review was prescribed for the grant program under 20 U.S.C. § 1234).
- See discussion of Head Start grant termination appeals supra Part III.A.2.ii.
- See discussion of SAA supra Part I.C.
- See discussion of SAA supra Part I.C (discussing 31 U.S.C. §§ 7502(a)(2)(A)(ii), 7503(a), and 7506).
- See discussion of HHS DAB, DoL OALJ, and ED OALJ supra at Parts III.A, III.B.
- 41 U.S.C. § 7102 (2012).
- Id. § 7103 (2012).
- Id. § 7105 (2012).
- Kipps, Kindness & Hamrick, supra note 51, at 591.
- 41 U.S.C. § 7104 (2012).
- Id. § 7107 (2012).
- Id. § 7104(a),(b).
- Id. Id. § 7104(b)(4).
- See Summary of Administrative Review supra Part III.C; see also discussion of Exhaustion supra Part IV.B.3.
- See discussion of Standards of Review supra Part IV.C.
- See discussion of Standards of Review supra Part IV.C.
- 28 U.S.C. § 1295(a)(3) (2012).
- See, e.g., CMS Contract Mgmt. Servs. v. Mass. Hous. Fin. Agency, 745 F.3d 1379, 1381 (Fed. Cir. 2014); Hymas v. United States, 810 F.3d 1312, 1314 (Fed. Cir. 2016) (considering the status of grants and cooperative agreements within the broader system of federal agency spending).
- 41 U.S.C. §§ 7106(b), 7108, 7109 (2012).
- 41 U.S.C. § 7103(b), (c)(1), (h) (2012).
- See supra Introduction.
- CAPPALLI, supra note 7, at 11.
- See supra Introduction.
- See discussion supra Part I.C.
- See discussion of Commission on Governmentt Procurement and the Contract Disputes Act supra Part I.A.2; see also discussion of CDA supra Part V.
- Kipps, Kindness, & Hamrick, supra note 51, at 585.