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DINAP Bulletin 84-23

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Allowance/Disallowance of Attorney Fees Paid with Grant Funds


To transmit policy clarification information regarding the allowance/disallowance of grantee legal costs paid for with grant funds.


All Native American JTPA Grantees


ROBERT D. PARKER Director Chief Grant Officer
Office of Special Division of Indian Acquisition and Targeted Programs and Native American Assistance


Reference. 41 CFR, Section 1-15.711-16; 20 CFR, 629.37 (a); 20 CFR, 629.37 (d); 5 U.S.C. Section 504. Background. There have been several inquiries regarding the circumstances under which legal fees incurred by a grantee are allowable grant costs. The following policy-clarification is issued pursuant to the cost principles cited in the Federal Procurement Regulations at 41 CFR, Section 1-15.711-16 and the Job Training Partnership Act (JTPA) regulation at 29 CFR, Section 629.37 (d) which state: "The cost of legal expenses required in the administration of grant programs is allowable. ***Legal expenses for the prosecution of claims against the Federal Government are unallowable." Legal expenses may be incurred for the limited purpose of resolving audits or any other issues which, if not resolved in the grantee's favor, will result in the imposition of appealable sanctions (e.g., the gathering and presentation of information to allow the Government's authorized officials) to evaluate a grantee's position, etc.). on the other hand, costs incurred,in the furtherance of an appeal (e.g., discovery, preparation of motions and briefs, etc.) after the grant officer's final determination are not recoverable. Additionally, the JTPA regulations, 20 CFR, Section 629.37(a), state that to be allowable, a legal fee in addition to being a settlement cost, must be 'necessary and reasonable for proper and efficient administration of the program....' Action Required. Please review the above information and take them under advisement before incurring legal costs. Inquiries. Any questions as you may have should be addressed to your DINAP Federal Representative.

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