Politics & Government

California non-profit agency loses legal fight with feds

WASHINGTON — A prominent California non-profit agency that has worked closely with Central Valley farm workers has now lost a costly breach-of-contract fight with the federal government.

The California Human Development Corp. spent four years seeking $400,256 in a dispute centering on construction of a Head Start facility in the Yolo County town of Woodland. This week, a judge ended the long-running case by rejecting the non-profit's claims that the federal government owed it money from the troubled project.

"(The company) is in essence asking to recoup costs which are nothing more than overruns of its grant award," U.S. Court of Federal Claims Court Judge Mary Ellen Coster Williams concluded.

Williams' 26-page opinion, quietly made public June 8, is mostly technical, but it gets meaty below the surface. It reveals, in particular, previously unpublicized problems that led to the California Human Development Corp. being pressured to give up a Head Start grant in 2003.

"I was very disappointed," Chris Paige, deputy chief executive officer of the non-profit group, said Friday of the ruling.

Paige added that "we will have to address" what the loss of a potential $400,256 reimbursement will mean for a non-profit with an annual budget of $12 million.

Founded in 1967, with offices in Sacramento and Santa Rosa, the California Human Development Corp. has a declared goal "to help low-income people secure the education, training, job opportunities and improved social conditions they need to live with independence and greater human dignity."

Funded through state, federal and private grants, the non-profit firm currently serves some 15,000 Californians annually in everything from job training to disability services. Within the Central Valley, it provides services as far south as San Joaquin County.

Between 2003 and 2005, for instance, it received more than $10 million to run migrant and seasonal farm-worker programs throughout Northern California.

California Human Development has similarly received federal grants to assist with welfare-to-work programs. In the past, it received money to administer Head Start programs serving low-income families.

The new claims court decision sheds light on how the non-profit lost Head Start contracts totaling several million dollars.

Judge Williams noted that a November 2002 federal review had found "staffing and supply deficiencies and inadequate management systems" with the Head Start program, while a June 2003 follow-up identified "problems with (California Human Development's) management, concerns over child health and safety, and allegations of child abuse by staff."

Federal officials offered the firm a deal. If the non-profit surrendered its Head Start funding and turned its Woodland facility over to a third party, the government would drop efforts to "disallow" $1 million in costs and would also keep private a critical report.

"The federal offer is that if CHDC agrees to relinquish the program they would not issue the disallowance letter, and the report ... would be filed and not issued," Williams wrote, quoting board members.

Negotiators agreed, with Paige noting Friday that "we reached a major parting of the ways."

Subsequently, though, the California Human Development Corp. sued over claims that the government had not fully reimbursed it for contract close-out costs. Specifically, the two sides disagreed over who was responsible for cost overruns on the portable Woodland building.

The first contractor working on the planned Head Start building lost his license, and the second contractor repeatedly failed to meet construction standards. The problems contributed to the federal decision to yank the Head Start contract, and set the non-profit and the government on the legal course that was finally resolved this week.

"Nothing in the grant imposed on the government any obligation to increase the grant's funding," Judge Williams concluded.