Office of Administrative Law Judges; Intent to Compromise a Claim, Resource, Inc.

DEPARTMENT OF EDUCATION

Office of Special Education and Rehabilitative Services

Office of Administrative Law Judges; Intent to Compromise a

Claim, Resource, Inc.

AGENCY: Department of Education.

ACTION: Notice of intent to compromise a claim.

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SUMMARY: The Department intends to compromise a claim against Resource,

Inc. now pending before the Office of Administrative Law Judges (OALJ),

Docket No. 94-103-R (20 U.S.C. 1234a(j)).

DATES: Interested persons may comment on the proposed action by

submitting written data, views, or arguments on or before May 30, 1995.

ADDRESSES: All comments concerning this notice should be addressed to

Jeffrey B. Rosen, Office of the General Counsel, U.S. Department of

Education, 600 Independence Avenue SW., Room 5411, FB-10B, Washington,

D.C. 20202-2242.

FOR FURTHER INFORMATION CONTACT: Jeffrey B. Rosen. Telephone: (202)

401-6009. Individuals who use a telecommunications device for the deaf

(TDD) may call the Federal Information Relay Service (FIRS) at 1-800-

877-8339 between 8 a.m. and 8 p.m., Eastern time, Monday through

Friday.

SUPPLEMENTARY INFORMATION: In September 1991 the Rehabilitation

Services Administration (RSA), U.S. Department of Education (ED),

conducted a compliance review of the grantee, Resource, Inc., in

accordance with the Rehabilitation Act of 1973, as amended (the Act),

and ``RSA Procedures for the Recovery of Disallowed Costs Identified

Through Program Monitoring Activities'' (Information Memorandum RSA-IM-

92-04). The review covered the grantee's performance during fiscal year

1991 under a Projects With Industry (PWI) program grant authorized

under Title VI of the Act, 29 U.S.C 795g. RSA issued a Final Monitoring

Report on March 24, 1992.

Based upon this monitoring report, the Regional Commissioner,

Region V, RSA, and the Director, Grants Division, Grants and Contracts

Service, issued a Notice of Disallowance Decision (NDD) on May 31,

1994, in which Resource, Inc. was requested to repay $218,517 of funds

misspent under Title VI of the Act. A total of $204,416 was disallowed

because the grantee did not meet the requisite cost sharing or matching

requirement under the PWI program. In addition, ED disallowed $115,585

for the failure of the grantee to keep time distribution records for

its employees who worked on the PWI program. However, because $101,484

of these funds were included in the prior disallowance, the total cost

disallowance ($218,517) was less than the total of the costs disallowed

for each of the two findings. On June 30, 1994 Resource, Inc. filed an

appeal of the NDD with the OALJ.

On November 17, 1994 ED filed a Notice of Reduction of Claim

notifying the OALJ that, based upon new information submitted by the

grantee, the first issue concerning the matching requirement was

resolved. Thus, the total amount outstanding in the appeal was reduced

to $115,585, which is covered by the Settlement Agreement.

Under the terms of the proposed agreement, Resource, Inc. owes ED a

total of $31,682. The grantee has agreed to make payment in 2

installments over a 1-year period, the first payment to be made within

30 days of execution of the agreement by ED. Resource, Inc. would be

assessed interest at a rate of three percent per year if both

installment payments are not made in a timely fashion. Failure to make

timely payments within 40 days of the due dates would result in a late

payment fee of 10 percent of the principal. Finally, under the

agreement, the parties would jointly move for dismissal of the appeal.

For the following reasons, ED recommends approval of the proposed

Settlement Agreement.

There is clearly a litigation risk in attempting to uphold the

original finding. The evidence presented by Resource, Inc. demonstrates

that the employees in question worked a substantial portion of the time

on the PWI grant. While Resource, Inc. clearly had an obligation to

keep time distribution records, its evidence, which often was less

reliable and circumstantial, could persuade an administrative law judge

or a Federal court to rule in substantial part or in full for its

position.

Resource, Inc. has agreed to repay $31,682. Based upon the

foregoing, ED believes that it is prudent to accept the settlement

offer, which represents a recovery of over 27 percent of the original

costs disallowed in the PDD for this finding. If this issue is not

settled, ED will incur further litigation costs, and there will be some

litigation risk during the administrative process. Moreover, Resource,

Inc. also would have the right to appeal any decision to the U.S. Court

of Appeals. See 20 U.S.C. 1234g. In addition, the grantee has certified

in the Settlement Agreement that it is presently in compliance with the

time distribution requirements that gave rise to the disallowance at

issue in this agreement.

After weighing the risks in litigating the issue that is the

subject of the settlement, it is ED's assessment that the proposed

Settlement Agreement is the most advantageous resolution.

The public is invited to comment on the ED's intent to compromise

this claim. Additional information may be obtained by writing to

Jeffrey B. Rosen at the address given at the beginning of this notice.

Program Authority: 20 U.S.C. 1234a(j) (1990).

Dated: April 7, 1995.

Donald R. Wurtz,

Chief Financial Officer.

[FR Doc. 95-9050 Filed 4-12-95; 8:45 am]

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