10-008311 Tampa Bay Workforce Alliance, Inc. vs. Agency For Workforce Innovation Status: Closed Recommended Order on Friday, August 12, 2011.

Summary: Petitioner met burden of proving propriety of some, but not all, of the grant funds it expended.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

TAMPA BAY WORKFORCE )

ALLIANCE, INC. , )

)

Petitioner , )

)

vs. ) Case No. 10 - 8311

)

AGENCY FOR WORKFORCE )

INNOVATION , )

)

Respondent . )

)

RECOMMEN DED ORDER

Pursuant to notice to all parties, a final hearing was

conducted in this case commencing on June 7, 2011 , in Tampa,

Florida, then continuing via video teleconferencing on June 8,

2011, with sites in Tallahassee and Tampa, Florida, before

Admini strative Law Judge R. Bruce McKibben of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Charles M. Harris, Jr., Esquire

Stephanie Smith Leuthauser, Esquire

Trenam, Kemker, Scharf, Barkin,

Frye, O'Neill & Mullis, P.A.

Bank of America Tower, Suite 1600

200 Central Avenue

St. Petersburg, Florida 33 701

For Respondent: Karen S. Bishop, Esquire

A gency for Workforce Innovation

The Caldwell Building, MSC 110

107 East Madiso n Street

Tallahassee, Florida 32399 - 4128

STATEMENT OF THE ISSUE

The issue in this case is whether certain enumerated

expenditures by Petitioner, Tampa Bay Workforce Alliance, Inc.

("TBWA"), were compliant with governing rules , and, if not,

whether t he expended funds must be repaid to Respondent, Agency

for Workforce Innovation (the "Agency").

PRELIMINARY STATEMENT

In November 2009 , the Agency's i nspector g eneral began an

investigation of spending practices at TBWA. The investigation

was predicated o n informational reports suggesting that TBWA may

have misused federal funds. The investigation was conducted in

two tiers. The first tier addressed food purchases; the second

tier addressed expenditures for activities, meetings,

sponsorships, and the pur chase of promotional materials by TBWA.

A Final Determination letter was issued by the Agency on

July 14, 2010, resulting in a finding of $147,128.18 of

disallowed costs. TBWA is contesting $125,834.75 of the

disallowed costs, claiming they are allowable costs and should

be approved.

At the final hearing, TBWA called one witness: Edward

Peachey, p resident and chief executive officer ("CEO") of TBWA. 1/

TBWA offered the following exhibits, which were admitted into

evidence: 1, 10 through 16, and 19 throu gh 21. Official

recognition was taken of Exhibits 17 and 2 2 .

The Agency called five witnesses: Lois Scott, program

manager; James Mathews, i nspector g eneral; Philip Wilcox,

investigations manager; Laura McKinley, early learning coalition

specialist; and Kevin Thompson, director of A dministration. The

Agency 's Exhibits 1 through 4, 7, 8, and 11 were admitted into

evidence.

A transcript of the final hearing was ordered by the

parties. The T ranscript was filed at the Division of

Administrative Hearings on July 13, 2011. By rule, parties were

allowed ten days to submit p roposed r ecommended o rders . Each

party timely submitted a Proposed Recommended Order , and each

was duly considered in the preparation of this Recommended

Order.

FINDINGS OF FACT

1. Flo rida's workforce system is a unique three - tiered

system governed by state and federal law. The Agency is the

workforce strategy and policy - setting board for the statewide

workforce system. It provides oversight to 24 regional

workforce boards in designin g and implementing programs to

develop a skilled workforce. TBWA is one of those 24 regional

workforce boards.

2. The Agency is the state administrative entity

responsible for the receipt and distribution of federal

workforce grant funds. The Agency rec eives funds from the

U.S. Departments of Labor, Health and Human Services, and

Agriculture. Those funds are distributed to the 24 regional

boards for use in the performance of their services. Grant

funds must be expended in compliance with state and fede ral

guidelines.

3. TBWA receives grants through the Workforce Investment

Act, which serves adult, youth, and dislocated workers , and

through the Wagner - Peyser Act, which funds Florida's job

exchange which matches employers with job seekers. On an annual

basis, TBWA receives grants from: Workforce Investment Act

Cluster, which covers adult, youth, and dislocated workers,

economically - disadvantaged adults and youth; Employment Services

Cluster; and Welfare Transition Program grants, which are funded

from a block grant and are focused on training and job

assistance for individuals receiving government financial

assistance. TBWA also receives grants targeted to veterans.

4. TBWA provides a variety of services in its geographical

area to persons seeking jobs and to employers seeking employable

workers. TBWA operates four one - stop career centers in the

Tampa Bay area. These are places where job - seekers can access a

variety of employment and training services. The one - stop

career centers provide job search, referral, and placement

assistance; career counseling and educational planning; support

services, including child care and transportation assistance to

gain employment; employability skills training; adult education

and basic skills training; technical tra ining leading to a

certification and degree; claim - filing for unemployment

compensation services; and temporary income, health,

nutritional, and housing assistance.

5. TBWA is a Florida not - for - profit corporation that

operates in the Hillsborough county a rea. It is responsible for

assuring that all federal funds it receives are used in

accordance with the requirements set forth in federal

regulations, specifically the guidelines in Office of Management

and Budget (OMB) Circular No. A - 122, Cost Principles for

Non - Profit Organizations. TBWA is also subject to OMB Circular

No. A - 110, Uniform Administrative Requirements for Grants and

Agreements with Institutions of Higher Education, Hospitals, and

Other Non - Profit Organizations. The two circulars will be

re ferred to as Circular A - 122 and Circular A - 110, respectively.

6. In November 2009 , the Agency's i nspector g eneral began

an investigation of spending practices by TBWA. The

investigation commenced as a result of "informational reports"

received by the Age ncy. At about the same time, a report was

published by local media concerning spending practices by

non - profit entities , such as TBWA. It is the belief of TBWA

that the media report instigated the Agency's investigation, but

whether it did , or not , is no t relevant to the findings made by

the Agency.

7. The Agency's investigation was done in two tiers: The

first tier addressed certain food purchases made by TBWA for

events that it had hosted. The Agency posted its findings for

the Tier I investigation i n a F inal R eport dated April 12, 2010.

8. The second tier addressed expenditures discovered

during the investigation of the Tier I matter. The newly

discovered expenditures included costs for TBWA's B usiness

E xcellence A wards program, sponsorships or don ations to public

entities, money spent for entertainment and guest speakers at

events, public outreach expenditures, and the purchase of

certain promotional materials. The findings from the Tier II

investigation were published in a letter dated April 29, 2010.

The Agency reviewed $394,211.82 in expenditures by TBWA. O f the

expenditures , $224,178.17 was initially questioned by the Agency

as being potentially improper.

9. TBWA allocates its costs to the various grants it

receives through a cost allocati on plan that is submitted to and

approved by the Agency each year. The TBWA cost allocation

plans submitted for the years relevant to this case were

approved by the Agency. Nonetheless, the Agency went back and

reviewed those years' expenditures as part of its

investigations.

10. As a result of its investigations, the Agency made a

determination to disallow costs expended by TBWA in the

following categories:

Ʊ $34,028.29 for unallowable expenditures related to

food purchases (Tier I);

Ʊ $60,468.89 for un allowable costs associated with the

B usiness Excellence Awards;

Ʊ $13,195.00 for disallowed sponsorships that were

determined to be donations to support various

events;

Ʊ $11,967.00 for disallowed entertainment costs for

various events;

Ʊ $22,800.00 fo r unallowable public outreach

expenditures; and

Ʊ $4,669.00 for unallowable expenditures for

promotional materials; for a total of $147,128.18 in

disallowed expenditures.

11. TBWA challenged some of the disallowed costs in each

of those categories. The challenged dollar amounts for each

category of disallowed costs were as follows:

Ʊ $18,905.12 in costs related to various purchases of

food items;

Ʊ $58,448.63 spent by TBWA in connection with its

Business Excellence Awards, an internal awards

program ;

Ʊ $13,195.00 expended by TBWA to purchase sponsorships

in various public endeavors;

Ʊ $7,817.00 used to purchase entertainment at various

functions and corporate meetings;

Ʊ $22,800.00 expended for the purpose of funding

public outreach efforts; and

Ʊ $ 4,669.00 spent to purchase promotional materials;

for a total of $125,834.75 of challenged

disallowances.

12. Regional workforce boards have considerable

responsibility and authority for establishing local service

priorities, local service delivery design , and overseeing

one - stop career centers. TBWA operates , in part , according to a

strategic plan which it developed in 2003 (the "Strategic Plan")

to fulfill its responsibilities to establish local service

priorities. The Strategic Plan has been updated o ver the years

and is still in full force and effect. The Strategic Plan sets

out the goals of the organization and provides a strategy and

roadmap for how TBWA will achieve its goals.

13. TBWA attempts to engage in spending practices that are

consistent w ith its Strategic Plan and with all federal and

state regulations. Generally, if items or services are

purchased to further the goals set forth in the Strategic Plan,

TBWA considers them appropriate. The Strategic Plan addresses

the following goals of TB WA:

Ʊ Improving employee relations;

Ʊ Improving communications among TBWA employees to

ensure that grants and other resources are being

utilized fully and properly;

Ʊ Improving employer penetration, i.e., identifying

the number of employers within the ge ographic area

actually using the workforce board's services; and

Ʊ Developing an integrated and cost - efficient media

plan, including aggressive outreach and development

of strategic partnerships.

The Disallowed Expenditures

14. An overview of the expen ditures disallowed by the

Agency follows: TBWA spent $8,138.78 for a year - end celebration

held the evening of December 12, 2008. According to the

documentation TBWA provided, the dinner menu for that event

included rosemary grilled chicken breasts, mashe d potatoes,

vegetables, and black forest chocolate cake at a cost of $29.00

per person, a beverage fee of $7.00 per person, and a 21 percent

service charge in the amount of $1,610.28.

15. TBWA spent $5,161.25 for a corporate staff meeting

held on January 24, 2009 , and provided food from Caterings by

the Family, including breakfast, lunch, beverages and dessert at

a cost of approximately $49 per person. The documentation

provided indicates that the meeting began at 9:00 a.m.,

concluded at 3:40 p.m., and w as attended by TBWA staff.

Breakfast was served from 8:45 a.m. , to 9:00 a.m., i.e., before

the meeting began.

16. TBWA spent $5,673.00 for a corporate meeting held on

March 30, 2009 , at the Quorum Hotel. The event was scheduled

from 8:15 a.m. , to 12:25 p.m. , and was attended by TBWA staff.

This event included a brunch buffet at a cost of $19 .00 per

person, plus a 22 - percent service charge. The agenda indicates

that there was a 15 - minute "star of the quarter" presentation, a

15 - minute presentation abou t the American Recovery and

Reinvestment Act, and a 15 - minute presentation about the summer

employment model. The remaining three hours and 25 minutes of

the meeting was spent as follows: registration, welcome and

remarks, military salute, introductions and acknowledgements,

team - b uilding activity, brunch, and a presentation by David

Glickman, a full - time comedian and professional speaker.

17. TBWA held two events called the Business Excellence

Awards ( " BEA " ). In the 2008 BEA meeting, TBWA spent $17,47 6.50

on the Intercontinental Hotel, at a cost of approximately $87.00

per person and served a menu that included $3,200.00 for

chocolate ; $1,800.00 for a chilled raw bar ; $1,150.00 for roast

beef ; and $2,400.00 for a potato martini bar , with a 22 - percent

s ervice charge of $3,151.50. TBWA also spent $3,210.00 for

table and chair covers, $81.76 on marketing items, $989.00 on

invitations, $566.89 on awards, $265.00 on a photographer,

$84.33 on sheer bags to distribute marketing items, and

$1,200.00 on a solo pianist and string quartet.

18. In the 2009 BEA meeting, TBWA spent $22,612.50 on the

Intercontinental Hotel, at a cost of approximately $113.00 per

person, spent $1,910.25 on awards, $10,000.00 on a video

featuring award winners, $52.40 for supplies, and $500.00 on a

solo pianist and string quartet.

19. TBWA has a copy of the 2009 BEA video which was

produced. However, TBWA did not produce the video at the final

hearing or provide sufficient evidence as to its contents. TBWA

said the purpose of the video was to produce high - energy video

vignettes that would mirror the energy and excitement of a world

class awards show. TBWA said it could use the video for

outreach. However, TBWA did not specifically demonstrate how a

video of award winners benefits one of its grants.

20. TBWA suggests the expenditures to various vendors --

Cheers (table and chair covers), Uline (gift bags), Shorter

Childs (invitations), John Kantor (photography), Tricycle

Studios (2009 BEA video), IBEX (musicians), the Levy Awards, and

costs of supplies -- are allowable as costs incidental to a

meeting. Peachey acknowledged that entertainment costs are not

allowable, but said music is allowable because the music was

incidental to the event. Peachey justified the Levy Awards as

allowable public outreach , because employers put the awards in

their offices and they could be a topic of conversation.

21. TBWA paid $2,500.00 to Tampa Bay Technology Forum on

July 1, 2007 , for its Entrepreneurial Boot Camp. TBWA contends

that this event provided entrepreneurial training for

individuals through Tampa Bay Technology Forum. The sponsorship

included having TBWA's logo published on the printed materials

for the event. There is no indication that a representative or

an employee of TBWA attended or par ticipated in the program.

22. TBWA gave $500.00 to the Tampa Organization of Black

Affairs in November 2007 and $500.00 again in January 2009.

TBWA provided some information about the events to the Agency.

TBWA showed, for example, that it had reserved a table for its

employees at the event. There is no other evidence as to

whether a TBWA employee actually attended the event.

23. TBWA paid $1,000.00 to the American Red Cross on

April 5, 2008, indicated as a "donation" on the corresponding

invoice. A t able for eight persons was reserved, but there is

no evidence that a TBWA employee attended the event.

24. TBWA submitted documentation for the $4,500.00 it gave

to the Tampa Bay Academy of Hope on April 5, 2008, and the

$2,500.00 it gave on June 12, 2009. The funds were designated

as sponsorships on the respective invoices provided by TBWA .

The recipient of the funds provided TBWA a description of the

advertising, marketing , and promotion opportunities the

sponsorships would purchase. There was no evide nce that TBWA

engaged in any of the advertising or promotion activities.

25. TBWA submitted documentation for the $1,100.00 it gave

the Tampa Bay CEO Magazine on December 7, 2008 , and the $575.00

it gave on January 30, 2009. The sponsored events were tou ted

as an opportunity to mingle with influential business leaders in

the community. No evidence was presented as to how the mingling

would further the purposes for which grants had been given.

26. TBWA spent $5,555.00 for a winter corporate meeting at

the Tampa Improv C omedy C lub on March 14, 2008. The

documentation provided for this event indicates that the cost

included $3,750.00 for food, $300.00 for room rental, and

$750.00 for entertainment. The documentation that TBWA

submitted in support of these costs indicates that the event was

scheduled from 12:30 p.m. , to 4:50 p.m. , and was attended by the

TBWA staff. The first item listed on the agenda is " [e] njoy

food and refreshments" from 12:30 p.m. , to 1:30 p.m. The agenda

and speaking points make clear that the primary purpose of this

event was not to disseminate technical information. These costs

are directly associated with a social event, i.e. , food and a

show at the comedy club.

27. TBWA spent $950.00 for a solo pianist and string

quartet at the Sc holars Reception on April 17, 2008. The

purpose of the reception was to award youth with scholarships.

TBWA contends that this cost is for recreation and that it is

incidental to a meeting itself. TBWA documentation, including

letters sent to attendees, established that this event was a

bona fide business meeting. The musicians were incidental to

the purpose of the meeting.

28. TBWA spent $587.00 for a violin - guitar duo at the

Governor's Diversification Awards on September 30, 2009. TBWA

contends that this event was a meeting and , also , constituted

outreach, and that the music was an incidental cost to the

event. There is no evidence in the record to establish that

this was a bona fide meeting. There is no agenda, and TBWA's

documentation clearly indi cates that it is a "networking

breakfast." Likewise, there is no evidence in the record to

establish how this was an outreach event.

29. TBWA paid Issue Media Group $22,800 in July of 2009.

At the time of payment, Issue Media Group had not launched i ts

online magazine; it was seeking founding partners to provide

initial funding for the project. Website pages taken from the

magazine once it went on - line show the TBWA logo on the webpage;

however, no information is included about any of TBWA 's grant

pr ograms. A user could, however, click on the link to get to

the TBWA website and find information about the programs that

TBWA provides. TBWA does not have any documentation to show

that TBWA received job postings as a result of this expenditure.

Because the website pages contained only a link to the TBWA

website and no information about any of the grant programs that

TBWA administers, the website pages seem to primarily promote

TBWA , rather than the grant programs.

30. TBWA spent $2,283.81 to purchase 20 0 blankets that

were given to staff as part of a corporate meeting to enhance

employee morale.

31. TBWA spent $2,085.19 to purchase 200 Tervis tumblers.

Peachey testified that initially the tumblers may have been

purchased to give to staff at a corpora te meeting, but that they

will now be used for outreach to employers.

TBWA 's Stated Rationale for the Expenditures

32. Regional workforce boards have a responsibility and

authority to establish local service priorities. They also

establish local servic e delivery design and oversee one - stop

career centers. To fulfill its responsibility, TBWA developed

the Strategic Plan and strives to implement it. TBWA expects

the Agency to consider the Strategic Plan when looking at the

appropriateness of expenditure s made by TBWA .

33. All of the grants received by TBWA have a common

singular purpose: To provide employers with a skilled

workforce. To achieve that purpose, TBWA interacts regularly

with the area business community. One of the ways it chooses to

do th at is by way of public meetings, e.g., its BEA events. The

BEA dinners were used by TBWA to launch its employer outreach

campaign and as a platform for one of its signature programs,

the Competitive Edge Award. TBWA tracked the list of BEA

invitees each year and the number of jobs orders placed by the

attendees.

34. TBWA identified improved employee relations as one of

its targets in the Strategic Plan. Specifically, TBWA felt that

it needed to improve employee morale and staff motivation to

serve grant purposes through enhanced interaction with employers

and job seekers. To that end, TBWA held parties and gatherings

for its employees, with entertainment, food, and gifts (as set

forth above).

35. The BEA dinners catered to employers and public

figures in TBWA 's service area. It was TBWA 's intent that the

event would attract business, political and community leaders

for the purpose of disseminating information about TBWA 's

programs. According to Peachey, the event had to be very

upscale to attract these people. There was no credible evidence

to support that contention.

36. In order to minimize costs, TBWA did a cost benefit

analysis and comparison shopping on many of the items and

services associated with its BEA gatherings. TBWA does not

consider the B EA gatherings to be entertainment, per se, because

the event was not specifically directed to amusement or

diversion of TBWA staff.

37. The Tampa Bay Technology Forum sponsorship included

the printing of the TBWA logo on event materials and an

opportunity for a TBWA representative to make a presentation to

attendees. However, there is no evidence that a TBWA

representative attended the function or spoke to the attendees.

Further, the TBWA logo does not necessarily address any of

TBWA 's programs paid for b y grants.

38. TBWA payments of $1 , 000 .00 to the Tampa Organization

of Black Affairs for two Martin Luther King, Jr. , breakfasts

were contemplated as a marketing tool. Although a table was

purchased, there is no evidence that a TBWA employee actually

atten ded the breakfasts.

39. TBWA paid $1 , 000.00 as a Blue Sponsor for the American

Red Cross dinner, but , again , there is no evidence that any

employees attended the function. The same is true of the

donations to the Tampa Bay Academy of Hope for its event; m oney

was paid for a "sponsorship , " but there is no evidence of active

involvement.

40. TBWA sponsored the CEO of the Year banquets in 2008

and 2009. While there is no evidence that an employee attended

those events, there is evidence that some attendees a ctually

posted jobs with TBWA .

41. The on - line publication , 83 Degrees , to which TBWA

contributed $22,800.00, is one medium chosen by TBWA for gaining

exposure. It is part of the on - going public outreach that TBWA

engages in regularly.

42. The food provid ed at its corporate meetings was done

for the purpose of employee morale. Further, TBWA believes the

meetings were for the primary purpose of dissemination of

technical information. There is, however, scant evidence to

support that position.

CONCLUSIONS OF LAW

43. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding pursuant to s ections 120.569 and 120.57(1), Florida

Statutes. Unless specifically stated otherwise herein, all

references to the Florida Statutes will be to the 2010

codification.

44. The burden of proof in a chapter 120 administrative

proceeding is on the party asserting the affirmative of the

issue. Fla. Dep't. of Transp. v. J.W.C. Co., Inc. , 396 So. 2d

778 (Fla. 1st DCA 1981 ). In this case, the Agency disallowed

$147,128.18 of TBWA's charges to grant funds , because the costs

were not compliant with OMB Circular No. A - 122 and/or because

the costs do not benefit the grants charged. TBWA, as the

Petitioner challenging the disa llowed costs, has the burden of

proving by a preponderance of the evidence that the disallowed

grant funds were spent for grant purposes and that its

expenditures were allowable.

45. The Agency is the state administrative entity for

receipt of federal work force development grants and other

federal funds and is the designated agency for each federal

workforce development grant assigned to it for administration.

§§ 20.50(2)(a) and 20.50(3), Fla. Stat. The Agency has the

level of authority necessary to be the designated recipient of

each federal grant assigned to it. § 20.50(3). T he Agency is

responsible for ensuring that the state appropriately

administers federal workforce funding. § 20.50(1).

46. TBWA is subject to OMB Circular No. A - 110, Uniform

Adminis trative Requirements for Grants and Agreements With

Institutions of Higher Education, Hospitals, and Other

Non - Profit Organizations. 2 C.F.R. §§ 215.1, 215.5. TBWA's

financial management system must provide for "[w]ritten

procedures for determining the r easonableness, allocability and

allowability of costs in accordance with the provisions of the

applicable Federal cost principles and the terms and conditions

of the award" and "[a]ccounting records including cost

accounting records that are supported by s ource documentation."

2 C.F.R. § 215.21(b)(6), (7).

47. OMB Circular No. A - 122 , Cost Principles for Non - Profit

Organizations , codified as 2 C.F.R. Part 230, provides the cost

principles that non - profit organizations must apply when

expending federal grant funds.

48. Attachment A of OMB Circular No. A - 122, General

Principles, provides that costs must meet the following criteria

to be allowable:

2. Factors affecting allowability of costs.

To be allowable under an award, costs must

meet the following general criteria:

a. Be reasonable for the performance of the

award and be allocable thereto under these

principles.

b. Conform to any limitations or exclusions

set forth in these principles or in the

award as to types or amount of cost items.

* * *

g. Be adequately documented.

2 C.F.R. Part 230, App. A § A.2. (2010).

49. OMB Circular No. A - 122 defines reasonable costs as

follows:

3. Reasonable costs. A cost is

reasonable if, in its nature or amount, it

does not exceed that which would be incurred

by a prudent person under the circumstances

prevailing at the time the decision was made

to incur the costs. The question of the

reasonableness of specific costs must be

scrutinized with particular care in

connection with organizations or separate

divisi ons thereof which receive the

preponderance of their support from awards

made by Federal agencies. In determining

the reasonableness of a given cost,

consideration shall be given to:

a. Whether the cost is of a type

generally recognized as ordinary an d

necessary for the operation of the

organization or the performance of the

award.

b. The restraints or requirements imposed

by such factors as generally accepted sound

business practices, arms length bargaining,

Federal and State laws and regulations, and

terms and conditions of the award.

c. Whether the individuals concerned

acted with prudence in the circumstances,

considering their responsibilities to the

organization, its members, employees, and

clients, the public at large, and the

Federal Gov ernment.

d. Significant deviations from the

established practices of the organization

which may unjustifiably increase the award

costs.

2 C.F.R. Part 230, App. A § A.3.

50. OMB Circular No. A - 122 provides that public relations

costs are allowable to c ommunicate with the public and press

about specific activities or accomplishments which result from

performance of Federal awards. These costs are considered

necessary as part of the outreach effort for the Federal award .

However, costs of advertising an d public relations designed

solely to promote the non - profit organization are not allowable .

1. Advertising and public relations

costs.

a. The term advertising costs means the

costs of advertising media and corollary

administrative costs. Advertisin g media

include magazines, newspapers, radio and

television, direct mail, exhibits,

electronic or computer transmittals, and the

like.

b. The term public relations includes

community relations and means those

activities dedicated to maintaining the

imag e of the non - profit organization or

maintaining or promoting understanding and

favorable relations with the community or

public at large or any segment of the

public.

* * *

d. The only allowable public relations

costs are:

(1) Costs specifical ly required by the

Federal award;

(2) Costs of communicating with the

public and press pertaining to specific

activities or accomplishments which result

from performance of Federal awards (these

costs are considered necessary as part of

the outreach ef fort for the Federal award);

or

(3) Costs of conducting general liaison

with news media and government public

relations officers, to the extent that such

activities are limited to communication and

liaison necessary keep the public informed

on matters of public concern, such as

notices of Federal contract/grant awards,

financial matters, etc.

* * *

e . Costs identified in subparagraphs c

and d if incurred for more than one Federal

award or for both sponsored work and other

work of the non - profit organization, are

allowable to the extent that the principles

in Attachment A to this part , paragraphs B.

("Direct Costs") and C. ("Indirect Costs")

are observed.

f . Unallowable advertising and public

relations costs include the following:

* * *

(4) Costs of advertising and public

relations designed solely to promote the

non - profit organization.

2 C.F.R. Part 230, App. B.

51. Regional workforce boards are established pursuant to

s ection 445.007, Florida Statutes, and they are responsible for

overseeing the one - stop delivery system in their local area.

§ 445.007(4)(d ) .

52. One - stop services are described in s ection 445.009(1)

and include the following: job search, referral and placement

assistance; career counseling and educational planning ; support

services, including child care and transportation assistance to

gain employment; employability skills training; adult education

and basic skills training; technical training leading to a

certification and degree; claim filing for unemployment

com pensation services; and temporary income, health,

nutritional, and housing assistance. § 445.009(1).

53. Pursuant to section 445.007(9), TBWA, as a regional

workforce board, must "[a]pply the procurement and expenditure

procedures required by federal law for the expenditure of

federal funds." § 445.007(9) . This statutory requirement

emanates from federal requirements for the use of federal funds

and is incorporated in the parties' Master Cooperative

Agreement. TBWA is , therefore , bound by the spending p rinciples

of F ederal law for its various grant funds.

54. Section 445.007(9) allows regional workforce boards

to:

[A] uthorize expenditures to award suitable

framed certificates, pins, or other tokens

of recognition for performance by units of

the workforce system. Regional workforce

boards; their administrative entities,

committees, and subcommittees; and other

workforce units may authorize expenditures

for promotional items, such as t - shirts,

hats, or pens printed with messages

promoting Florida's workfor ce system to

employers, job seekers, and program

participants. However, such expenditures

are subject to federal regulations

applicable to the expenditure of federal

funds.

§ 445.007(9) .

55. Section 445.007 was amended in 2010 to prohibit the

purchase of food by regional workforce boards. That prohibition

did not exist during the period of time that expenditures at

issue in this case were made.

56. Applying the OMB c irculars and state law to the facts

of this case, the following conclusion concerning the challenged

expenditures are made:

Disallowed Entertainment Costs

Ʊ December 2008 end of year celebration: There was

insufficient evidence presented by TBWA to support

the contention that the meeting was anything other

than an employee party. The exp enditures relative

to that event are disallowed. ($8,138.78)

Disallowed Food Cost

Ʊ January 24, 2009 , corporate staff meeting: There is

insufficient evidence to support the need for

providing food at this meeting. The expenditure for

food is disallowed. ($5,161.26)

Disallowed Food Cost, Entertainment Cost

Ʊ March 14, 2008, corporate meeting: This meeting was

a mixture of dining, entertainment, and employee

recognition. There was no discernible dissemination

of technical information set forth in TBWA's

documentation. The expenditure is disallowed.

($5,555.00)

Ʊ September 30, 2009 , Governor's Diversification

Awards: The musicians hired for this event were

specifically hired for a reception. The expenditure

is disallowed. ($587.00)

Ʊ March 30, 2009 , c orporate meeting: This meeting was

a mixture of business and social. It is impossible

to accurately allocate the division of time between

the two, but at least part of the meeting was not

consistent with the directives set forth for

allowable expenditure s. One half of the expenditure

is disallowed. ($2,836.50)

Disallowed Business Excellence Award Cost

Ʊ BEA events have some legitimate business basis.

However, the manner in which the events were

conducted by TBWA is not entirely consistent with

prudent expenditure of government grant funds.

Further, there is no evidence that the video

produced at the e vent has any marketing value.

One - half of the expenditures for these events is

disallowed. ($20,044.50)

Disallowed Sponsorships

Ʊ Tampa Bay Technology Forum: Absent any proof that

TBWA did anything more than write a check to the

organization, this expen diture would be a donation

or contribution, not a sponsorship. The expenditure

is disallowed. ($2,500.00)

Ʊ Tampa Organization of Black Affairs: Absent any

proof that a TBWA employee actually attended the

events and was actively involved in marketing or

outreach, the payments must be considered donations.

The expenditures are disallowed. ($1,000.00)

Ʊ American Red Cross: Absent any proof that a TBWA

employee actually attended the event and was

actively involved in marketing or outreach, the

payment mu st be considered a donation. The

expenditure is disallowed. ($1,000.00)

Disallowed Promotional Materials

Ʊ Blankets and tumblers: Although purchase of these

items may be a way to improve employee morale, there

is insufficient evidence that they were pur chased or

used for that purpose. The expenditure is

disallowed. ($4 , 369.00)

Ʊ The total amount of disallowed expenditures is

$55,192.04.

57. The remainder of the challenged expenditures were

proven to be consistent with the requirements for use of

gover nment grant funds as set forth in the OMB c irculars.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that a final order be entered by Respondent ,

Agency for Workforce Innovation, partially upholding its

de cision to disallow the challenged expenditures by Petitioner,

Tampa Bay Workforce Alliance. The total amount of disallowed

expenditures is $55,192.04, to be paid within 90 days of the

entry of a final order.

DONE AND ENT ERED this 12th day of August, 2011 , in

Tallahassee, Leon County, Florida.

S

R. BRUCE MCKIBBEN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filin g (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 12th day of August , 2011 .

ENDNOTE

1/ Peachey was not the CEO of TBWA during the period of time at

issue in this proceeding. He had no personal knowledge about

the expenditures at issue, but has information based upon his

review of documentation and discussions with the prior CEO. The

value of his testimony is weighted accordingly.

COPIES FURNISHED :

Rosa McNaughton, General Counsel

Agency for Workforce Innovation

Caldwell Building, Suite 212

107 East Madison Street

Tallahassee, Florida 32399 - 4120

Audrey Gaten, Administrative Assistant III

Agency for Workforce Innovation

Caldwell Building, MSC 110

107 East Madison Street, MSC 110

Tallahassee, Florida 32399 - 4128

Karen S. Bishop, Esquire

Agency for Workforce Innovation

The Caldwell Building, MSC 110

107 East Madison Street

Tallahassee, Florida 32399 - 4128

Edward C. Peach ey, Esquire

Tampa Bay Workforce Alliance, Inc.

5701 East Hillsborough Avenue, Suite 1419

Tampa, Florida 33610

Charles M. Harris, Jr., Esquire

Ste phanie Smith Leuthauser, Esquire

Trenam, Kemker, Scharf, Barkin,

Frye, O'Neill & Mullis, P.A.

Bank of Ameri ca Tower, Suite 1600

200 Central Avenue

St. Petersburg, Florida 33701

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommend ed Order should be filed with the agency that

will issue the Final Order in this case.