INDIAN SELF-DETERMINATION AND EDUCATION 

ASSISTANCE ACT 

OVERSIGHT HEARING 

BEFORE THE 

SUBCOlVEVIITTEE ON NA'ITVE .Al'\/IERICAl\ AFFAIRS 

OF THE 

COl\fMITTEE ON 

NATURAL R:BJSOURCES 

HOUSE OP REPRESENTATIVES 

ONE HUNDRED THIRD CONGRESS 

SECOND SESSION 

ON 

THE IMPLEMENTATION OF THE INDIAN SELF-DETERMINATION ACT, AND DEVELOPMENT OF REGULATIONS FOLLOWING PASSAGE OF THE 1988 AMENDMENTS TO THE ACT 

JULY 29, 1994-WASHINGTON, DC 

Serial No. 103-105 

Printed for the use of the Committee on Natural Resources 

87-932cc"" 

U.S. OOVERNME:I><"T PRI.NTING OH'ICE 

WASHINGTON : 1995 

For sale by the \J .S. Government Printing Oflice 

Superint.;ndent of Documents, Congressional Sole:; Office, Washington, DC 20402 

ISBN 0·16-046775·6 
COMMI'ITEE ON NATURAL RESOURCES 

GEORGE MILLER, California, Chairman 

PHILIP R. SHARP, Indiana 

EDWARD J. MARKEY, Massachusetts 

AUSTIN J MURPHY, Pennsylvania 

NICK JOE RAHALL II, West Virgima 

BRUCE F. VENTO, Minnesota 

PAT WILLIAMS, Montana 

RON DE LUGO, Virgin Islands 

SA.c\l: GEJDENSON, Connecticut 

RICHARD H. LEHMAN, California 

BILL RICHARDSON, New Mexico 

PETER A. DEFAZIO, Oregon 

EN! F.H. FALEOMAVAEGA, American 

Samoa 

TIM JOHNSON, South Dakota 

LARRY LAROCCO, Idaho 

NEIL ABERCROMBIE, Hawaii 

CALVIN M. DOOLEY, Califo~nia 

CARLOS ROMERO-BARCELO, Puerto Rico 

KARAN ENGLISH, Arizona 

KAREN SHEPHERD, Utah 

NATHAN DEAL, Georgia 

MAURICE D. HINCHEY, New York 

ROBERT A. tJNDERWOOD, Guam 

HOWARD L. BERMAN, California 

Lfu'iE EVANS, Illinois 

PATSY T. MINK, Hawaii 

THOMAS J. BARLOW III, Kentucky 

THOMAS M. BARRETT, Wiseonsin 

DON YOUNG, Alaska, 

Ranking Republican Member 

JAMES V. HANSEN, Utah 

BARBARA F. VUCANOVICH, Nevada 

ELTON, GALLEGLY, California 

ROBERT F. SMITH, Oregon 

CRAIG THOMAS, Wyoming 

JOHN J. DUNCAN, JR., Tennessee 

JOEL HEFLEY, Colorado 

JOHN T. DOOLITTLE, California 

WAYNE ALLARD, Colorado 

RICHARD H. BAKER, Louisiana 

KEN CALVERT, California 

SCOTT MciNNIS, Colorado 

RICHARD W. POMBO, California 

JAY DICKEY, Arkansas 

JOHN LAwRENCE, Staff Director 

RICHARD MELTZER, GenEral Counsel 

DA..'iiEL VAL KISH, Republican Staff Director 

8UBCOMMITI'EE ON NATIVE AMERICAN AFFAIRS 

BILL RICHARDSON, New MeKico, Chairman 

PAT WILLIAMS, Montana CRAIG THOMAS, Wyoming 

SAM GEJDENSON, Connecticut Ranking Republican Member 

ENI F.H. FALEOMAVAEGA, American DON YOUNG, Alaska 

Samoa RICHARD H. BAKER, Louisiana 

TIM JOHNSON, South Dakota KEN CALVERT, California 

NEIL ABERCROMBIE, Hawaii 

KARAN ENGLISH, Arizona 

TADD JOHNSON, Staff Director 

MARIE HOWARD, Professional Staff Member 

BARBARA ROBLES, Clerk 

RICHARD HOUGHTON, Republican Counsel on Native American Affairs 

(II) 
CONTENTS 

Page 

Hearing held July 29, 1994 ..................................................................................... 1 

Statement of: 

Clapham, Britt, II, Senior Assistant Attorney General, Navajo Nation, 

Department of Justice, Window Rock, AZ .................................................. 20, 21 

Prepared statement ................................................................................... 59 

Cohen, Bonnie, Assistant Secretary, Policy, Management and Budget, 

U.S. Department of the Interior .................................................................. 5, 6 

Prepared statement ............. ................................. .................................... 38 

Dean, S. Bobo, of Hobbs, Straus, Dean & Walker, Washington, DC ........... 20, 21 

Prepared statement .... ... ... ..... ..... ... ..... ........ ... .. ...... ... ...... ........ ... ... ... ...... .... 69 

Dexter, Joseph, Chairman, Alaska Native Health Board \prepared statement) ....................................................................................................... ...... 108 

Flood, Henry, on behalf of the Saint Regis Mohawk Tribe and the Self 

Determination Institute (prepared statement) ........................................... 115 

Gouwens, Kay E. Maasen, Sonosky, Chambers, Sachse & Endreson, 

\Vashingtom, DC ........................................................................................... 20, 23 

Karshmer, Barbara, Alexander & Karshmer, Berkeley, CA ......................... 20, 26 

Prepared statement ...... ... .... .... .... . .. ...... ........... ........ ... ...... .. ...... ... .............. 95 

Lincoln, Michel, Deputy Director, Indian Health Service, U.S. Department of Health and Human Services ............................. ....................... ..... 5, 9 

Prepared statement ...... ... .. ........ .. . .. ........ ... ... ... .......... ............ ... ... ........ ...... 44 

Martin, Phillip, Chief, Mississippi Bank of Choctaw Indians, Philadelphia, Mississippi ........................................................................................... 16, 17 

Prepared statement ....................................................................... .. .......... 53 

McCain, Hon. John, a U.S. Senator from Arizona ......................................... 3 

Prepared statement ................................................................................... 33 

McCloskey, Richard, Director, Division of Legislation and Regulations, 

Office of Planning, Evaluation & Legislation, Indian Health Service, 

Department of Health and Human Services ........... ...... . ...... ... .................. 5 

Miller, Lloyd Benton, of Sonosky, Chambers, Sachse, Miller, Munson 

& Clocksin (prepared statement) ................................................................. 79 

Poag, Molly, Special Assistant to the Secretary and Director, Office of 

Regulatory Affairs, Department of the Interior ......................................... 5 

Richardson, Hon. Bill, a U.S. Representative from New Mexico, and 

Chairman, Subcomnuttee on Native American Affairs ............................. 1 

Roessel, Faith, Deputy Assistant Secretary for Indian Affairs, Department of the Inter10r ...................................................................................... 5 

Schoening, Athena, Deputy Associate Director, Office of Tribal Affairs, 

Indian Health Service, U.S. Department of Health and Human Services.................................................................................................................. 5 

Tullis, Eddie, Chairman, Poarch Creek Band of Indians, Atmore, Alaba~!p~~~d·~·~t~~~~t·:::::::::::::::::::::::::: ::::::::.::::::::::: :::::: ::::: ::::: ::: :: :::::::::16, §~ Additional mat~rial supplied: 

Lincoln, Michel: Cost to Department .............................................................. 13 

Presidential Documents dated September 14, 1993: "Elimination of OneHalf of Executive Branch Internal Regulations" ........................................ 107 

Richardson, Hon. Bill: Background on the Indian Self-Determination and 

Education Assistance Act ............................................................................. 2 

Communications submitted: 

Cohoe, Bennie (Ramah Navajo School Board): Letter of July 28, 1994, 

to Hon. Bill Richardson ................................................................................ 113 

Dean, S. Bobo (Hobbs, Straus, Dean & Walker): Letter of July 29, 1994, 

to Betty J. Penn with attachments ............ ... ........ ........... .... .. ...... ... ..... ........ 123 

(III) 
IV 

Page 

Communications submitted-Continued 

Trujillo, Michael H. (Dept. HHS): Letter of October 6, 1994, to Hon. 

Bill Richardson with responses to questions .............................................. 48 
INDIAN SELF-DETERMINATION AND 

EDUCATION ASSISTANCE ACT 

FRIDAY, JULY 29, 1994 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON NATIVE At\1ERICAN AFFAIRS, 

COMMITTEE ON NATURAL RESOURCES, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:59 a.m. in room 

1324, Longworth House Office Building, Hon. Bill Richardson 

[chairman of the subcommittee) presiding. 

STATEMENT OF HON. BILL RICHARDSON, A U.S. REPRESENTA· 

TIVE FROM J'lj'EW MEXICO, A.llill CHAIRMAN, SUBCOMl\HTTEE 

ON NATIVE A.l\1ERICAN AFFAIRS 

Mr. RICHARDSON. The Subcommittee on Native American Affairs 

will come to order. This morning we will be taking testimony on 

the implementation of the Indian Self-Determination Act, and also, the development of regulations following passage of the 1988 

amendments to the Self-determination Act. 

The Indian Self-determination and Education Assistance Act was 

signed into law in 1975 in order to maximize tribal participation 

in the planning and administration of practical services and programs, as well as to reduce the Federal bureaucracy within those 

programs. Despite passage of the act, tribal attempts to assume the operation of Federal programs have been hindered by an increased Federal operation of Federal programs, and they have been hindered 

by an increased Federal bureaucracy as well as by restrictive and 

unnecessary contracting regulations. 

The 1988 amendments to the Indian Self-determination Act were 

intended to remove these barriers to contracting. The 1988 amendments required the BIA and the Indian Health Service to develop 

regulations with the participation of tribes by October of 1989. 

Six years later, the agencies have yet to promulgate regulations. Despite the preparation of two sets of negotiated tribal Federal 

draft regulations between 1988 and 1990, the agencies shut down 

further tribal consultation from mid-1990 until earlier this year, 

In January of this year the agencies finally published a proposed 

set of regulations which bore little, if any, resemblance to the prior 

negotiated drafts. The proposed regulations are several hundred 

pages in length and actually complicate, rather than simplify, the 

contracting process. In other words, the new regulations would accomplish exactly the opposite of what the 1988 amendments intended to achieve. 

(1) 
2 

The regulatory process has cost the tribes hundreds of thousands 

of dollars, and has led to great confusion within Indian country and 

along the Federal agencies. Despite the Agency's recent pledge to 

extend the comment period and renegotiate the proposed regulations, tribes remain suspicious because not only have the tribes already been through two previous negotiations, but the issues now 

in dispute are the very same issues that were in dispute six years 

ago. 

Finally, I am sure that all of the witnesses are familiar with S. 

2036, legislation introduced by our good friend, Senator John 

McCain, to eliminate or in some instances minimize the promulgation of further regulations under Indian Self-determination Act, 

and to establish a model Self-determination Act contract. On 

Wednesday I introduced similar legislation to Senator McCain's, 

H.R. 4842. To the extent that witnesses are prepared to comment 

on these legislative proposals, the subcommittee welcomes such testimony. 

We must have fewer regulations. Last September, the President 

signed an Executive Order calling for each department and agency 

to eliminate at least 50 percent of its internal management regulations within three years. I believe that the regulations governing 

the Indian Self-determination Act contracting process are no exception to this rule. 

At this time I would remind all witnesses to summarize as much 

as possible. Their full statements will be made part of the record. 

The record will be kept open for two weeks. Right now I would like 

to submit the background for the record. 

[The information follows:] 

BACKJROUND Of' THE INDIAN SELF-DETERMINATION A!\D EDUCATION ASSISTA.'-:CE Acr 

The Indian Self-Determination and Education Assistance Act was signed into law 

in 1975 in order to maximize tribal participation in the planning and administration 

of Federal services and programs, as well as to reduce the Federal bureaucracy 

within those Indian programs. Despite passage of the Act, tribal attempts to assume the operation of Federal programs were hindered by an increased Federal bureaucracy as well as restrictive and unnecessary contracting regulations. The 1988 

Amendments to the Indian Self-Determination Act were intended to remove these 

barriers to contracting. The 1988 Amendments required the Bureau of Indian Affairs and the Indian Health Service to develop regulations with the participation of 

Indian tribes by October of 1989. 

Six years after passage of the 1988 Amendments. the agencies have yet to promulgate regulations Despite the preparation of negotiated tribal-Federal draft regulations, the agencies rejected the negotiated regulations. In January 1994, when the 

agencies finally published their proposed set of regulations, the proposal bore little 

resemblance to the negotiated draft but rather contained nearly all of the agencies' 

positions from their earlier drafts. The comments period on the proposed regulations 

closes in August 20. Recently, the agencies and the tribes have agreed to re-negotiate the content of the proposed regulations under the Federal Advisory Committee 

Act in October of this year. 

The regulatory process has cost the tribes hundreds of thousands of dollars, and 

has led to great confusion within Indian Country and among the Federal agencies. 

Rather than simplifying the contracting process, the proposed regulations would ac- tually complicate the process and raise even greater barriers to Self-Detennination 

Act contracting by tribes. 

A mounting sense of frustration on the part of Indian Country has led to the 

unanimous denouncement of the proposed regulations and a call for legislation that 

would supplant the regulatory process. Recently, the House and the Senate have introduced similar measures, H.R. 4842, the Indian Self-Determination Act Amendments of 1994, and S. 2036, the Indian Self-Determination Contract Reform Act of 

1994, respectively, which would amend the Indian Self-Detennination and Edu-
3 

cation Assistance Act by making key provisions of the Act self-implementing and by 

establishing a model contract. The model contract would govern the terms under 

which Indian tribes and tribal organizations could assume the operation and man- agement of Federal programs and functions benefiting Indians that are operated 

within the Department of the Interior and the Department of Health and Human 

Services, including programs and functions of the Bureau of Indian Affairs and the 

Indian Health Service. H.R. 4842 would greatly simplify the contracting process, as the 1988 Amendments were originally intended to do, and would reduce the bureaucracy that is so pervasive in Federal Indian programs. 

The purpose of this hearing is to solicit the views of Indian Country and the Administration on the implementation of the Indian Self-Determination and Education 

Assistance Act and the 1988 Amendments. Jn addition, the Subcommittee on Native 

American Affairs is seeking the views of Indian Country and the Administration on the extent, development and support of Indian Self-Determination Act contracting 

within all agencies in the Department of the Interior. Finally, although the Subcommittee is not requesting formal views on I-LR. 4842, the Subcommittee welcomes 

any comments which Indian tribes and the Administration choose to submit. 

Mr. RICHARDSON. Needles~ to say, we are delighted to have as 

our first witness the Vice-Chairman of the Senate Indian Affairs 

Committee, the Honorable .John McCain, who has enormous leadership on a variety of Indian issues. The Senator was testifying this 

week also on other pieces of legislation. Once again, we welcome 

you, Senator. Please proceed. And the five minutes does not extend 

to you. 

STATElVIENT OF HON. JOHN McCAINt A U.S. SENATOR FROM 

ARIZONA 

Senator McCAIN. Mr. Chairman, I will try to take about two 

minutese, because as usual we are in complete agreement, and 

frankly your opening statement says just about everything that I 

want to say. Except, Mr. Chairman, I want to thank you and Congressman Thomas for your incredible work on this subcommittee. 

There was some question for years, when I was a Member of this 

committee, as to whether there should be a subcommittee on this 

issue. I think you and Congressman Thomas have graphically demonstrated that this subcommittee was needed long ago, and I am 

deeply appreciative of your leadership and the tremendous cooperation that you and I and Congressman Thomas have had with 

Chairman Inouye on a broad spectrum of issues. 

Mr. Chairman, as you said, six years ago the Congress passed 

this legislation to reform the 638 contracting process, called for the 

BIA and IRS to issue final joint regulations by October of 1989. To 

date, final regulations still have not been issued. 

Now, the BIA and the IRS want to begin a whole new round of 

negotiations. I find the conduct of the BIA and the IRS under this 

administration and under previous administrations to be outrageous. I was just as critical of the last administration for their 

handling of this matter, and I note that this administration, which 

has said it wants to reduce burdensome regulations, reinvent government, listen more carefully to Indian tribes, has failed to act responsibly on this issue, just as previous administrations did. 

I believe we have the opportunity to put an end to the bureaucratic games this year, and our two pieces of legislation are similar. 

We can bring finality to it. And as you know, both your legislation 

and our legislation proscribe the terms and conditions for any selfdetermination contract and prohibit the Secretary from promulgat-
4 

ing any regulations for the act. No modifications are permitted 

without written agreement of the Secretary and the tribe. 

Mr. Chairman, the only thing that I would like to add is that 

this year there was a national meeting of Indian tribes concerning 

this issue and the tribes overwhelmingly endorsed what is said in 

your legislation and in ours. 

Again, if we are listening to the Indians, I would suggest that the 

best thing that we could do is to pass your legislation before we go 

out of session this year. 

Thank you very much, Mr. Chairman. I appreciate the opportunity again to be with you. 

Mr. RICHARDSON. Thank you, Senator. 

[The statement of Senator McCain may be found at end of hearing.] 

Mr. RICHARDSON. You have been very instrumental, throughout 

your career, especially with the BIA and making sure that the Federal Government saves money. 

Can you just tell us how you think the legislation that you initiated on the Self-determination Act, how Wfl actually are saving 

money? And you also discuss the performance of the bureaucracies, 

the IHS, the BIA. Have you over the years seen any improvement 

in them trimming this bureaucracy? 

Senator McCAIN. You know, Mr. Chairman, one of the great dis- appointments to me has been that we have not been able to reduce 

the size of the bureaucracy. 

When we pass legislation such as self-governance, where you 

know a number of tribes have been able to engage in self-governance, the result has still been no decrease in the bureaucracy when 

the whole object-well, a secondary object was to reduce the size 

of the bureaucracy. 

As you know, Mr. Chairman, the 1975 Indian Self-Determination, Education and Assistance Act provided the tribes with the authority to contract with the Federal Government to operate programs serving their tribal members, and this policy over the years 

has proved to be very successful in terms of promoting tribal operation of Federal programs and services that are administered by 

the BIA and IHS. It has been successful. 

The policy had its origins back in the Nixon administration, as 

you know. And unfortunately, as we have moved forward, there has 

been greater and greater encroachment upon that philosophy. 

Today approximately $531 million of the funds appropriated to the 

BIA are administered by tribal governments under self-determination contracts, and there are over 400 contracts between Indian 

tribes and the IHS involving about $497 million annually. 

And when we considered the 1988 amendments, we noted that 

the act had failed to meet its goal of reducing the Federal bureaucracy and ending the Federal domination of Indian programs. In 

fact, Mr. Chairman, there have been no reduction in the Federal 

bureaucracy. Instead, the act had spawned an increase in Federal 

officials who were employed to monitor self-determination contracts. 

As so many layers of the bureaucracy and rules have been imposed that the contract approval process required an average of six 

months, rather than 60 days as mandated by the act. So I regret 
5 

to tell you, Mr. Chairman, that instead of moving forward we seem 

to be moving backwards, as the imposition of more regulations has 

taken place. 

And now, tragically, both IHS and BIA are going to appear before you and say that they want to renegotiate regulations again. 

And every Indian tribal leader that I have talked to has said they 

want less regulations, they want less bureaucracy, they want to determine their own futures, and they want to govern themselves. 

So, Mr. Chairman, I hate to come before you with a bleak picture, but maybe it can give us the proper impetus to go ahead and 

pass this important legislation. 

Mr. RICHARDSON. Well, I want to thank the Senator. I know he 

is very busy. We once again appreciate all the work he has done 

with us, and we wish him well in the days ahead. 

Thank you, Senator. 

Senator McCAIN. Thank you, Mr. Chairman. 

STATEMENTS OF BONNIE COHEN, ASSISTANT SECRETARY, 

POLICY, M:A.J.'IJAGEMENT AND BUDGET, U.S. DEPARTME:!'-.'1' OF 

THE INTERIOR, ACCOMPANIED BY FAITH ROESSEL, DEPUTY 

ASSISTANT SECRETARY FOR INDIAN AFFAIRS AND MOLLY 

POAG, SPECIAL ASSISTANT TO THE SECRETARY AND DIRECTOR, OFFICE OF REGULATORY AFFAIRS; AND MICHEL LINCOLN, DEPUTY DIRECTOR, INDIAN HEALTH SERVICE, U.S. 

DEPARTMENT OF HE..U.TH AND HUMAN SERVICES, ACCOM· 

PANIED BY ATHENA SCHOENING, DEPUTY ASSOCIATE DI· 

RECTOR, OFFICE OF TRffiAL AFFAIRS, INDIAN HEALTH 

SERVICE AND RICHARD McCLOSKEY, DIRECTOR, DIVISION 

OF LEGISLATION AND REGULATIONS, OFFICE OF PLANNING, 

EVALUATION & LEGISLATION, INDIAN HEALTH SERVICE 

Mr. RICHARDSON. We will now move on to our next panel, the Executive Branch witnesses, the Honorable Bonnie Cohen, Assistant 

Secretary for Policy, Management and Budget at the Department 

of Interior. Secretary Cohen will be accompanied by Faith Roessel, 

Deputy Assistant Secretary for Indian Affairs, Department of the 

Interior; Ms. Molly Poag, Special Assistant to the Secretary, and 

Director of the Office of Regulatory Affairs of the Department of 

the Interior. 

And Mr. Michel Lincoln, Deputy Director, Indian Health Service, 

Department of Health and Human Services, Rockville, Maryland, 

accompanied by Athena Schoening, Deputy Associate Director, Office of Tribal Affairs, Rockville, MD, Mr. Richard McCloskey, Director, Division of Legislation and Regulations, Office of Planning, 

Evaluation and Legislation. 

Mr. Lincoln, is Michael Trujillo confirmed yet? 

Mr. LINCOLN. Congressman Richardson, yes, he is. He is--

Mr. RICHARDSON. We love to see you here, but we have-fer some 

reason he has never appeared before this committee. And is he in 

Washington or is he out of town? 

Mr. LINCOLN. He is out of town. The Assistant Secretary for 

Health, Dr. Philip Lee, had specifically requested that Dr. Trujillo 

participate in a strategic planning meeting with himself and other 

Public Health Service agency heads. 
6 

Mr. RICHARDSON. Well, we have invited him several times to appear. I don't think we have ever seen him. But we are delighted 

to see you. Secretary Cohen, please proceed. 

STATEMENT OF BONNIE COHEN 

Ms. COHEN. Thank you, Congressman Richardson. I am pleased 

to be here to disct.<ss the Department's efforts to implement the 

1988 amendments to the Indian Self-Determination and Education 

Assistance Act. 

As you indicated, I am accompanied by Faith Roessel and Molly 

Poag. At the outset, I want to assure you and the tribes that we 

are aware of the frustrations experienced regarding implementation of the act, and we are working hard to remedy these problems. 

In the past 18 months, since we have taken office, we have made 

substantial progress. For example, when this administration took 

office, the proposed regulations, as Senator McCain indicated, had 

missed the statutory publication date by roughly four years. Publication quickly became a priority for Secretary Babbitt, and the proposed rule was published within a year. 

Pursuant to tribal request, we are developing a process to reach 

consensus with the tribes on the final rule, and we anticipate publication by August, 1995, the date requested by the tribes. This administration recognizes our government-to-government relationship 

with the tribes, and is anxious to work with them to continue implementing this important legislation. 

We appreciate the opportunity to come before you and to describe 

our efforts. We believe we are on the right track toward resolving 

many of the tribes' outstanding concerns, and that the current 

process should continue. We therefore urge that the Congress defer 

any legislation until we publish the final regulations. I would like 

it turn the discussion over to Faith Roessel, who will talk about the 

act and the contracting of BIA programs. 

Ms. RoESSEL. Thank you, Bonnie. Mr. Chairman, it is indeed a 

pleasure to be here today. I would like to expand upon the written 

testimony that will be submitted from the Department and focus 

particularly on the Bureau of Indian Affairs. 

The BIA has been very successful in contracting out its programs 

to tribes. In fiscal year 1993, BIA's total obligation for 638 contracts, including self-governance compacts, was roughly $700 million, or nearly one-third of BIA's total obligations. 

As far as the area offices that award the highest number of 638 

awards, Portland leads the areas with 1,933; Phoenix area is next 

with 1,615 awards; and Eastern, with 650 awards, nearly 90 percent of its current operations. 

Under 638, tribes are able to administer at least a portion of virtually every existing BIA program, including human services, education, public safety and justice, community development, resource 

management, trust services, and general administration. As of the 

third quarter of fiscal year 1994, BIA has obligated $518 million to 

self-determination contracts, grants, and compacts. 

Mr. Chairman, as you know, this administration is taking its 

charge very seriously to make government work. In this spirit, the 

Bureau of Indian Affairs has initiated a pilot project for administering nonprocurement contracts agreements. Under this project, 
7 

eight BIA agencies are delegated authority to approve, negotiai:e, 

and award nonprocurement agreements that do not involve construction projects. 

This means that a noncontracting officer makes awards at the 

agency level. This moves the decisionmaking authority to the lowest possible level within the Bureau. It reflects a true governmentto-government relationship with tribes, while promoting partnerships. 

We want to test and identify ways to develop a more effective 

and responsible rewarding process for 638 contracts. In the past 

year we have evaluated the agencies under the pilot project and 

feel that it has been very successfuL The participating tribes are 

pleased with the shortened response time in making contract decisions and in processing contract approvals and awards. 

If I may just continue in summary, Mr. Chairman. 

Mr. RICHARDSON. Please do. 

Ms. ROESSEL. Estimated time saved in some cases has literally 

been weeks. There are recommendations to expand our project 

under consideration by the Bureau and the Department. 

If approved, our pilot project would be expanded to the second 

tier of BIA agencies totaling about 13 agencies. The Bureau is continuing to take the lead in promulgating the final regulations. 

Assistant Secretary Deer is personally committed to developing 

a workable final rule in a timely manner. The final rule as developed with tribal input should bring clarity to the regulations, thus 

making it easier for tribes and nonBIA bureaus to resolve issues. 

We believe that tribal recommendations must be given full consideration and we will work with tribal representatives to incorporate their recommendations whenever possible. I would like to 

now turn it back over to Bonnie. 

Thank you. 

Ms. COHEN. Thank you, Faith. We know that the Indian tribes 

are concerned not only about the delegation of BIA programs, but 

the delegation of nonBIA programs. And I would like to just tell 

you what we have been doing in that area. 

The Bureau of Reclamation currently has the greatest portion of 

the nonBIA programs administered under 638 contracts. Among 

other things, tribes currently are administering planning operations, environmental studies, and the construction, operation, and 

maintenance of water systems and water-related projects. 

We are anticipating that BIA will be increasing their 638 contracting opportunities. The Bureau of Reclamation will be increasing those opportunities, and it is offering training to its employees 

in 638 contracting procedures. The BLM has also entered into 638 

contracts. 

BLM is estimating over $5 million worth of programs in 638 contracts for fiscal year 1994, a substantial increase over the roughly 

200,000 contracted in 1992. Many other nonBIA programs, though 

currently not contracted under 638, are administered through the 

cooperative arrangements such as a Memorandum of Understanding or agreement. For example, the Chehalis and Quinhalt tribes 

are conducting fishery restoration activities funded by the Fish and 

Wildlife Service under the Chehalis River Fisheries Program, and 
8 

the Hoopa Valley, Karuk, and Yurok tribes are conducting similar 

activities in the Klamath River basin. 

In Alaska, the Chiefs conference and the Association of Village 

Council Presidents are collecting data that is used in Fish and 

Wildlife Service subsistence harvest management activities. The 

Blackfeet tribe in Montana has an assistance agreement with BLM 

for inspection and enforcement of Indian oil and gas operations, 

and many other BLM programs are also administered through cooperative agreements with the tribes. 

Despite these efforts, the Department recognizes that more can 

and should be done. As a result, the Department has established 

an internal review process to identify nonBIA programs such as 

programs currently administered under cooperative agreements 

that may be subject to 638 contracting. 

This review which is headed by the Department's Chief of Staff 

is ongoing and is increasing the Department's understanding of 

programs that directly benefit American Indians. This increased 

understanding will enable Bureau directors and office heads to actively promote these programs for contracting by tribes. 

Now, I would like to turn it over to Molly Poag to talk about the 

status of regulations. Molly. 

Ms. PoAG. Thank you. Mr. Chairman, my role is to discuss the 

process, where we are in the development of the 638 regulations, 

why did it take so long to get to this point, and where do we go 

from here. 

In other words, when are we going to have a final rule on the 

books? Let me begin by explaining the dilemma that this administration faced when we first came on board. We quickly learned of 

this rule, of course, and were stunned to hear that it was already four years behind the statutory deadline for publication. 

We also quickly uncovered, however, an issue of considerable 

concern, the fact that there had been this lack of tribal input. This 

was of concern for two reasons. First, the 1988 amendments required tribal participation in the drafting process, and also this 

was a start of a new and historic administration and we wanted 

to get off on a positive footing with tribes. 

Therefore, we were understandably hesitant to go out with a 

draft that we knew did not reflect tribal input. I think you know 

the history, Mr. Chairman. In short, there was tribal input up until 

September of 1990, but at that point, the two Federal agencies, 

HHS and DOI, took the draft reflecting tribal input and went behind closed doors and played with it for two years and came up 

with a very different draft, as you acknowledged, Mr. Chairman, in 

your opening remarks. 

So it was this revised rule that was in front of us when we came 

on board in January of 1993. Our dilemma was whether to go out 

with that rule, knowing that tribes would be unhappy with many 

of its provisions and knowing they were unhappy with the pro('ess, 

or to take time to consult with tribes, further delaying the publication of even a proposed rule. 

A further complicating factor was the fact that we didn't have a 

confirmed Assistant Secretary on board in the early days. Ada Deer 

was sworn in July 16th, 1993, and I can assure you that she took 

an immediate and direct interest in this rule. She consulted with 
9 

tribal leaders, and asked their recommendation on how we addressed this dilemma. She came back to us with a recommendation 

based on those consultations that we go out with the rule as is, but 

that we make clear the fact that we were going to actively seek 

tribal input. 

And we took that recommendation, published the rule. We revised the preamble to flag our concern about the lack of tribal 

input and to affirm our commitment to actively seek out and fully 

consider tribal comments during the public comment period. The 

rule was published on January 20th. We had originally 180~xcuse me, 120-day comment period. 

During that timeframe, we held three regional meetings with 

tribes and one national meeting with tribes specifically to solicit 

their input. Those were very well attended both by tribes and by 

departmental officials. They were also very productive. The tribes 

came to the table with very thoughtful comments. 

At the last meeting, the national meeting, there was a caucus of 

the tribal leaders and they came back to us with three requests. 

First, they asked that we extend the comment period for another 

90 days. Second, they asked that the tribes be included in the 

drafting process following the close of the comment period. And 

third, they asked that we complete the whole process by August 

31st, 1995. 

We agreed to all three requests. We extended the comment period to August 20th, which gives tribes a full seven months to comment from the time it was published. We worked out a way to involve tribes in the process. Specifically, we have a charter under 

the Federal Advisory Committee Act, and we are planning a minimum of three public meetings over the next year where we hope 

to receive consensus on this rulemaking involving tribes as we need 

to do. 

And third, I know this is of particular interest to you, we agreed 

to the timeframe. We think August 31st, 1995, is a workable timeframe, that that gives us time to have the necessary consultations 

with tribes. The tribes think it is doable. We think it is doable. I 

can tell you that this regulation is one of the Secretary's top regulatory priorities, and we are going to do everything in our power 

to meet that deadline. 

And the last thing I want to stress is simply that the process 

that we have established from this point forward fulfills the 1988 

amendments' mandate to include tribes in the actual drafting process, and is on the path that I think we need to be on. I think it 

is the appropriate path, and I hope we are allowed to continue 

along that path. 

And, Bonnie, I turn it back over to you. 

[The statement of Bonnie Cohen may be found at end of hearing.] 

STATEMENT OF MICHEL LINCOLN 

Mr. RICHARDSON. Let's-I want to ask you some questions, so 

let's move on to Mr. Lincoln. 

Mr. LINCOLN. Mr. Chairman, thank you for allowing us to come 

to this hearing. I am accompanied today by Mr. Richard McCloskey, the Director of the Division of Legislation and Regulations. 
10 

We do share your concerns about the need for a simple straightforward regulation. We also share the concerns expressed by the 

Congress with respect to the timeframe that has been very thoroughly discussed by the Department of Interior. 

Our testimony is submitted for the record. Perhaps I could just 

add two general statements and then be available for questions, 

Mr. Chairman. One of the statements is that as we move through 

the regulation development process, we too, as is the Department 

of Interior, are committed to living with the timeframes that have 

been identified in Albuquerque, New Mexico, at the national meeting, and in terms of extending the comment period also entering 

into a negotiation period starting in October of this fiscal year. 

And so we would anticipate indeed that we would be in negotiations, we would be developing the final language and recommendations to both of our secretaries, and that this process would move 

very quickly through the first quarter of this upcoming fiscal year. 

The last statement, Mr. Chairman, is that I personally have not 

had the opportunity to review the proposed legislation in front of 

the committee, and we certainly will be commenting back to the 

committee relative to these issues in those areas that we are verv 

much in support and those issues that we would like to have a further opportunity to discuss with the committee. 

Thank you, Mr. Chairman. 

Mr. RICHARDSON. Thank you. 

[The statement of Michel Lincoln may be found at end of hearing.] 

Mr. RICHARDSON. Let me just say something to Assistant Secretary Cohen and Molly Poag and Faith Roessel and all of you. We 

have a little bit of a problem here. What I sense that you are telling me is you don't want us to pass this legislation until August 

of 1995? Is that right? Is that- is that what you are asking us to 

do? 

Ms. COHEN. Well, Faith can speak to our specific positions on the 

legislation, but we feel that while there has been an unacceptable 

delay in the publishing of the regulations, we have draft regulations out. We have a process in place. And by permitting that process to go forward, we feel we will have satisfactory regulations really in the most efficient and effective way. 

Mr. RICHARDSON. Well, if I understand correctly, you are talking 

about holding some meetings in January, six months of negotiations, the Secretary then considers the recommendations, then 

there is departmental and OMB clearance, final regs, possibly two 

years away, this is the estimate of my staff. 

Let me just tell you what my thoughts are. In 1988 and 1990, 

this is before any of you carne in, the tribes negotiated rulernaking 

with the Department of Interior, and they made agreements. But 

then the Department ignored this rulernaking. Now, I think you 

are all very well intended. And Ms. Franklin, you have been in, 

what, about a year? 

Ms. Cohen? 

Ms. COHEN. Year and a half. 

Mr. RICHARDSON. And Ms. Poag, a year? 

Ms. POAG. Yes, a year and a half. 
11 

Mr. RICHARDSON. And I respect that, and I know you are being 

very sincere. But my sense is, knowing the BIA the way I have 

over the last 11 years, they don't want to change. That is the problem. 

The BIA has bureaucrats that don't want to change anything. 

And I think if we keep using the excuse that we have to have tribal 

input-we do, we get tribal input, and then the agencies ignore this 

input. That is the nature of the beast. 

So we are back again with series of meetings and the bureaucracy is back. Basically what you are saying is you want new negotiations. And while I feel that you are sincere in wanting to achieve 

the President's goal, his Executive Order 12861, each agency eliminate 50 percent of its internal regulations, and Ms. Poag you have 

a very good reputation, that while I think that you are all aggressive and positive, your bureaucracy is creating a situation where 

you are becoming a victim to this endless process and they are 

going to say you have to consult with the tribes. I know the BIA will say we have to have tribal input. Well, let's 

consult with every tribe in the world. And that is an endless process and they use that excuse to basically not do anything. And they 

do that with self-governance, they do that with Indian Health Service, they do that with self-determination. What else do they do it 

with? Everything. 

You know, so-·so I-I want to wish you well, I want to give you 

the tools. I think if I pass this bill, we pass McCain's bill and our 

bill, I think it will strengthen you. And I see you as three knights, 

at least the three women here, Lincoln also, but give you the tools 

to achieve this goal. Don't you see, don't you see what they are 

doing? Don't get drawn into this huge series of meetings and negotiations and you got to wait for this, you got to wait for that. 

Ms. Cohen, you are the-you are the Assistant Secretary. You 

can take some shots back at me. I am not taking shots at you, but 

I worry about what you just told me. 

Ms. COHEN. I don't think you are taking shots at me or my associates. I think, though, this is an important priority for Secretary 

Babbitt. He, the Chief of Staff, has taken the leadership role in 

this. We are committed to getting it done on the time schedule that 

we have laid out. 

In areas that Secretary Babbitt has made a priority, he has seen 

that things get done. We are committed to getting this done. Now, 

we know the hurdles that we face. We have taken on a number of 

issues like this, but we feel that it is possible that we have regulations that the tribes can respond to in a meaningful way. We can 

sit down in a dialog, and we can get this done by August 1995. 

I don't know if Molly wants to add something. 

Ms. POAG. I would like to add one clarification, Mr. Chairman. 

The process that we have established with being the charter of 

the Federal Advisory Committee Act, envisions having 48 representatives from the tribes. That is what the tribal caucus told us 

they wanted at the last national meeting. 

So the tribes will choose the 48 representatives from the 12 

areas, and the departments will choose their own representatives. 

And that is the process by which we will come to the final regulations. We have no intention, and I do not believe-! will say we will 
12 

not take the draft that comes out of that process and go behind 

closed doors again, as was done in the prior administration, and revise it. 

We are going to be working hand in hand with the tribes in the 

government-to-government relationship and through that process 

we are going to come to closure. No more the behind-closed-doors 

dealings. 

Ms. ROESSEL. If I may add, Mr. Chairman, also, I think you 

know Ada Deer, and she certainly did not come to this administration to perpetuate a legacy that we have known in Indian country 

has been one dominated by lack of consultation or overuse of consultation for excuse purposes. 

But I do need to remind the Chairman that this administration 

has made it very clear to its agencies and to its departments under 

the executive memoranda that was signed on April 29th when the 

President met with over 300 tribes at the White House, that very 

specifically we are required to consult when there are decisions affecting the tribes. 

And the first hurdle we were faced with obviously was how do 

we do that in face of FACA, you know, the Federal Advisory Committee Act. As Molly has explained, although it seems unwieldy 

and burdensome, we have to go throufh that process in order to 

get I think the full advantage of triba participation and involvement. 

But I just want to assure the Chairman that I will take back 

your words to Ms. Deer. She is very concerned about the image of 

the BIA. She wants a new way of doing business, and I think she 

would be in full agreement with your statement. 

Mr. RICHARDSON. I believe Secretary Babbitt-is this Collier that 

is involved? I mean he's very good, I have worked with him. You 

give me encouragement. You are good, young, new faces. 

But can't you see what the bureaucracy is trying to do to you? 

They are trying to get you in this-they did this to the Bush people. They did this to the Reagan people. And they put you through 

this whole bureaucratic process, and then they say you got to bring 

the tribes in, and then they tell you, now talk to this tribe X, Y, 

and Z. And don't think there aren't some tribes that are in very 

tight with the BIA and they have this self-perpetuating process. 

You know, we have-we have a BIA reorganization effort. You 

know what they are doing? They have asked us for another year 

to keep talking. It happens all the time. And what I am just saying 

to you is we have to get rid of some of this red tape. 

And it just seems that we are engaging in more and trying to get 

rid of this red tape. And I think it is incumbent upon you to just 

set some deadlines. And I think August 1995 is too late. I am going 

to move this-I may move this bill soon. 

The gentleman from American Samoa. 

Mr. FALEOMAVAEGA. Will the Chairman yield? I recall, Mr. 

Chairman, that throughout the whole four years of the previous administration there was discussion and supposedly movement in the 

reorganization of the BIA, and to this day I have yet to see a report 

of that reorganization effort. And this is four years ago. 

And I would like to second my absolute support for your consideration of this, Mr. Chairman, that August 1995 is absolutely too 
13 

late. Mter having this bill passed since 1988, we are still talking 

about these regulations. And I am just-there is no excuse as far 

as I am concerned. 

And I think-1 think in the fact this is not Secretary Babbitt now 

on the line, the fact that the President of the United States, taking 

some 300 tribes to the White House, making such a big affair of 

this whole thing, dealing with Native American needs, and we are 

right back to square one, we are talking about the bureaucracy 

again, and not taking any real serious effort to see that these 

things are not going to be on a continual basis for another 100 

years, still no changes, no substantive changes taking place. 

And so I for one just cannot see any justification why these regu- lations have to wait until August of 1995, just as we waited four 

years, the previous administration, for the reorganization of BIA, 

and still no results. 

Ms. COHEN. Mr. Chairman, Congressman, the August 1995 date 

was developed in consultation with the tribes. But we understand 

your frustration. We share the frustration. 

We can go back to the tribes and we could work against an earlier timeframe in consultation with them. We understand the urgency and the feeling of urgency that people have. It has been 

much too long. We think we can do it within the next year. 

Mr. RICHARDSON. Well, let me-l just want to ask one question 

for Mr. Lincoln. Could you provide us with an estimated cost to the 

Indian Health Service on the failure when you don't promulgate 

regulations, the failure, the cost in doing that? 

Mr. LINCOLN. Mr. Chairman--

Mr. RICHARDSON. In other words, the estimated cost to the IHS 

caused by the failure to complete promulgation of regulations in a 

timely fashion. 

Mr. LINCOLN. Mr. Chairman, we will provide that for the record. 

If we could work with your staff to tease out the more detailed 

questions associated with that question, we would be glad to provide that for the record. 

[The information may be found at end of hearing in a letter 

dated October 6, 1994, and the following was submitted by Mr. Lincoln.] 

COST TO DEPARTMENT 

Question: Could you provide the estimated costs to the Department caused by the 

failure to complete promulgation of regulations in a timely fashion? 

Answer: There were no costs associated with the Department not promulgating 

the regulations. Since 1988, the amount of funding under tribal contracts has more than doubled from approximately $200 million to over $500 million for both services 

and facilities construction in FY 1994. Every effort has been and will continue to 

be made to more than complete the regulations development in a timely manner. 

Mr. RICHARDSON. Yes, and what I will do is I will submit the 

questions that I was going to ask you for the record to all of you. 

And what I would like to do, Ms. Cohen, is maybe visit with you 

and Mr. Collier and Ada Deer, and let's talk about all of these bureaucratic issues that I just mentioned. I think that-I am impressed by your energy in trying to resolve this. I am not sure that 

the bureaucracy is responding to you. 

But if we could talk about this issue, self-governance, the BIA reorganization, you know, the endless new deadlines and endless new 
14 

procedures that the bureaucracy seems to be convincing you, and 

I know how they work, that they are needing. And maybe we can 

come to some closure on-and we can be used to help you. 

I just think that what we are seeing is more than what--we are 

already-this is almost the end of the second year of the administration. And August of 1995, that is almost close to the convention, 

isn't it? No, that is 1996. And then I suspect we are going to have 

to take some legislative action on these regulations, or-I just 

think that we have to move more speedily, and I would encourage 

you and Ms. Poag, too, we have got to just seize control of the BIA. 

And we are losing time . • A~nd all of this talk about debureaucratizing and executive orders 

to reduce regu.lations, it is just not happening. A.lld the only faith 

I have is the fact that it is people like Secretary Babbitt and Collier 

and Ada Deer and Faith Roessel, I worked with Faith over the 

years, and I know that-the staff-here is 392 pages of regulations, 

proposed regulations, the Department of Interior, Assistant Secretary of Indian affairs, 40-page bill. This is not us, is it? Oh, all 

right. Well, I want to-does the gentleman want to close? 

Mr. FALEOMAVAEGA. I just want to, and I am sorr; if I am being 

somewhat repetitive, if the question has already been raised, and 

it is just to-for in fairness to the members of the panel, this is not 

anything in any personal way against all of you. I realize that some 

of you have just come on board. 

Is it because of lack of resources that we have this sense of frustration with the Agency, that you are just not able to implement 

or promulgate these regulations? What seems to be the problem? 

Is it the logistics, just having a difficult problem consulting with 

the tribes? Or why six years? Why is it taking this long and still 

we have not gone this far in getting these regulations going? 

Ms. COHEN. I don't think that we can speak to the causes of the 

delay in the past administration. Since we took office, the need for 

these regulations came to our attention. 

We reviewed the regulations, we talked to tribes, and we have 

moved with some speed, perhaps too deliberate speed, but we have 

moved with some speed. These regulations have a high priority. We 

have gotten them out now for comment and we will try to work to 

move up the August 1995 deadline to get final regulations sooner. 

Mr. FALEOMAVAEGA. So this-have you received any orientation 

from the permanent cadre that have been before you as to their 

frustrations perhaps that they share with you, why they have been 

unable to come up with the goods on this? 

Ms. COHEN. Why the previous----

Mr. F'ALEOMAV AEGA. Yes. 

Ms. COHEN [continuing]. political appointees? No, they didn't 

share with me why they were not able to get these out. 

Mr. FALEOMAVAEGA. I mean what about the permanent cadre? 

The mid-managers are the ones who are still holding on to the fort 

while the political guys leave the administration. 

Do they share with you what has been their frustration for the 

last six years, why they just ·..vere not able to move forward with 

these regulations? 

Ms. POAG. I think a lot of what the Chairman said is correct, 

that there are problems with bureaucracy, that this is a com-
15 

plicated regulation, we did need to consult with tribes. I think 

the--we do not agree with the process that was used whereby the 

Federal agencies went behind closed doors for two years, but I 

think that certainly contributed to the problem. 

There were disputes within the Department because this is not 

just a BIA regulation, it affects other bureaus as well, so there was 

a great deal of talking. But I do think we are on course now, we 

have got the procedure in place to consult with tribes and to bring 

this to closure. So I think we are now off the path of delay and 

back on the--

Mr. FALEOMAVAEGA. And with the resources you now have in 

hand, you are absolutely certain by August of next year these regu· 

lations will be coming forward, be forthcoming? 

Ms. POAG. I cannot say I am absolutely certain that will happen. 

I don't think anybody can. We don't have control over the tribes 

and we don't know what is going to happen. But I can tell you, to 

an absolute certainty, that we will do everything in our power to 

meet that deadline. 

Mr. FALEOMAVAEGA. Mr. Lincoln? 

Mr. LINCOLN. Yes, Congressman, I think there is another factor 

here that contributed to the delay, and that certainly is the necessity for the Department of Interior and the Department of Health 

and Human Services to come up with a single regulation. 

That absolutely being a critical, necessary step to take, but one 

that did contribute to the delay. We do now have, though, a single 

regulation that the two departments have agreed upon, and we do 

now have a very good process, we believe, to resolve any differences 

between the administration, Executive Branch of government, and 

tribal governments. 

We are committed to the process also from the Indian Health 

Service standpoint, and we believe the Department of Health and 

Human Services as it appoints a negotiating team to participate 

with the Department of Interior and with tribal governments will 

have the necessary delegated authority also to push these regulations forward on a faster track. 

Mr. FALEOMAVAEGA. So what you are saying, for all these years 

there has been problems administratively between the two agencies 

to begin with, jurisdictional fights, problems of who has the say on 

this issue and that issue. 

Has that been the experience all these years? 

Mr. LINCOLN. Congressman, I believe that there have been differences in the way the two departments have interpreted the statute. There are differences in the way that we clear departmental 

positions between Interior and HHS. 

And in the negotiations-! was one of the individuals, perhaps 

the only person in this room, that was on the negotiating team between Health and Human Services and the Department of Interior. 

And I can assure you, those were very spirited negotiations as we 

attempted to come up with a single regulation. 

We believe that is behind us now. We do have a single regulation 

and we do-now it is time to certainly reenter negotiations. And we 

are committed to move the process forward. 

Mr. F ALEOMAV AEGA. Thank you, Mr. Chairman. 
16 

Mr. RICHARDSON. Well, I am-I think you have gotten-you have 

gotten our message. I just-I just want you to go back and get moving. Did I hear you say, Mr. Lincoln, you have-IHS has not yet 

appointed your negotiating team to deal with this issue? 

Mr. LINCOLN. No, Mr. Chairman, we are right in the process of 

having both the Department of Interior and the Department of 

Health and Human Services identify who is going to be negotiating, 

in addition to the 48 tribal representatives being identified. I think 

we are at the right place. 

We do have a document that is going forward to the Department. 

We do not believe this to be something that would take months and 

months. We believe that once we move the document forward, it 

will be a matter of weeks. Because we have been working co-jointly 

or at the same time with the Public Health Service and the Secretaty's office. So we feel that it will just take us a week or so to 

do that. 

Mr. RICHARDSON. OK All right. Well, Ms. Cohen and Ms. Poag 

and Ms. Roessel, I would like to do that meeting very soon in which 

we address all of these issues. And I know you are sincere and earnest. I wish you well, but let me just say I guess the proverbial I 

have seen this before. And I don't want you to be victimized by the 

bureaucracy. I see you as reformers. 

Right sitting in back of you is my friend, Mike Anderson, who for 

years would sit in the witness chair and told me all the BIA problems. Now he is over there. I am not saying he is the problem now, 

but I know he knows some of these frustrations that all of us have 

had. 

And this is why we are so excited at the advent of this new administration and the new team at Interior, and why you have a 

great responsibility to clean this mess up. It is a mess over there . ..A ...... '1d just don't get-there is a word that I am not going to use, 

which is perfect for this, I know what--drawn in to this bureaucracy that just is known for stifling any kind of change, and they 

want more regulation. I can see them doing this to you. 

So with that, I want to thank you for coming. We appreciate your 

testifying. And I do wish to visit with you before we adjourn for the 

August recess because we have to make some decisions on what 

bills we are going to move, and I have great respect for Secretary 

Babbitt and Ada Deer, and I don't want us to be in conflict. So 

again--

Ms. CmiEN. Thank you, Mr. Chainnan. We will make an appointment with you as soon as possible. We look forward to talking 

about this and all the other issues with you. And in addition, the 

staff that is working on this would be pleased to work with your 

staff. 

Mr. RICHl· .. HDSON. OK. Thank you. 

STATEMENTS OF PHILLIP MARTIN, CHIEF, MISSISSIPPI BANK 

O:F CHOCTAW INDIANS, PHILADELPHIA. MISSISSIPPI AA'D 

EDDIE TULLIS, CHAIRMAN, POARCH CREEK BAI'41> OF INDIANS, ATMORE, ALABAIVIA 

Mr. RICHARDSON. We will now move on to the second panel, the 

Honorable Phillip Martin, the Chief of the Mississippi Band of the 

Choctaw Indians, Philadelphia, Mississippi. The Honorable Eddie 
17 

Tullis, Chairman of the Poarch Creek Band of Indians from 

Altmore-Atmore, Alabama. I think-let me welcome both of you. 

Mr.-- Chairman Tullis, I know you, don't I? 

Mr. TuLLIS. Absolutely. 

Mr. RICHARDSON. Where were we together, at the--

Mr. TuLLIS. I drove you around when you were at the NCAI at 

Green Bay, we spent a good bit of time in an automobile traveling 

around looking at Green Bay. 

Mr. RICHARDSON. Well, it is a pleasure to see you again. 

Mr. TuLLIS. My pleasure. 

Mr. RICHARDSON. And, Chief Martin, it is a pleasure to see you, 

too. Chief Martin, why don't you start out? Again, welcome. We 

would like to have you summarize in five minutes because I know 

we have probably got a lot of questions for both of you. 

STATEMENT OF PHILLIP MARTIN 

Mr. MARTIN. Thank you, Mr. Chairman. I don't think I have formally met you, but after hearing you talk today, I feel like I know 

you. Thank you for the opportunity to be here and make a few comments on the proposed changes to the Self-Determination Act. 

I have submitted a written statement and I won't read that, but 

I would like to make a comment or two extemporaneously. I believe 

the amendment that you are proposing to the act is one that we 

like. I think that new amendments are needed and we don't need 

to wait. 

I support this bill because-and I support the idea of going forward with it. I think we have spent too much time within the Bureau to make some changes . .1\nd I don't think that is worth waiting for. The big problem that I see, and you hit upon it, too, is the 

bureaucracy. We have a lot of-I have a lot of experience in dealing 

with the bureaucracy. And I think that is what the Secretary and 

these young ladies ought to be working on. 

How do you change the bureaucracy? What are you going to have 

to do to have them respond to the law and the regulation that they 

are supposed to carry out? And some of us have had a lot of fights 

with the area offices. You know, that is sort of the problem. 

The bureaucracy is strong at the area offices, and at the central 

office they have good communication and if a tribe wants to get 

ahead, usually, you know, those kind of tribes are discouraged. But 

nevertheless, we have made a lot of progress. 

I would just like to briefly mention that when I started working 

with the tribe in 1957, we didn't have anything. We didn't have 

any money, actually still don't today. But we have made a lot of 

progress. We have a contract, over $30 million, with the government, including BIA and IHS. We have about $70 million of sales 

every year with our industry, which makes it a total of around 

$100 million that the tribe administers in one form or another. And 

we are not afraid to contract, but we are highly leveraged, too. 

In order to do this, we had to borrow money and take a risk that 

is required in business. And so far we have been successful and we 

continue-we will continue that path. In addition to that, $70 million, we just started our casino and we are projecting maybe another $100 million in sales. This equates to about 4,000 jobs that 

we have created as of today. 
18 

And progress, tribes are making progress throughout Indian 

country. We don't need a bureaucracy to hold us back. I believe, I 

strongly believe and I have believed this for a long time, we don't 

need a lot of regulation. We don't need--we need a law that is more 

in tune with the government-to-government relationship concept. 

And that means less regulation, more responsibility for the tribe, 

and let them be responsible for their action and do the things that 

they know has to be done at the local level without Federal, too 

much Federal intervention. And I strongly support those concepts, 

and I support Senator McCain's bill. 

I haven't seen his changes yet, but when they first come out, 

talked about it, the concept, I supported it strongly and I believe 

that I support, continue to support that as well. So I would strongly urge you to move forward with your plans and let's get the two 

bills presented at both houses and come up with the best solution 

to the problem that we know exists, and give the tribe the necessary authority and rights to move forward with contracting and 

develop strong reservation economy and provide- jobs and the other 

opportunities to its people. 

And I think that is the whole concept behind this at the beginning, and it is not working as it is now. And I would strongly like 

to see changes made in this act. 

Thank you very much. 

Mr. RICHARDSON. I want to thank you. 

[The statement of Phillip Martin may be found at end of hearing.] 

Mr. RICHARDSON. I am going to excuse myself for a few minutes 

and the gentleman from American Samoa will chair. I will be back 

shortly. 

Mr. F ALEOMAV AEGA. [Presiding.] Please proceed. 

STATEMENT OF EDDIE TULLIS 

Mr. TuLLIS. Thank you, Mr. Chairman, and Mr. Richardson. I 

certainly, as you leave, I understand, but I want you to realize that 

one of the reasons I am here today is to express appreciation of my 

tribes and other tribes in the efforts that you have to alleviate this 

problem we find ourselves in. A.t1d I appreciate your efforts on our 

behalf. 

I am here today to speak in a dual capacity, both as the Chairman of the Poarch Band of Creek Indians of Alabama and also as 

the Chairman of the United South and Eastern Tribes. And I find 

myself in a situation where I don't-do not totally understand what 

is happening. 

We have started this process and I have to give credit to our 

former director, Mr. Lionel Johns, who passed away a little over a 

year ago, that had been very actively involved in this process. And 

then I have to think about the number of hours that not only my 

local staff or my own tribal staff have spent involved in this process, but the number of hours that we, as an organization, that 

USET have spent discussing amongst ourselves, amongst the tribal 

leaders and the tribal staff, but also the number, the great number 

of hours that we have dedicated to this effort. 

I had an opportunity to attend that meeting in Albuquerque last 

May. I went to that meeting thinking that we had had a staff of 
19 

people and a group of people from the other side of the questions, 

had spent an awful lot of time negotiating back and forth and having consultation with the tribes around the country. I thought we 

were going there to see the results of all of that work. I went there 

and found total frustration on the part of the tribes, went there 

and found that those people who had been negotiating and had 

been involved, from a tribal point of view, were of the opinion that 

we had went some way or by some reasv,,, the process went into 

reverse and was headed back toward the starting point again. 

So we are here today as tribal leaders who are very frustrated 

with this process. And therefore it is with that in mind that we 

come here and tell you that we support an effort for this Congress 

to move forward to solve this problem. We feel that if this continues to go through the process and we go back to almost ground zero 

and start over again, that there is no way assuring without action 

by this Congress that the bureaucrats will set themselves a deadline. 

We realize that there are efforts out there and certainly there is 

a commitment on the part of the tribes to see this to its finality 

due to the fact that we view it as something greatly beneficial to 

the tribes. If we can have the bureaucrats remove some of the impediments to self-governance, if we can have them remove some of 

that regulation that we spend so much of our time at the local level 

trying to figure out what they mean by those regulations, certainly 

it can be beneficial to the tribes. 

So we are here today to support the efforts of the Congress to 

solve a problem that the bureaucrats and the tribes together have 

not been able to solve. So we are certainly here in support of 4842. 

We realize that there are an awful lot of technicalities about the 

bill and the next panel certainly will address a number of those, 

but I can assure you that there is an awful lot of support in Indian 

country by tribal leaders of the effort to bring this to a conclusion. 

Thank you for the opportunity to be here today. 

Mr. FALEOMAVAEGA. Thank you, gentlemen. 

[The statement of Eddie Tullis may be found at end of hearing.] 

Mr. FALEOMAVAEGA. I just want to ask a couple of questions. In 

your attendance at that meeting that was held in Albuquerque 

about the 638 law, I understand again and reemphasizing not only 

by way of total frustration from the tribal leaders, but just wanting 

to get a sense of your observations during that conference, did you 

sense that part of the problem was really with the tribal organizations as to why these regulations never seemed to come about, because of this consultation desire that the bureaucracy downtown 

wanted to continue? 

Mr. TuLLIS. Sir, I am the first to say here to you and admit that 

there is an awful lot of tribal bureaucracy that develops also. And 

I think one of the things that had happened is that the whole process got wrapped up in-in the difference in Indian country. 

And I think those people that were involved from the tribal perspective allowed the bureaucrats to play on some of the differences 

that you have amongst the regions in this country. We realize there 

is over 500 Indian tribes and we are not all the same. All of us do 

not have the exact same needs and the exact same desires out 

there. 
20 

But I think there was an overwhelming majority of the tribes 

there that realized that this process needed to move forward, and 

we did not need to continue to negotiate, we did not need to continue the process of trying to satisfy every one of the tribe's concerns there, that we need to move on with the process. 

Mr. FALEOMAVAEGA. Mr. Martin. 

Mr. MARTIN. Yes, I don't know about the-what the problem was, 

but one of the things that I saw was we were not making very 

much headway, so I made a motion to support Senator McCain's 

bill. 

And everybody there, it was unanimot:.sly supported, that concept, that we go ahead and ask Congress to, and Senator McCain, 

to go ahead and develop his bill so that we would have a real process going on that would be the law that everybody supported. So 

we have a lot of support for legislative action to remedy this. 

Mr. F ALEOMAV AEGA. For the record, approximately how many 

tribal organizations were represented at that conference in Albuquerque? 

Mr. Tl.JLLIS. I think all the major organizations were represented 

there, and they were a great number of the tribes. I am scared to 

tell you a number. I know it was probably closer to 200, 250 of the 

tribes had tribal representatives at that meeting. But all of the national organizations and all the regional organizations were represented at that meeting. So there was a very good tribal participation in the meeting. 

Mr. FALEOMAVAEGA. Would you sense that a great majority of 

the organizations as well as the tribal leaders were in agreement 

and basically the bottom line, cut the red tape and let's get on with 

it? 

Mr. TuLLIS. I can assure you that was the consensus of that 

meeting because I talked to a number of those tribal loaders and, 

being involved in an organization as President of USET, I certainly 

feel that all of the organizations had had the time to formulate 

upon that would agree to that. 

Mr. FALEOMAVAEGA. Were there any officials of the Department 

of Interior in attendance at that conference? 

Mr. TuLLIS. Yes, sir, all the way to Ms. Ada Deer. Matter of fact, 

one of the-one of the major discussions at that meeting was delaying the implementation of what was then the proposed regs. And 

Dr. Hill and Ms. Deer both participated in that meeting. 

Mr. FALEOMAVAEGA. All right. Gentlemen, thank you very much 

for your testimony this morning. 

STATEMENTS OF BRITT CLAPHAM1 II, ESQ., SENIOR ASSISTANT ATTORNEY GENERAL, NAVAJO NATION, DEPARTMENT 

OF JUSTICE1 WINDOW ROCK, AZ; S. BOBO DEAN, ESQ., 

HOBBS, STRAUS, DEAN & WALKER, WASHINGTON, D.C.; BARBARA KARSHMER, ESQ., ALEXANDER & KARSHMER, BERKELEY, CA; AND KAY E. MAASEN GOUWENS, ESQ., SONOSKY, 

CHAMBERS, SACHSE & ENDRESON, WASHINGTON, D.C. 

Mr. FALEOMAVAEGA. For our next panel we have Mr. Britt 

Clapham, II, Esquire, Senior Assistant Attorney General, Navaho 

Nation, Department of Justice; Mr. S. Bobo Dean, Esquire, Hobbs, 

Straus, Dean & Walker, law firm of Washington, D.C.; Ms. Barbara 
21 

Karshmer, Esquire, Alexander & Karshmer, Berkeley, California, 

law firm; and Ms. Kay Maasen Gouwens, of Sonosky, Chambers, 

Sachse & Endreson of Washington, D.C. 

Welcome to the panel this morning, ladies and gentlemen. And 

I would like for Mr. Clapham to begin. For the record and without 

objections, all your statements will be made part of the record. 

Mr. Clapham. 

STATEMENT OF BRITT CLAPHAM, II, ESQ. 

Mr. CLAPHAM. Mr. Chairman, Members of the committee and 

staff, I think rather than go through my written testimony word 

by word in light of the Chairman's earlier introductory statements, 

it seems fair to say that the committee has a fairly firm understanding of the process that we have been through in the development of 638 regulations over the past five years and ten months, 

now nearly six years. 

There are a couple of points that I would like to make and then 

pass on for others to discuss further. You have heard the officials 

from the BIA and Indian Health Service today describe the process 

that is beginning with the upcoming negotiations. 

We understood and were informed, as recently as last week, the 

F ACA process that has been described has also encountered some 

stumbling blocks and problems. There was an attempt to jointly 

fund this 48-person group. We understand that there is appropriation act issues that prohibit the authorization of jointly funding the 

F ACA process. 

We further understand that the two agencies have sought clearance through the upcoming 1995 appropriation to address that, but 

have not been informed whether that has been resolved at this 

point in time to allow the joint funding of an advisory committee 

under FACA. 

I would also point out that no one during the testimony addressed the substance of the regulations proposed in January of 

this year. Frankly, these regulations narrow the contracting opportunities the tribes had before 1988. 

And finally, I have to say, having gone through virtually every 

step of the way on behalf of the Navaho Nation and for a brief period another tribe, it seems as though the process that was described is not the one I participated in. 

First and foremost, we don't have a joint uniform regulation, as 

proposed. And I guess the most troubling thing to me is that we 

talk about deadlines in this process. I don't recall that over this six 

years any deadline that has been established has ever been met. 

That concludes my initial remarks. There are a couple of remarks I would like to make later concerning specific provisions in 

H.R. 4842. And I will do that following Ms. Gouwens's testimony, 

with the committee's indulgence. 

(The statement of Britt Clapham, II, Esq. may be found at end 

of hearing.] 

STATEMENT OF S. BOBO DEAN, ESQ. 

Mr. DEAN. Mr. Chairman, my name is Bobo Dean. I am here to 

testify on behalf of a number of tribes and tribal organizations 

whom we represented in this process and who are identified in the 
22 

written statement that we asked to be filed for the record. I also 

will not read my statement. 

I would like to comment first with respect to a couple of matters 

that have come up in the testimony earlier today. And specifically 

first, I think it was indicative that the Federal witnesses all left 

without listening to the two tribal chairmen who succeeded them. 

I think that probably was inadvertent, but it seems to me to-! 

could understand if they walked out on the lawyers, but it seems 

to me they should have sat here and listened to the statements 

from Chief Martin and the Chief of thE. Poarch Creek Band of Indi~ 

ans. 

Mr. FALEOMAVAEGA. I think it might be proper, and certainly I 

will take this under advisement in my recommendation to the 

Chairman, from now on we will have the officials of the departments to testify last, so they will be sitting there, so they can all 

wait and listen to what the community people have to say. And 

that certainly will be my recommendation in the next round. I ap~ 

preciate that observation. 

Mr. DEA..l\1'. Secondly, I was disturbed by Mr. Lincoln's testimony 

that the departments have now achieved agreement on the regulations. They may have, in some areas at least, achieved agreement 

between themselves. 

At the Albuquerque meeting, among the things that happened, 

one of the Federal representatives made reference to the difficulty 

of achieving consensus among tribes. A tribal representative got up 

and held up the proposed regulations and asked that any tribal 

representative who felt that these were acceptable should raise his 

hand. And no tribal representative raised his hand. Then he said 

will you raise your hand if you believe that these regulations are 

not acceptable? And every tribal representative raised his hand. 

And he said that is a consensus. 

Now, there is a consensus among tribes that the regulations are 

unacceptable. What difference does it make that the two departments have reached an agreement? And the fact that Mr. Lincoln 

didn't seem to focus on that is depressing in terms of what is going 

to happen in the next round. 

My clients, I believe, do support the position taken in Albuquerque that the agencies and the tribes should sit down again within 

this Federal Advisory Committee structure, but we are concerned 

as to what the outcome will be. Then I would like to say that there 

has been, and very correctly, emphasis on the delays, the failure 

to meet the deadlines, the fact we still do not have regulations. 

What I have addressed in my written statement is what is wrong 

substantively with the regulations. There are two issues. One is 

delay, and the other is issuing regulations, which would be a nightmare. And if you speed up and issue these regulations or regulations very much like these that have not been completely 

rethought, that would not be what my clients would support. 

Mr. FALEOMAVAEGA. So what you are saying, Mr. Dean, that 

even though we may meet a deadline and issue regulations, that 

does not necessarily solve the problem? 

Mr. DEA.~. That is correct. 

Mr. FALEOMAVAEGA. It will probably make it even more---

Mr. DEAN. It could be worse. 
23 

Mr. FALEOJ.V1AVAEGA [continuing]. worse, all right. 

Mr. DEAN. Finally, in my written statement, I referred to several 

issues that are wrong. I will not repeat those. We also will provide 

to the committee staff the comments that we are filing on behalf 

of our clients with the departments, which are about 80 pages detailing areas of the regulations that present problems. I would, 

however, like to state very briefly one of the areas. 

Mr. DEAN. [Continuing.] It is the scope of self-determination contracting. That is covered in Section 900.106 of the regulations, 

which reads like instructions either for a board game or for a computer game in which it is an assault on a medieval fortress and you 

have battlements and you have moats and you have drawbridges, 

and behind them you have the Federal bureaucracy trying to hang 

on to their prerogatives and their prerequisites. Just looking at 

900.106(h) would demonstrate to you why tribes are very upset by 

these regulations. 

Thank you very much. 

Mr. F ALEOJ.V1A v AEGA. Thank you very much. 

[The statement of Mr. Dean may be found at end of hearing.] 

Mr. F ALEOMAV AEGA. Ms. Karshmer. 

Ms. KARSHMER. Might I defer to Ms. Gouwens first, Mr. Chair- man? 

Mr. FALEOMAVAEGA. Certainly. Ms. Gouwens. 

STATEMENT OF KAY E. MAASEN GOUWENS, ESQ. 

Ms. GoUWENS. My name is Kay Gouwens, and I am a lawyer 

with the law firm that represents tribes and tribal organizations 

nationwide. I am here today in place of my partner, Lloyd Miller, 

who was invited to testify and had hoped to come, but finds himself 

deep into a very critical phase of the Exxon Valdez oil spill litigation in which our firm represents about 4,000 members of the Alaskan native plaintiff class; and under the circumstances, he concluded he, regretfully, simply could not appear himself today. I will 

do my best to fill his shoes. 

On the matter that is now before the subcommittee, our firm is 

representing a coalition of tribes and tribal organizations. The 

members of that coalition are as follows: the Jamestown S'Klallam 

Tribe of Washington; the Yukon-Kuskokwim Health Corporation of 

Alaska, which by the way runs a 40 million IHS hospital and a regional health care delivery system that serves a vast geographic 

area larger than the State of South Dakota; UIC Construction, Inc., 

which is the construction subsidy of the Barrow, Alaska Village 

Corporation; SKW Eskimos Inc., a construction subsidiary of Archi 

Slope Regional Corporation of Alaska; the Southern Indian Health 

Council of California; and the Ramah Navajo School Board which, 

despite its name, actually runs a host of not only education, but 

other social service delivery programs for the Ramah Navajo people 

of New Mexico. 

In preparing for this hearing today, I thought it would be somewhat instructive to go back and look just very briefly at the legislative history of the 1988 amendments that we are all here addressing today to see what was on this committee's mind when it acted 

on the bills that ultimately became those amendments; and I would 
24 

just like to read a couple of sentences from this committee's report 

of 1986-August 7, in fact, 1986, one week shy of eight years ago. 

The committee said this: It seems that since its inception-the 

inception of the act in 1975, that is-instead of focusing on self-detennination, the agencies have only focused on developing complex 

contracting and program regulations. In this maze of rules and regulations, the original intent of the Self-Determination Act has 

somehow gotten lost. The report continues that the committee 

hopes that in the future the agencies, in implementing the Act, will 

not treat the Indian tribes as regular government contractors, but 

as self-governing entities with attributes of sovereignty. 

Well, nearly eight years later, I think it feels to most people here 

like deja vu all over again. The veterans of the process are trying 

to get this act to be implemented the way Congress initially intended, and I think can be excused if they feel at times as if they 

have been caught in a time warp. But of course they haven't been; 

time has been passing, six years have passed since Congress directed these agencies to, within 10 months, promulgate regulations 

which they were expressly instructed should be simple, straightforward and not contain unnecessary requirements. And what we 

are faced with instead is a several-hundred-page document that is 

anything but simple, extremely complex and flies in the face of the 

mandates Congress stated in both the original act and in the 1988 

amendments. 

Given the history of this process, our clients have just reached 

the conclusion that enough is enough. We don't doubt the sincerity 

of those agency witnesses who testified this morning about their 

true intent to improve this process and draw this intenninable regulatory process to a close. But I guess the Exxon Valdez case is on 

my mind, because the image that I have in my head is of a massive 

oil tanker filled with oil going forward on a course, and the man 

or the woman who is at the helm of that vessel can't turn it immediately. It takes a long time from giving the direction to getting the 

vessel to move. And we are just confident, given what appears to 

be a very entrenched and resistant midlevel bureaucracy, that 

these well-meaning people cannot turn this tanker-<:ertainly not 

by the rather optimistic August, 1995 deadline that the tribes and 

the agencies are striving to meet on the proposed regulations. 

I would just like to comment very briefly, echoing some of the 

other panelists' comments this morning, that I would hate for anyone to be left with the impression that because the tribes requested 

additional time to come in on these regulations and endorse the 

idea of an advisory process, even after August, and agreed on a 

goal of an August, 1995 final remembering date, that the tribes 

and tribal organizations have really embraced this process. They 

are, in fact, hostages to this process. 

The only reason that more time is needed to comment on these 

regulations is because they are so massive and so confusing and so 

contrary to the interests of tribes that, of course, tribes have to try 

to have as much effective further input into these as possible, before they are enacted. In fact, I think there should not be a need 

for further process here. 

The positions of tribes on the vast majority of issues that have 

arisen in the past six years in self-determination contracting are 
25 

well-known, and have been stated over and over again, and are reflected in the joint tribal Federal draft regulations that were rejected by the previous administration, and have been submitted in 

official commentary on the proposed regulations. What we need is 

resolution of these issues. And I think the record is complete 

enough that this committee and this Congress can resolve those issues legislatively and put an end to the ability of these agencies 

to creatively misinterpret the mandates of this statute. 

It is for that reason that our clients heartily endorse the provisions of H.R. 4842, which was introduced by the Chairman and 

Vice Chairman, I understand, earlier this week. 

I would just like to very briefly touch on a couple of the provisions of that bill. I believe Mr. Dean indicated that one of the most 

frustrating provisions of the proposed regulations is the provision 

that deals with the so-called "contractibility" issue that would attempt to insulate the Federal agencies from having a vast variety 

of their functions taken over by Self-Determination Act contractors. 

The proposed bill would resolve this problem in a couple of ways. 

First, it would-we shouldn't need clearer language, because the 

language in the Act is already pretty clear on this, but it would 

state even more clearly that programs that are subject to being 

contracted under the Act include administrative functions of the 

Department of the Interior, the Department of Health and Human 

Services, which support the delivery of services to Indians, including those administrative activities that are related to, but not part 

of the service delivery program, which are otherwise contractible 

without regard to the organizational level within the departments 

where such functions are carried out. 

The bill also takes a very positive step, in our view, of clarifying 

that a decision by the Department that a particular program or 

function is not contractible is not some kind of threshold decision 

that is insulated from the protections of the so-called "declination" 

process, but is in fact a decision to decline a contract that must 

trigger all of the procedures that Congress has put in place for protecting tribes when such a decision is made. 

We would also--I mean, basically we endorse all of the provisions 

of this bill. I would just hit on a couple of highlights. 

As I think this committee well knows, tribal reporting requirements under current law, as proposed in the draft regulations, is 

truly crushing. The draft bill would address this problem by continuing to require tribal organizations to submit single agency audits which, after all, are probably the best means for ensuring that 

contracts are properly operated, and all other reporting requirements will be subject to negotiation between the agencies and the 

tribes. And this means that if there is a reporting requirement that 

the agency thinks is crucial and the tribe refuses to agree with it, 

the agency is free to decline the contract, and then the tribe has 

all of the procedural protections that go along with the declination 

process. 

I think I will pass on some of the other more technical provisions 

of the bill, except again to say that we think it is a wonderful bill 

that resolves virtually all of the issues that we know have been 

raised in recent years and resolves them in a way that should further the purposes of this act. 
26 

Mr. F ALEOMA V AEGA. Thank you. 

[The statement of Mr. Miller may be found at end of hearing.] 

Mr. F ALEOMAV AEGA. Ms. Karshmer? 

STATEMENT OF BARBARA KARSHMER, ESQ. 

Ms. KARSHMER. Thank you. My name is Barbara Karshmer, and 

I am an attorney from California; and I am here today on behalf 

of three tribal consortiums in California that represent 30 tribes, 

as well as another individual tribe. Together, these three consortiums and the individual tribe provide services to more than 40,000 

Indians in Southern California. 

They have been involved, as have I, in the regulation drafting 

process over the last five years. 

I think you have heard today that there is unanimous discontent 

with both the process and the results of that process in Indian 

country. I think it is a safe conclusion to say that any continued 

process is not likely to produce any different results. They may be 

marginally better in terms of the contents of some regulations, but 

not sufficiently significant to wait another year. 

I think it is naive, as well, to think that these regulations can 

be fully promulgated in the course of one year from now. I think, 

more likely, it will take at least two years. Tribes have been waiting for six years at this point to reap the benefits of the 1988 

amendments to the Act, and to ask them to wait another two years, 

I think, is unconscionable. 

What happened from my perspective in the drafting of the regulations is that the agencies involved forgot that statutes passed for 

the benefit of Indians are to be liberally construed in their favor; 

and instead, made the regulations as restrictive as possible and in 

the government's favor rather than that of the tribes. I gave examples in my written testimony of the many areas that I feel are 

strictly illegal in the regulations in that they are specifically contrary to the provisions of the law. And I won't go through that, but 

just refer you to that. 

I am here today on behalf of my clients to urge that you immediately pass H.R. 4842. This bill takes care of the problems that 

the tribes have experienced since the inception of the Act, and certainly since 1988, and avoids the need for going through a process 

that most tribes believe will be useless. 

I would like to do two things very quickly today. One is to discuss your model contract that appears at Section 108 of the Act, 

and also note a few minor technical clarifications that we would 

recommend be made to the Act as well. 

Since the mid-1970's when the Act was passed, I have personally 

been involved with representing tribes in negotiating 638 contracts. 

Problems we faced are that the requirements have changed, year 

to year, in those contracts; the language of the contracts has always changed from year to year; and the contracts include, by reference, long lists of other provisions, other paragraphs, other circulars and other requirements that the tribes are required to comply 

with. These requirements are nowhere to be found in one place; 

and often when you ask the agencies for these requirements, they 

can't even provide you with copies of them, so that they are unavailable for the tribes to review to determine whether they can, 
27 

will or wouldn't want to comply with them at the time of negotiation. 

All of these requirements have always been nonnegotiable, so the 

tribes have to take them or have no contract; and the requirements 

vary from contract to contract, depending on who is negotiating the 

contract, which agency and which tribe it is with. 

We strongly support, for these reasons, your approach of providing a model contract in the legislation. 

As you are aware, I am sure, this approach has been successfully 

utilized in Title III, the self-governance aspects of the Indian SelfDetermination Act; and there is a model compact for that which we 

believe is similar to what you have done in your provisions. We believe that what you have done is sufficiently flexible to meet both 

the needs of tribes and the administration and to allow them to 

interact on a government-to-government basis without hampering 

either side from having a workable contract. 

I think that the Act will create a simplification of the contracting 

process. It will eliminate disputes over onerous contract terms and 

will create the result that tribes, wherever located, will be treated 

uniformly; and that is certainly not the case now. 

A few parts that deserve special attention are your inclusion at 

Section 1081(b) of the canon of statutory interpretation that 

tribes-that statutes for the benefit of Indians are to be liberally 

interpreted in their favor. I think this will remind the people negotiating the contracts on behalf of the administration, every time 

they have to negotiate a contract, of what this law is really about. 

I think your tribal court provisions are excellent, especially insofar as they allow for alternative tribal resolution bodies to be used 

in the place of tribal courts. In California, at least, with more than 

110 tribes, only two of those tribes have tribal courts. 

I think the three-year contracts, with annual funding agreements, are excellent. The provisions regarding limitation of costs 

are very valuable, and I think Mr. Clapham will comment on those 

briefly. 

I think-I could go on through the whole model contract, but I 

think that the provisions here are really what is needed. I think 

the contract is well drafted. It is consistent with the Act and its 

intention, and it is workable for both tribes and the agencies. 

My clients strongly endorse the model contract and the Act as a 

whole, and urge that you pass it promptly and not be delayed by 

the perhaps naive promises of the administration witnesses that 

were here today. We would also ask that you take a look at our 

comments in regard to changes to the declination time limits, 

rights to engaging discovery, burden of proof, and restriction on 

regulations that are specific wording we have suggested in my testimony. 

I, with that, will thank you for the opportunity to appear today 

and turn the mike back over to Mr. Clapham. 

[The statement of Ms. Karshmer may be found at end of hearing.] 

Mr. F ALEOMA v AEGA. Thank you very much. I do have some questions I would like to-Mr. Clapham, did you have a couple more 

comments to make? 
28 

Mr. CLAPHAM. Mr. Chairman, yes, I did. Thank you for the opportunity. 

I wanted to hit on four sections just very briefly in H.R. 4842. 

The first is Section 5, which deals with the regulatory process. 

As written, it limits regulations to five areas that are procedural 

in nature. We think that is a workable approach; it gives the agencies 12 months to promulgate regulations in those five areas 

through the negotiated rulemaking process under the negotiated 

Rulemaking Act of 1990. There is no impediment here that would 

prohibit the agencies from promulgating internal rules under the 

Act. I think the Act is clear in that regard. So the internal operations of the agencies with regard to 638 contracting could still go 

forward. 

Finally, as Ms. Karshmer and others have pointed out, there are 

some changes in 4842 that deal with limitation of cost, that ensure 

that adequate funding will be provided to the tribes in the process 

of carrying out these contracts; and if it is not, those activities can 

be shifted back to the Federal Government once those funds have 

been expended, and not added to meet the needs of the programs 

carried on. There are amendments in the appeals section to allow 

a tribe to exercise an option between an administrative appeal or 

go directly into the Federal District Court for declination appeals. 

Finally, a matter that has been of interest to the Navajo Nation, 

my client, for this whole period of six years, the Act specifically authorizes the use of tribal preferences, the hiring and contracting 

process in implementing a 638 contract. 

For the record, I will be submitting when I return to Window 

Rock, resolutions of the Intergovernmental Relations Committee of 

the Navajo Council that support-have reviewed and authorized 

and support S. 2036, as revised, the bill that was before them prior 

to this hearing. I am sure they will take similar action on H.R. 

4842 in the future. 

Thank you. 

Mr. FALEOMAVAEGA. Thank you very much. 

I have no doubt that all of you members of the panel certainly 

have held your given positions with distinction as expert attorneys 

in your own right; and I suspect also our friends downtown, who 

wrote hundreds of these pages of so-called regulations, are also attorneys of their own distinction. I am getting a little frustrated 

right now that this is a battle between lawyers who continue to do 

these things and seem to cause more problems than actually finding a solution to these problems. 

I would like to ask you, members of the panel before us here, do 

you think that perhaps the law that was enacted six years agowas the language in that statute so bad or so vain that the attorneys couldn't write their regulations properly? Was that the reason 

why they couldn't do it? I mean, I would like your opinions on this, 

since you are expert in interpreting the law in your own right as 

attorneys. 

Mr. CLAPHAM. In response, I would have to say, I thought the 

language was clear. I thought that the regulations could have been 

written and thought that the regulations were written in 1989 

after the two--
29 

Mr. FALEOMAVAEGA. I mean, this law wasn't 2,000 pages; I 

mean, it was plain, simple, farmer's language. Was this written by 

attorneys, too, that caused the confusion? 

I am sorry, I didn't mean to interrupt; I just wanted your honest 

opinion. What was the problem? 

Mr. CLAPHAM. I think that the comments earlier in the hearing, 

of the Chairman about the bureaucracy, contributed greatly to the 

problems with the regulations. I also believe that the expansion of 

the 638 contracting process to bring in the non-Indian bureaus, 

folks who had not been familiar with 638 contracting in the Department of Interior may have contributed to some of the confounding nature which we find in the regulations now. 

Mr. FALEOMAVAEGA. Do you think there is some greater truth 

in-I don't know which Henry that was in the Shakespeare era, 

Henry V or Henry VIII-with the admonition, the first thing we do 

is kill all the lawyers. I mean, I see the frustration of the tribes; 

and I am sure all of you are frustrated yourselves in trying to work 

this thing out for your clients. I am sure you are doing an honest 

job and trying to give them the best representation. But, by golly, 

I suspect that these ghost attorneys that have been writing these 

regulations downtown also is part of the problem. 

I was wondering, could it be that this legalese has gotten so bad 

here in Washington, D.C. that we seem to miss-forget smelling 

the flowers, while going through the forest and not seeing the light 

of these things? 

I don't know. Please enlighten me on this. 

Ms . .KARSHMER. I would like to just respond that I don't think it 

is legalese that is the problem; I think it is the basic concepts that 

are the problem. Lawyers are new lawyers; we have bureaucratic 

inertia that we are dealing with. As my colleague suggested, we 

have this big ship going in a direction that just can't be turned. 

I think we have a problem dating back-I noted in my written 

testimony--

Mr. FALEOMAVAEGA. But, you see, the captain of the Exxon 

Valdez, I understand, was drunk. 

Ms. KARsHMER. I don't cast those aspersions on anyone in the 

administration. 

Mr. FALEOMAVAEGA. I hope we don't have drunken lawyers drafting these regulations. 

Ms. KARsHMER. I can only speak for myself. 

Back in 1975, when the law was first passed, BIA officials went 

from reservation to reservation in California telling the tribes that 

this was termination, that BIA was going to be wiped out, that 

there was going to be no one to protect the interests of tribes, and 

therefore, tribes should not be favorably inclined to contract under 

the Act. 

What happened instead of that was that bureaucracies developed 

regulations that they would have to implement; they would have 

to have a million people on staff to control these contracts with the 

tribes. I give the example in my written testimony that in 1975, 

there wasn't even an area office in California for the provision of 

health care. There wasn't a single IHS service unit in California; 

there was no care provided by IHS for Indians in California. 
30 

Today, there is still no care provided by IHS for Indians in California. All the care is provided through contracts with tribes. Yet 

from 1975 to the present, there is now more than 125 IHS employees in the IHS area office in California to monitor contracts, to 

write contracts, to keep tribes in line. And I think it is this very 

conception that tribes cannot be trusted with 638 contracts to do 

what is right, to operate contracts correctly, and to spend government money properly that is the impediment behind getting anywhere on these regulations. 

Mr. DEAN. Mr. Chairman, if I could also respond. I want to say 

that I-Chip Martin has told me that I am making a lifetime career out of these regulations, and notwithstanding that, I don't 

think it is primarily the lawyers on either the tribal side or the 

government side. I think it is the interest of the bureaucracy. 

In the course of the consultation, one Federal representative told 

the tribal representatives that what we are trying to do in this particular part of the regulations is to create a level playing field between the tribes and the Federal employees. That showed an approach which is understandable, because we are talking in some instances about the jobs of people and their families. 

Recently, I have heard at one of the IHS area offices that that 

point was made, you are asking us to lay off people who have families to support. 

Now, the fact is that the Congress has made a determination 

that tribes should decide that, whether they are going to be served 

by Federal employees or by their own people, under their own authority. So I think it is understandable that there is bureaucratic 

resistance. I think some on the government side have seen their clients as being the agency, and have not perhaps been sufficiently creative in carrying out the congressional purpose. But I think that 

is understandable. 

I believe that the problem with the next round, if there is one, 

is whether the departments, the people that we heard today, will 

really force a total rethinking of the Federal approach. Because if 

they go back and try to justify all or most of these present regulations, it will be a waste of time. 

Mr. FALEOMAVAEGA. Ms. Gouwens? 

Ms. GoUWENS. I have nothing further to add. I think the statute 

has long been clear, and the problem is with attitude, not with language. 

Mr. FALEOMAVAEGA. There has been another sense of curiosity 

too about the Bureau downtown, and the fact that-this is hearsay. 

I don't know-maybe if you all have any knowledge-exactly 

what is the percentage of the people working for the BIA that are 

Native Americans, and through a self-perpetuating bureaucracy 

over the years, some estimates have been made that 80 percent of 

the people working for BIA are Native Americans. 

Mr. CLAPHAM. I can't speak for the situation here in Washington 

D.C.; I simply don't know those figures. I would tell you that at the 

area office level and the agency office level on the Navajo reservation, the BIA's employees are predominantly Navajo-members of 

the Navajo Nation. 

Mr. FALEOMAVAEGA. Well, I am sure this is the effort of every 

tribe, to get as many of the Members of the tribe to be a part of 
31 

the process, participating in the tribal affairs, especially when a 

tribe is the size of the Navajo Nation with 200,000 now in number, 

the largest Native American tribe in the country. So you have to 

have a bureaucracy, you have to have a government to provide for 

the needs of some 200,000 men, women and children. 

In what was discussed earlier with our friends from downtown, 

with the notion that these regulations should hopefully come about 

by August of next year, I notice in your testimony, Ms. Karshmer, 

that this is unthinkable, that it should be done in some way; and 

then I hear, I think, Mr. Dean's observation that sometimes we 

really don't know if these regulations are going to solve the problem. It might make things even worse. 

So why should we even issue regulations at all? Just perhaps 

come up with another solution to the problem or a suggestion. 

Ms. KARsHMER. I think that that is why the tribes are endorsing 

your bill, because they don't have the confidence that sufficient 

changes will be made in the regulations, or in the proposed regulations, to make them workable. 

As my colleague earlier stated, tribes are really stuck. If they 

didn't agree to participate in the process of redoing the regulations, 

they would be stuck with the regulations there are right now. So 

they really had no choice but to say OK, we will try to make them 

better. 

But at the same time, there was the unanimous vote in support 

of S. 2036, which is nearly identical, or will be nearly identical, as 

I understand it, to your bill, H.R. 4842. And I think it was a matter 

of not having choices and not seeing that there was going to be a 

sufficient agency response to tribal concerns. 

As I am sure you are aware, tribes negotiated regulations for 

several years, thought they had a good set of negotiated regulations; then things were dropped for two years, and out came this 

set of regulations that looked totally different from what had been 

negotiated and, in many cases, was opposite to what had been negotiated by the tribes and had little relationship, if any, to all of 

the agreements that the tribes had thought they had reached during the initial negotiation period. 

So that is why tribes are very skeptical about going forward with 

a regulatory process, but instead, prefer the process that you have 

taken or the approach that you have taken in your bill to avoid the 

need for such a process and deal with some of the substantive issues as well. 

Mr. F ALEOMA v AEGA. You might say then that the bottom line 

that all of you, by consensus, agree to the principles of the objectives of H.R. 4842? 

Mr. DEAN. Mr. Chairman, if I could say, I have not had time to 

get instructions from my clients as to the House bill. I have reviewed it, however, and I have given your staff comments. 

I believe that 95 to 98 percent of the provisions would have widespread support among Indian tribes. There may be several provisions that I can't be sure of until I get instructions from my clients. 

So that is the only reason I have not testified to endorse it at this 

time. 

Mr. FALEOMAVAEGA. Well, one thing, I certainly enjoy working 

very much with your Chairman; and he likes to move on things 
32 

once they start going, and you either be on that train or you are 

going to miss the ride. And I look forward to working with the 

Chairman on this bill that I think is going to move very quickly. 

We definitely want to do something about it. 

I think, in fairness to our friends downtown-you know, we have 

only instituted this subcommittee since the beginning of this Congress, and perhaps, too, that we have had problems in previous 

years where we never had a subcommittee, it was always held on 

an ad hoc basis. I don't know what that means. But just the fact 

that we never had a subcommittee to directly address the issues 

dealing with Native Americans on the House side, we have had 

problems. 

And, bless your heart-I know Chairman Udall; you couldn't find 

a person with more love and feel for Native American issues-but 

just the fact that we did not have an institutionally established 

subcommittee to handle the affairs of Native Americans, I think 

was perhaps one of the problems that we faced here on this side. 

Thanks to Senator Inouye--you know, singlehandedly he went 

about to establish a select committee, now composed of 16 Senators, and now it is a regular committee of the Senate; and for 

years we never had that either. · So, hopefully, with the commitment that this President has 

made, inviting the leaders of the tribes from all over the country 

to the White House-! think it is a step forward-and hopefully his 

commitment and rhewric is going to be matched with Secretary 

Babbitt's commitment that they definitely will do something about 

the needs of Native Americans. 

I want to personally thank all of you for coming here this morning to testify. Keep us posted. The train is going to be moving, and 

we need your help and support from your respective tribes to see 

that we take corrective action on this problem that has been lingering for the past six years. 

Thank you very much. The committee is adjourned. 

[Whereupon, at 11:45 a.m., the subcommittee was adjourned; and 

the following was submitted for the record:] 
33 

STATEMENT 

OF 

SENATOR JOHN McCAIN 

FOR THE OVERSIGHT HEARING ON 

THE INDIAN SELF-DETERMINATION AND EDUCATION ASSISTANCE 

ACT 

BEFORE THE 

SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

OF THE 

COMMI'ITEE ON NATURAL RESOURCES 

UNITED STATES HOUSE OF REPRESENTATIVES 

JULy 28, 1994 

Mr. Chairman and Members of the Committee, I appreciate the opportunity 

to appear before you today to offer a few comments on the Indian SelfDetermination and Education Assistance Act. 

Before I begin, I want to commend Chairman Richardson and Congressman 

Thomas for introducing H.R.4842. The House bill is similar to S.2036, the Indian 

Self-Determination Contract Reform Act of 1994, which Chairman Inouye and I 

introduced in the Senate on April 20, 1994. The Committee on Indian Affairs will 

mark up S.2036 in a couple of weeks, and I am very hopeful that we will be able 

to pass S.2036 in the Senate prior to the August recess. 

Mr. Chairman, I think it would be useful to review briefly the history of the 

Indian Self-Determination Act and to examine why the tribes have become 

increasingly frustrated with the existing regulatory process. 

The 1975 Indian Self-Determination and Education Assistance Act provided 

tribes with authority to contract with the federal government to operate programs 

serving their tribal members. The policy of self-determination has proven to be very 

successful in terms of promoting tribal operation of federal programs and services 

administered by the BIA and IHS. The policy has its origins in President Nixon's 

1970 "Special Message to the Congress on Indian Affairs" which stated: 
34 

For years we have talked about encouraging Indians to exercise greater 

self-determination, but our progress has never been commensurate with 

our promises. Part of the reason for this situation has been the threat 

of termination. But another reason is the fact that when a decision is 

made as to whether a Federal program will be turned over to Indian 

administration, it is the federal authorities and not the Indian people 

who finally make that decision. 

This situation should be reversed. In my judgment, it should be up to 

the Indian tribe to determine whether it is willing to assume 

administrative responsibility for a service program which is presently 

administered by a federal agency. 

In response to President Nixon, the Congress passed the Indian SelfDetermination and Education Assistance Act in 1974 and it was signed into law by 

President Ford on January 4, 1975. Today, approximately $531 million of the 

funds appropriated to the BIA are administered by tribal governments under selfdetermination contracts. There are over four hundred contracts between Indian 

tribes and the IHS involving about $497 miilion annually. Indian tribes contract 

with the IHS for the operation of 8 fully accredited hospitals, 347 health centers 

and 70 service units. 

During the consideration of the 1988 amendments the Senate Committee on 

Indian Affairs noted that the Act had failed to meet its goal of reducing the federal 

bureaucracy and ending the federal domination of Indian programs. In fact, there 

had been no reduction in the federal bureaucracy. Instead the Act had spawned an 

increase in federal officials who were employed to monitor self-determination 

contracts. The Committee found that federal bureaucrats had imposed 

administrative and reporting requirements on Indian tribes which were more 

stringent than the standards which would apply to direct federal operation of the 

programs, activities and services that the tribes were contracting to provide under 

the Act. So many layers of bureaucracy and rules had been imposed that the 

contract approval process required an average of 6 months rather than the 60 days 

mandated by the Act. 

The Committee found that the original goal of ensuring maximum tribal 

participation in the planning and administration of federal services, programs and 

activities intended for the benefit of Indians had been undermined by excessive 

bureaucracy and unnecessary contract requirements. The 1988 amendments were 

intended to " ... remove many of the administrative and practical barriers that seem 
35 

to persist. .. " under the Act. The amendments required new regulations to be 

developed by BIA and IHS with the participation of Indian tribes. Senate Report 

100-274, which accompanied the amendments, stated: 

The regulations regarding contracts under the Indian SelfDetermination Act should be relatively simple, straightforward, and 

free of unnecessary requirements or procedures. The Committee 

intends ... [the] regulations to become effective prior to the beginning 

of the first Fiscal Year following enactment of this amendment. 

The 1988 amendments were intended to increase tribal participation through 

contracting in the management of federal Indian programs and to help ensure longterm financial stability for tribally-run programs. The 1988 amendments also 

required the Secretaries of Interior and HHS to consider and formulate appropriate 

regulations with the participation of the Indian tribes. The accompanying Senate 

report called for the two departments to issue joint regulations. Joint regulations 

were intended to permit the agencies to award contracts and grants to Indian tribes 

without the unnecessary burden or confusion associated with having two sets of 

rules for the same legislation. Joint regulations were also intended to permit both 

departments to implement the !988 amendments and eliminate deficiencies or 

problem areas which inhibited contracting under the original act. 

Nearly six years have passed since the enactment of the 1988 amendments. 

On January 20, 1994 the BIA and IHS finally published proposed regulations in the 

Federal Register. Despite the fact that the regulations were supposed to be 

"relatively simple, straightforward and free of unnecessary requirements or 

procedures," the new regulations contain hundreds of new requirements. As one 

commentator noted: " .. .in numerous instances [the proposed regulations] are more 

restrictive than existing regulations and raise new obstacles and burdens for Indian 

tribes seeking the opportunities for effective tribal self-government promised by the 

Act." 

Tribal reaction to the proposed regulations has been extremely negative. 

Not only are tribes frustrated that the regulatory process is still on-going with no 

end in sight, but the fact that the proposed regulations in many instances are 

different than the understandings that tribes thought they had reached with the 

agencies during the joint tribe-agency consultations. 
36 

S.2036, the "Indian Self-Determination and Contract Reform Act of !994," 

is intended to prohibit the Secretary of the Interior and the Secretary of Health and 

Human Services from promulgating any regulations under the Self-Determination 

Act It prescribes the terms and conditions which must be used in any contract 

between an Indian tribe and the Bureau of Indian Affairs or the Indian Health 

Service. No modifications could be made to any contract which is entered into 

under the authority of the Self-Determination Act without the written consent of the 

Secretary and the tribe. 

It is entirely possible that regulations will be required in certain areas to 

effectuate the purposes of the Act. However, I believe the burden of proof should 

be on the federal agencies or any other interested party (tribes or lawyers) to justify 

to the Congress and to the tribes the need for such regulations. 

On June 15, 1994, the Senate Committee on Indian Affairs conducted a 

hearing on S.2036. All of the tribal witnesses testified in strong support of this 

legislation. In addition, tribal witnesses requested that the Committee consider 

combining relevant portions of S.l410 (a bill introduced by Senator Inouye on 

August 6, 1993 which proposes various technical amendments to the Indian SelfDetermination Act) and other technical revisions to ensure that the federal agencies 

do not substitute their views for that of the Congress and the Indian people. 

My staff is currently working with various tribal representatives to draft an 

amendment in the nature of a substitute to S.2036. 

Regrettably, this administration has voiced its opposition to S.2036. Assistant 

Secretary Ada Deer has asked the Committee on Indian Affairs to suspend further 

consideration ofS.2036 until the BIA and IHS have renegotiated regulations for the 

Self-Determination Act under the Federal Advisory Committee Act. 

Tribes are clearly frustrated and angered by the current state of affairs. I was 

critical of the last administration for their handling of this matter, and I note that 

this administration, which has said that it wants to reinvent government, reduce 

burdensome regulations, and listen more carefully to tribal governments also has 

failed to act responsibly. One year after this administration took office it made the 

decision to publish proposed 638 regulations that even the most casual observer of 

the five and one-half year regulatory process knew would be rejected by the tribes. 

Now the administration is asking the Congress to suspend further legislative action 

until it can complete another round of tribal-federal negotiations. 
37 

My response to the BIA and the IHS is straightforward. We have given the 

BIA and the IHS nearly six years to do a job that was supposed to take one year. 

The time has come for decisive action, and it is my intent to move legislation 

reforming the Indian Self-Determination contracting process this year. I look 

forward to working with you, Mr. Chairman, and Congressman Thomas to enact 

legislation that will recapture the vision that gave birth to the Indian SelfDetermination and Education Assistance Act. 
38 

STATEMENT OP BONNIE COHEN 

ASSISTANT SECRETARY -- POLICY, MANAGEMENT AND BUDGET 

UNITED STATES DEPARTMENT OF THE INTERIOR 

Before the 

COMMITTEE ON NATURAL RESOURCES 

SUBCOMUITTEE ON NATIVE AMERICAN AFFAIRS 

UNITED STATES HOUSE OF RBPRBSBNTATIVBS 

Regarding 

CURRENT EFFORTS TO IMPLEM!!:NT THE 1988 AMENDMENTS 

TO THE INDIAN SELF-DETERMINATION 

AND EDUCATION ASSISTANCE ACT 

July 29, 1994 

Good Morning, Mr. Chairman and Members of the Committee. I am pleased to be here to discuss the Department's efforts to 

implement the 1988 amendments to the Indian Self-Determination 

and Education Assistance Act (the "Act" or "638"), particularly 

as these efforts relate to contracting in Departmental agencies 

outside of the Bureau of Indian Affairs ("BIA"). Before we begin, however, I would like to introduce Faith Roessel, Deputy 

Assistant Secretary, Indian Affairs, and Molly Poag, Director, 

Office of Regulatory Affairs. Faith will discuss current 

contracting efforts in the BIA, and Molly will discuss the 

current status of the proposed regulations. 

INTRODUCTION 

At the outset, I want to assure you that we are aware of the 

frustrations experienced by tribes regarding implementation of 

the Act, and that we are working hard to remedy some of the 

problems that have led to these frustrations. Many of these 

problems, however, began during prior Administrations and, in the 

past 18 months, we have made substantial progress toward 

resolving them. For example, this Administration made 

publication of the rule a priority and published it within one year of taking office. Moreover, pursuant to tribal request, we are developing a process to attempt to reach consensus with 

tribes on the final rule, and we anticipate publication by August 

1995, ·the date requested by tribes. 

In addition, we are working to ensure that tribes are aware of 

and, if they desire, take advantage of contracting opportunities 

under the Act. The BIA has contracted out nearly a third of its 

program funds and anticipates continuing to expand the scope of 

its contracting activities. The Bureau of Reclamation ("BuRec•) 

and the Bureau of Land Management ("BLM") also have programs 

contracted to tribes under the Act, and they expect to contract 

other programs in the future. We recognize, however, that we can 
39 

do more, and we have instituted a review to determine which 

programs within the Department provide direct benefits to tribes. 

This Administration recognizes our government-to-government 

relationship with tribes and is eager to work with them to 

finalize regulations implementing this legislation. We 

appreciate the opportunity to come before you and describe our efforts. We believe that we are on the right track to resolving 

many of the tribes' outstanding concerns. We are opposed, 

therefore, to any 638 legislation at this time and urge the 

Congress to defer legislative action until a final rule is 

completed. 

CONTRACTING BPFORTS IN NON·BIA AGBNCIBS 

The Act was first enacted in 1975 to authorize tribes to seek 

contracts with the Department of the Interior ("DOI"), under 

which tribes would administer programs previously administered by 

the BIA. Programs eligible for contracting were required to have 

been established for the benefit of Indians under the Snyder 

Act' or any subsequent act. The Department generally has 

interpreted the original act to require only the contracting of 

BIA programs. 

The 1988 amendments expanded the scope of the Department's 

contracting powers to include programs that were established for 

the benefit of Indians because of their status as Indians, yet are administered by agencies within Interior other than BIA. 

Since 1988, some non-BIA programs have been contracted. The 

Bureau of Reclamation ("BuRec•) currently has the greatest 

portion of non-BIA programs administered under 638 contracts. 

Among other things, tribes currently are administering planning 

operations, environmental studies, and the construction, 

operation, and maintenance of water systems and water-related 

projects. For example, the San Felipe Pueblo and the Santo 

Domingo Pueblo are administering a program on the stabilization 

of the banks of the Rio Grande; the Tohono O'odham - Shuk Toak 

district are constructing water delivery facilities; the Navajo 

Nation is administering a program regarding safety of the Round 

Rock dam; and the Gila River Indian Community is constructing an irrigation system on the Sacaton Ranch. In anticipation of 

increasing its 638 contracting activities, BuRec is offering training to its employees in 638 contracting procedures. 

The BLM also has entered into 638 contracts. BLM is estimating over $5,000,000 worth of programs in 638 contracts for FY 1994, a substantial increase over the roughly $200,000 it contracted in 

1992. These programs all relate to cadastral survey work in 

Alaska. 

25 u.s.c. s 13. 

- 2 -
40 

Many other non-BIA programs, though currently not contracted 

under 638, are administered through cooperative arrangements such as memoranda of understanding or agreement. For example, the 

Chehalis and Quinhalt tribes are conducting fishery restoration 

activities funded by the Fish and Wildlife Service ("FWS"l under 

the Chehalis River Fisheries Program, and the Hoopa Valley, 

Karuk, and Yurok tribes are conducting similar activities in the 

Klamath River Basin. In Alaska, the Tanana Chief's Conference 

and the Association of Village Council Presidents are collecting 

data that is used in FWS subsistence harvest management 

activities. The Blackfeet tribe in Montana has an assistance 

agreement with BLM for inspection and enforcement of Indian oil 

and gas operations, and many other BLM programs also are administered through cooperative agreements with tribes. The 

Minerals Management Service is conducting an outreach program to 

generate tribal interest in cooperative audit agreements under 

the Federal Oil and Gas Royalty Management Act. 

Nevertheless, the majoricy of DOI pt·ograms contracted to tribes 

under 638 are through BIA, because of BIA's unique role within 

the Department and the American Indian com~unity, and because of 

the statutory re~uirement that programs eligible for 638 

contracting must be for Indians because of their status as Indians. In FY 93, B!A's total obligation for 638 contracts was roughly $700,000,000, or nearly one third of BIA's total 

obligations. The 638 obligation includes funds for tribes to 

administer at least a portion of virtually existing BIA 

program, such as human services, education, safety and 

justice, community development, resource management, trust 

services and general administration. 

The Department recognizes, however, that more can and should be 

done to encourage non-BIA contracting. As a result, DO! has 

established an internal review process to identify non-BIA 

programs, such as programs currently administered under 

cooperative agreements, that may be subject to 638 contracting. 

This review, which is headed by the Department's Chief of Staff, 

is ongoing and is increasing the Department's understanding of 

programs that directly benefit American Indians. This increased 

understanding will enable Bureau Directors and office heads to 

actively promote these programs for contracting by tribes. 

CURRENT PROPOSED REGULATION 

Under the current proposed regulation, a program is for the 

benefit of Indians because of their status as Indians, and thus 

eligible for consideration for 638 contracting, where Indians are the primary and significant beneficiaries of the program as evidenced by: (1) authorizing or appropriations legislation or 

- 3 -
41 

legislative history; (2) implementing regulations; or (3) the 

actual administration of the program.• 

The term " primary or significant beneficiaries" refers to those 

entities whose benefit or enhancement was the principal or a leading motivation for the establishment of the program or portion of the program. 

Under this test, the Department must conduct a case-by-case 

analysis, examining the purpose, character, and administration of 

the program. In establishing a particular program, however, 

express congressional invocation of its constitutional authority over Indians will be considered evidence that Congress intended 

the program to be for the benefit of Indians because of their 

status as Indians. 

In light of the Department's increasing understanding of its 

programs that benefit Indians in their status as Indi~ns, and in 

light of our government-to-government relationship with tribes, I 

want to stress that the proposed test, consistent with the 

purpose of the Administrative Procedure Act, is merely a proposal. It may be modified based upon public comments received 

during the comment period, or as a result of the consensus- building discussions with tribal representatives that will occur after the close of the comment period. These discussions, and 

the process that led to development of the current regulation, are described below in more detail. 

DBVBLOPMBHT OP TBB PROPOSBD RBGOLATION 

The Department recognizes that promulgation of the proposed 

regulation has been extraordinarily delayed. Most of this delay, 

The proposed regul•tion provides that a program ia for the benefit of 

Indians because of their status as Indians, and thus eligible for 638 

contracting, where: 

•(A) The authori:ing statute or legislative history specifically identifies 

Indians, because of their status as Indians, as primary or oignificant 

beneficiariea of the program or portion of the program or otherwise 

indicates that Congressional intent was to benefit Indians because of their statue •• Indians; or 

(8 ) The appropriation of funds for the operation of the program or portion 

of the program specifically target• Indians, because of their status as Indians, as primary or significant beneficiaries of the •ppropriations, as evidenced in the statutory or committee report lanquage or the budget 

justifications submitted to the Appropriations Committee; or 

{C) Regulations or admini8tration of a program or portion of a program identify Indians, bec•use of their atatua as Indians, or reflect a Departmental intent to benefit Indians, because of their status as Indiana, 

aS primary or significant recipients of the services to be provided by the program or portion of the program. 

- 4 -
42 

however, occurred during prior Administrations. When this 

Administration took office, the proposed rule had not been 

published and was over four years behind schedCJle. The rule 

quickly became a priority, however, and was published just one year later. DOI and HHS currently are working to develop a process that will permit tribes to participate fully in the 

development of the final rule. 

DOI and HHS began drafting joint regulations implementing the 

amendments in 1988. Meetings with tribes were held throughout 

the country to discuss the amendments, and a working document was produced following two regulatory drafting workshops that 

included DO!, HHS, and tribal representatives. In December 1989, 

DOI and HHS jointly released draft regulations for tribal 

comment, and in January and February of 1990, thirteen regional 

consultation meetings were held to discuss the jolnt draft 

In March 1990, the Coordination Working Group ("CWG"i was created 

to revise the December 1989 joint draft regulations. The CWG, 

which was composed of representatives from DOI, HHS, and tribes, 

met periodically between March 1990 and August 1990. In 

September 1990, a second draft regulation was released reflecting 

changes made by the CWG. 

Throughout the following year, DOI and HHS cor.ducted preliminary 

reviews of the CWG draft. DOI created a Departmental Review 

Team, composed of representatives from all DOI bureaus with an interest in the regulation, to examine the draft. DOI also 

created a Departmental Policy Group, composed of all Assistant 

Secretaries and the Solicitor, to resolve issues that could not 

be resolved by the Departmental Review Team. Tribal 

representatives were not included in this process. 

In November 1991, DOI and HHS separately released revised draft 

regulations based upon their respective reviews of the CWG draft. 

A joint negotiation team was appointed to resolve differences 

between DOI and HHS drafts, and this team met for the first time 

in June 1992. Weekly meetings were held throughout the summer of 

1992, and the final joint regulations were completed in October 

1992. Tribal representatives also were not included in this 

process. 

In December 1992, the joint draft was submitted to the Office of 

Management and Budget ("OMB"l for review. After the Clinton 

Administration took office, however, the rule was returned for 

review by each Department. Thorough reviews were conducted and, on January 20, 1994, the regulations were published in the 

Federal Register with a 120 day comment period expiring on May 

20, 1994. 

During this period, three regional meetings (in Phoenix, 

Minneapolis, and Reno) and one national meeting (in Albuquerque) 

• 5 • 
43 

were held to s.olicit tribal comments on the proposal. 

Representatives of many bureaus and offices attended to ensure that tribes were aware that many non-BIA programs are contractible. 

During the national meeting, tribes requested that the comment 

period be extended for 90 days and that a process be developed 

for tribal participation in the development of the final rule. 

Specifically, tribes requested six working sessions with 00!, 

HHS, and 48 tribal members, and that the final rule be published no later than August 31, 1995. DOI agreed in principle to these 

requests, and DOI and HHS promptly extended the comment period to 

August 20, 1994, thus providing tribes with seven months to 

comment on the proposed regulation. 

DOI and HHS currently are working to fulfill the other tribal 

requests made at the national meeting in Albuquerque. Currently, 

DOI and HHS are developing a charter, under the Federal Advisory 

Committee Act, to permit us to continue working with tribes after 

the close of the comment period to develop consensus positions 

for the final rule. It is anticipated that these efforts will 

produce a final rule that fulfills the mandates of the 1988 

amendments and meets tribal concerns. 

Moreover, DOI is working to ensure that, in light of the 

government-to-government relationship with tribes, the consensus reached with HHS and tribes reflects the final position of the 

Department. The process established between 1990 and 1992 

allowed DOI and HHS to review and revise the original CWG draft 

without the benefit of further tribal participation. Under the 

process currently being developed, however, DOI intends that the 

final rule will reflect any consensus reached with tribal 

representatives, thus avoiding the delays that occurred between 

1990 and 1992. Moreover, DOI intends to complete the process 

within the timeframe requested by tribes at the May 1994 national 

meeting in Albuquerque. 

CONCLUSION 

We commend the committee for scheduling this hearing and thank 

you for the opportunity to testify. This hearing has provided us with another opportunity to listen to all sides and work toward a consensus that will serve the needs of the tribes and the 

Department. We oppose any legislation that hinders our efforts 

toward reaching consensus. We have a government-to-government 

relationship with tribes and we are developing a process co resolve important self-determination issues. This process should 

be allowed to continue unfettered. 

- 6 -
44 

DEPARTMENT OF HEALTH AND HUMAN SERVICES 

STATEMENT OF 

MICHEL LINCOLN 

DEPUTY DIRECTOR 

INDIAN HEALTH SERVICE 

BEFORE THE 

HOUSE SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

UNITED STATES HOUSE OF REPRESENTATIVES 

JULY 29, 1994 
45 

Good Morning, 

Mr. Chairman, I am Michel Lincoln, Deputy Director, Indian Health 

Service (IHS). I'm pleased to be here today to provide you an update 

on the Indian Self-Determination Act (P.L. 93-638) regulations 

development process. I am accompanied today by Mr. Richard J. 

McCloskey, Director of the Division of Legislation and Regulations. 

Let me begin by stating that we share your concerns about the need for 

the most simple, straightforward regulations as possible. we also 

share the concerns expressed by tbe Congress and the tribes with 

respect to the time required to finalize the regulations. 

First, with respect to the time involved, we agree it has been an 

lengthy process. However, to date, we ~ave successfully accomplished 

a key congressional directive, including a joint Notice of Proposed 

Rulernaking (NPRM), published January 20, 1994, in the Federal Register 

with a 120 day comment period. The Department of Health and Human 

Services (DHHS) and Department of tbe Interior (DOI) ensured that the 

NPRM was developed with substantial tribal participation. From 1988 

to 1990, over 600 individual tribal representatives were actively 

involved in drafting groposed regulations provisions many of which are 

contained in the NPRM. 

1 
46 

From 1991 to 1993, joint Secretarial review, negotiation, joint policy 

decisions and clearance was completed through two Administrations. 

During this period, the IHS maintained communications, through 

meetings and correspondence, with tribal representatives on draft 

regulation revisions as policy decisions were made. 

In April and May of this year, the Department of Health and Human 

Services (DHHS) and the Department of the Interior (DOI) held three 

regional throughout the u.s. and a national meeting in Albuquerque. 

The purpose of these meetings was to orient all tribes to the 

rationale behind final policy decisions reflected in the NPRJol, as we1 1 

as to receive public comments. 

In May, aver 400 tribal representatives who attended the national 

meeting presented to Assistant Secretary of Indian Affairs Ada Deer 

and myself, a tribal leader consensus statement. This statement 

requested a three month extension to the original comment period. It 

also contained a detailed schedule of recommended activities related 

to the NPRM to be undertaken over the following year including a 

series of tribal/federal meetings to review comments and negotiate a 

consensus toward developing a final rule. The IHS has agreed to the 

tribes' request and extended the comment period to August 20. We are 

working out procedural arrangements with the DO! and the tribes and 

plan to begin these meetings in October, 1994. Based upon the 

recommended schedule, final regulations are anticipated to be 

published in November 1995. 

2 
47 

While the proposed regulations are longer than the previous issuance 

they do represent a more simplified process. In the future, all 

contract requirements will be contained within these regulations 

where, formerly, key Federal Acquisition Regulation (FAR) provisions, 

Agency guidelines, manuals, and policies were incorporated by 

reference. In many instances, tribes provided specific language and 

text for DHHS and DOI to incorporate into the proposed regulations. 

While regulations should not impose undue burdens, they should promote 

fairness and consistency in Agency decision-making. These types of 

procedural requirements, in part, limit or define Agency discretion 

and contribute to overall length. Examples include: 

a provision imposing on the Secretary important requirements, 

such as timeframes for making decisions to approve or decline a 

contract; 

a description of the Secretary's obligation to provide technical 

assistance; 

identification of the criteria to be used by the Secretary in 

making discretionary decisions; e.g. criteria for considering 

tribal requests for waivers, criteria for approving or 

disapproving contracts; 

3 
48 

DEPARTMENT Of HEALTH & HUMAN SERVICES 

----- -···---·~~

OCT 6 1994 

Th~ Honorable Bill Richardson 

Chairman 

Subcommittee on Native 

American Affairs 

Committee on Natural Resources 

U.S. House of Representatives 

washington, D.C. 20515 

Dear Mr. Chairman: 

Public Health Servic<t 

Indian Heatth Service 

Rockville MD 20857 

Enclosed is the Indian Health service's (IHS) response to your 

August 2 inquiry in followup to the July 29, 1994, oversight 

hearing on the Indian Self-Determination Act regulations. As you 

requested, the IHS has responded to those questions specifically 

directed to, and relevant for, the Agency. 

We hope that the enclosed information is helpful to you and your 

staff. Your interest and effort in these matters is appreciated. 

Enclosures 

Sincerely yours, 

.-,.- 7 .L1 /~ A~~L-,( ~ .. _/...( ~ ry<!/J 

a':',.(Mlchael H. Trujillo, M.D., (J Assistant Surgeon General 

D1rector 

M.P.H. 
49 

Department of Health and Human service 

Responses to Questions Submitted by the 

House Native American Affairs Committee 

from the July 29, 1994 oversight Hearing on the 

Indian Self-Determination and Education Assistance Act 

Public Law 93-638 

1. How did the change of Administrations which came about as a 

result of the 1992 elections affect the regulatory development 

process. 

Answer: Some delays occurred as a result of the change in 

administration. The new administration ordered a review of all 

regulatory materials then in process including material previously 

approved for but not yet published in the federal Register. The 

notice of proposal rulemaking (NPRM) for the 1988 amendments to the 

Indian Self-Determination Act, Public r"aw (P.L.) 93-638 fell in this 

category. The Department of Health and Human Services initiated a 

review and reclearance of the NPRM which was completed on 

August 2, 1993. During this period, Clinton Administration 

officials were briefed on the level of involvement by the tribes. 

Some concerns were voiced regarding the of outreach to, and 

participation in the drafting process by and tribal 

organizations after August 1990 and language to this effect was 

noted in the preamble. However, the Departments concluded that the 

"public comment period will provide an adequate opportunity for 

tribes and tribal organizations to provide comments on the current 

draft." 

2. \~hat are some of the other major reasons that implementation of 

the 1988 Amendments to the Indian Self-Determination Act have taken 

so long? 

Answer: While the regulations development process has been slow, 

IHS has implemented most of the major provisions of the Amendments 

regarding new tribal rights and/or Agency obligations. Examples 

include formal review of Agency decisions, statutory timeframes for 

contracting decisions, reduced reporting, funding of contract support costs, and removal of the contracting process from the 

application of Federal procurement rules. 

3. Assistant Secretary Cohen Could you please identify any 

efforts the Department has taken to encourage the development of 638 

contracts with Bureaus other than the Bureau of Indian Affairs? 

Answer: See Department of Interior response. 
Page 2 - To Asst. Sec'y Bonnie Cohen and Dep. Dir. Lincoln: 

4. Assistant Secretary Cohen -- Can you give us some examples of 

non-Bureau of Indian Affairs programs which have been contracted by 

tribes pursuant to the Indian Self-Determination Act? 

Answer: See Department of Interior response. 

5. You are familiar with the legislation introduced by Senator 

McCain. The legislation I have introduced is quite similar. Do you 

not agree that the legislation we have proposed, to streamline the 

contracting process, is in keeping with Executive Order Number 12861 

signed by President Clinton last year requiring each agency to 

eliminate 50 percent of its internal regulations within 3 years? 

Answer: While the legislation would reduce the volume of the NPRM, 

this would not necessarily represent a more streamlined process. It 

has been the position of most tribes involved to date that it is 

better to have prescribed procedures than to have greater Agency 

discretion. It has also been the preference of these tribes that 

all contract requirements be contained within the regulation where 

formerly, Agency guidelines, manuals, and policies were incorporated 

by reference. In many cases, provisions represented by language and 

text in the regulation were written by tribes participating in the 

regulation drafting activities. In other instances, the Agency has 

provided more simplification than what is required by express 

statutory provisions. If the regulations are not finalized, many 

advantages that tribes have anticipated will be lost. 

6. Although the agencies have agreed to extend the comment period 

and to re-negotiate the published notice of proposed rulemaking, the 

tribes have already negotiated two sets of regulations which the 

agencies have essentially ignored. What guarantee can the 

Department and the Service give us that the new round of 

negotiations will not simply end in the same result? 

Answer: The Department of Health and Human Service has agreed to 

the national tribal consensus request to provide for tribal 

participation in reviewing comments on the NPRM and developing the 

Final regulation through the establishment of an Advisory Committee 

under the Federal Advisory committee Act (FACA). The Committee, 

which would include tribal representatives, would work toward 

consensus recommendations to the Secretary on the Final regulation. 

It is important to note that tribal positions were not ignored with 

respect to the proposed rule implementing the P.L. 93-638 

amendments. All were thoroughly considered and throughout the 

process the Departments sought to retain as much of the advice and 

perspective provided by tribal representatives as possible. 

However, there are differences with the positions of some tribes 

including a number related to principles of .equity for all tribes. 
51 

Page 3 - TQ_~sst. Se~nnie Cohen and Dep. Dir. Lincoln: 

It is important to clarify that there were no earlier agreed upon 

regulations. There were a series of work drafts developed during 

extensive meetings. These drafts contained extensive notes 

describing differing views of the parties - tribal, IHS and BIA. The 

last series of meetings resulted in the September 1990 work draft. 

At that time all parties agreed that what '"''IS needed was a proposal 

to which both Federal agencies agreed and to which the tribes could 

react. In March 1993 staff of both Departments conducted a joint 

briefing for the 638 Steering Committee which supported publication 

of the NPRM as the appropriate mechanism to address the remaining 

issues. The NPRM was published virtually unchanged in 1994. The 

reliance on the FACA process is in response to the tribal consensus 

regarding the preferred method to assure tribal participation. 

7. Do you anticipate any problems in meeting the commitments you 

have made to tribes -- to negotiate a redraft of the proposed 

regulations -- as set forth in the latest draft charter for the 

Federal Advisory Committee Act committee? 

Answer: We do not anticipate delays beyond the estimated time 

indicated in the tribal consensus statement. Tribes have been 

involved in virtually all decisions to date regarding the process 

schedule. It is assumed that this will continue, and any delay 

will be with the mutual agreement of all parties. 

a. Are you aware of any problems with respect to the funding of 

the Federal Advisory Committee? 

Answer: The IHS has agreed to fund half of the estimated $300,000 

cost of the Federal Advisory Committee. The IHS does not have a 

problem with the funding approach. 

9. Could you provide us with an estimated cost to the Departments 

caused by the failure to complete promulgation of regulations in a 

timely fashion? 

Answer: There were no costs associated with the Departments not 

promulgating the regulation. since 1988, the amount of funding 

under tribal contracts has more than doubled from approximately $200 

million to over $500 million for both services and facilities 

construction in FY 1994. Every effort has been and will continue to be made to more than complete the regulations development in a 

timely manner. 
52 

Page 4 - To Asst. Sec'y Bonnie Cohen and Dep. Dir. Lincoln: 

10. Could both Departments please provide the Subcommittee with a 

list of all Indian Self-Determination Act contracts currently 

operated within the Department and the Service, which includes the 

contractor, the contract amount, and when the contractor first 

entered in a contract with the relevant agency? 

Answer: The requested material is being compiled and wiil be 

forwarded to you when completed. 
WRITTEN TESTIMONY 

on 

IMPLEMENTATION OF THE INDIAN SELF-DETERMINATION ACT 

AMENDMENTS OF 1988 

Submitted to: 

HONORABLE BILL RICHARDSON, CHAIRMAN 

SUBCOMMIITEE ON NATIVE AMERICAN AFFAIRS 

HOUSE NATURAL RESOURCES COMMIITEE 

Room 1522 Longworth House Office Building 

Washington DC 20515 

by: 

PillLLIP MARTIN, CillEF 

MISSISSIPPI BAND OF CHOCTAW INDIANS 

Box 6010 Choctaw Branch 

Philadelphia Mississippi 39350 

July 28, 1994 
54 

Mr. Chairman, I thank you for inviting me to testify about the experiences of the 

Mississippi Band of Choctaw Indians, a federally-recognized tribe of some 5,500 members, 

in the implementation of the Indian Self-Determination Act Amendments of 1988. Actually, 

this will be quite difficult to do, as the Amendments have not been implemented yet, even 

though it has been nearly six long years since their enactment by the Congress and approval 

by the President. 

Rather, let me begin with a short discussion of my involvement with the development 

of the amendments. I was one of several tribal leaders invited by staff members of the (then) 

Senate Select Committee on Indian Affairs to come to Washington for two meetings to 

discuss tribal goverrtments' problems with the implementation of the Self-Determination Act. 

These were good discussions, covering a very broad range of issues connected with tribal 

contracting of Bureau of Indian Affairs and Indian Health Service programs under P.L. 93-

638 -- but let me summarize if I can the general concerns expressed by the tribal leaders. 

We were concerned overall that over the decade since enactment of P.L. 93-638, the 

personnel of the two Indian agencies had become familiar enough with the provisions of the 

law and its regulations that they had discovered or invented a large number of bureaucratic 

strategies that they could use to thwart the intent of the law -- to delay tribes' requests, to 

declare certain functions non-contractible, to skewer tribes' desired service levels using the 

weapon of the tribes' own legitimate and authorized indirect costs rates, and the like. 

Working with the Senate Committee, especially Michael Hughes, who was sort of 

moderating the discussions, we came up with a good collection of suggested changes the aim 

of which was to bring some fresh air to the contracting situation and give tribes more of an 

even break when confronted with these two massive bureaucracies. The suggested changes were given statutory wording, and, eventually, were enacted, and signed by the President in 

1988. 

At that time, I remember, I was very optimistic about the prospects for the passage of 

the Amendments being another step on the road to tribal self-governance, another 

incremental change aimed at eventual self-sufficiency and local control of Indian-specific 

resources. I looked forward to being involved in the process of consultation on regulations 

to implement the Amendments. 

But after a couple of those consultation meetings, the scenario was already clear. The 

Bureau and the IHS would so befoul the atmosphere, with unnecessary details and complex 

procedures not even alluded to in the Amendments, the atmosphere in which the regulations 

would have to be developed, that the process would grind to a halt. It did indeed grind to a halt. After six years, we were finally presented with a set of proposed regulations, 

supposedly promulgated pursuant to an act designed to simplify the process, that are four 

times more lengthy than the original regulations were. 

Let us take as an example the situation with the FARs. The amendments made clear 

that 1) most 638 contracts were not be considered procurement contracts, but exempted 

construction contracts from this consideration, and 2) allowed the appropriate Secretary to 

waive any non-638 regulations he or she thought suitable to waive. This combination should 

have given the Bureau and IHS people the opportunity to stick with the spirit of the 

amendments and come up with strong, though not lengthy. construction contract 

requirements. Instead, we have page upon page of the Federal Acquisition Regulations 

keyed to the applicability or the non-applicability of each. 
55 

Many tribal leaders wish to give the Bureau and IHS another opportunity to resolve 

the myriad problems with the proposed regulations. I do not agree. At this point, the 

regulations can only be looked at or revised in a tainted context, tainted by an underlying 

attitude that is completely contrary to the spirit of the Amendments, developed in the 

hothouse atmosphere of those who have switched their calling in life from administering 

Indian programs to "monitoring" tribal contracts. 

What is happening is that the statutes are being superimposed on a preexisting 

association between tribal governments and federal bureaucrats. This longstanding 

relationship precludes absolute self-determination because it presents the people at BIA and 

IHS responsible for seeing to it that self-determination is achieved with an absolute conflict 

of interest situation. If these people carry out the intent of Congress and move federal 

resources to the local level, they are cutting their own financial throats, ultimately destroying 

their own livelihoods. 

Over the past 20 years of the Self-Determination Policy, as tribal governments have 

taken responsibility for more and more federal resources, we should have seen the number of 

federal employees using or monitoring those resources shrink. In fact, the exact opposite has 

happened. The bureaucracies are bigger than ever, consuming ever larger amounts of 

resources designated for Indian people. I believe that this fact alone demonstrates the depth 

of the conflict of interest in the bureaucracy, a situation in which the only form of workable 

altruism is that for other BIA and IHS employees, not for the persons for whom the 

administered services have been designed. The successes of the federal Indian agencies in 

obfuscation in the implementation of Self-Governance compacts, a mechanism devised by the 

Congress to address the root causes of these problems, is a striking example of the tenacity 

of the bureaucracy's unenlightened self-interest. 

For this reason, I have become convinced in recent months that the only way around 

the logjam is for the Congress to enact something similar to Senator McCain's proposed 

"Indian Self-Determination Contract Reform Act," S. 2036, which prohibits the issuance of 

regulations. 

I have reviewed the experience of the Mississippi Band of Choctaw Indians with 

regard to our P.L. 100-297 School Grant, which we administer for our 1,400 students in six 

elementary and one high school on the reservation, a law which contains a prohibition on 

Interior rulemaking. Our experience has been extremely worthwhile -- we have the local 

flexibility that a grant provides, we have accountability through overall Bureau monitoring, 

and, more importantly, through our Single Audit. 

I know that the full gamut of Bureau and IHS programming is more complex than the 

single budget line represented by the BIA school operations costs, and any alternative 

approach to 638 regultions needs to take this into consideration. But overall, the idea of 

sovereign tribal governments, most of which in this day and age are modern, efficient 

institutions with ready access to the expertise that they need, and which have and always 

have had a government-to-government relationship with the federal government, managing 

Indian financial resources on their own, with accountability rather than supervision, is an 

idea whose time has come. 

Thank you. 

2 
56 

STATEMENT OF 

EDDIE L. TIJLLIS, CHAIRMAN 

POARCH BAND OF CREEK INDIANS 

AND 

PRESIDENT, UNITED SOUTH & EASTERN TRIBES, INC. 

ON THE 

INDIAN SELF·DETERMINA TION CONTRACT REFORM ACT OF 1994 

S.1410 and S.2036 

July 29, 1994 

Mr. Chairman, I am very pleased today to have been invited to testify on the administrative 

proeress made on the Notice of Proposed Rulemakine to implement the 1988 Amendments to 

the Indian Self-Determination Act and to state my views on the legislative intent to combine 

5.1410 and 5.2036. 

My name is Eddie Tullis, Chainnan of the Poarch Band of Creek Indians located in Atmore, 

Alabama. and the President of United South and Eastern Tribes, an intertribal organization 

comprised of 21 federally recoenized tribes from Maine to Florida and west to Texas. 

I attended the May 1994 National Meeting on the P.L. 93-638 Notice of Proposed Rulemaking 

held in Albuquerque, New Mexico and had the opportunity to hear and witness the frustration 

and concerns of many Tribal Leaders from acros.s this great country of ours. 

The main is.sue that was repeatedly stated was that the proposed reeulations would impede rather 

than facilitate the 638 contractine of federal programs and services by Indian Tribes and Nations. 

Over-riding all issues was the expressed desire of Tribal Leaders. to see tbat the fmal 638 

rceulations be implemented in accordance with the intent of Congress expressed in the 1988 

Amendments. 

It has been six (6) years since the 1988 Amendments were enacted. According to congressional 

records, there have been at lean three (3) oversight hearings to determine "WHY!!!" the 

required regulations had not been developed and implemented. 

In good faith and earnest effort, Congress set forth in the 1988 638 Amendments the assurance 

of maximum tribal participation in the planning and administration of federal services, programs 

and activitie., intended for the benefit of Indian people. 

In a Senate Indian Affairs Oversight Hearing on NPRM for 638 in January of this year, it was 

noted by Committee Chairman Senator Inouye that the BIA and DiS had lillled to meet its goal 

of reducing the federal bureaucracy and ending the federal domination of Indian programs. 
57 

Despite the fact that the 638 regulations were supposed to "remove many of the administrative 

and practical barriers that seem to persist ... " under the ACT, the proposed regulations are 

eighty-three pages long and contains hundreds of new requirements. 

There are 28 pages of the NPRM that are devoted to the FAR provisions exclusively. 

Tribal Leaders stated that the proposed regulations are now more restrictive than existing 

regulations and raise new obstacles and burdens that impede the tribal government efforts to 

fully contract under 638. These impediments prohibit effective tribal self-government that was 

promised by the 1988 Amendments to 638. 

In spite of the many substantial comments and recommendations voiced by Tribal Leaders on 

the sixteen (16) subparts of 638 NPRM, the one issue that prevailed throughout the National 

Meetings in Albuquerque was that the regulations in their present form are not acceptable to the 

tribes. 

Major recommendations for change are needed to remove the burdensome and obstructive 

provisions in the NPRM for 638. Areas of concerns expressed by Tribal Leaders are: 

Contractibility, Funding, Appeals, Divisibility, Construction and Program Standards, Eligibility, 

Federal Tort Claims, Indirect Cost and Contract Support. 

It must be emphasized very clearly to BIA and lliS that Self-Determination is not simply another 

federal program. It is a government-to-government relationship and that 638 is the mechanism 

by which Congress and the Federal Government recognizes and maintains the tmst 

responsibility. 

Mr. Chairman, while the provisions discussed in S.l410 and S.2036 deserve consideration and 

support by Tribal Leaders, it must be emphasized that the following vital provisions must be 

incorporated in the legislative language to ensure tribal stability: 

• Tribal participation shall be a11 integral on-going process of ALL budget planning efforts, 

at 6lJ. levels of budget development. 

• All aspects of budgeting with BIA/IHS shall be consistent with the full spirit and intent 

of the Indian Self-Determination policy to deal with tribes on a government-togovernment basis. 

• That Tribal decision-making and priority setting over available resources shall also be 

an integral part of the budget planning and execution process at ALL levels. 

Keeping with the spirit and intent of the 1988 Amendments to 638, Congress should look closely 

at the recommendations for amendments to 638 that includes adding a new Title to provide 

instructions to BIA and IHS reprdine Tribal Participation in the bud&et planning process. 

2 
58 

The Self-Delmmination Amendments are submitted with the intent to eliminate unnecessary 

approvals and processes in favor of streamlining the delivery of budget funds to Tribes and 

eliminating unnecessary obstacles and burdensome regulations to their use. 

It is my hope that you will consider incorporating and institutionalizing the Tribal Budget System 

principles and components in both BIA and ms the lepslative amendments outlined in Section 

8 and in the thirteen (13) guiding principles in Appendix A of the Joint Tribal/BIA/DOI 

Advisory Task Force's February, 1994 Program Report. The Task Force has pointed that the 

current budgetary process has not been updated since 1934. 

I urge you to implement changes and modifications to 638 that recognius the need for budget 

reform, as well as, changes to subparts of NPRM that will ensure the implementation and 

Congressional intent of the Indian Self-Determination Policy. I llt&e you to &ive close attention 

to the Issue of "Contractibility" in the proposed NPRM. The term program is defined in a 

exceedingly restrictive manner so that it is limited to "operation of services. • The defmition is 

an administrative interpretation by BIA and IHS, not be statute, or the intent of Congress and 

638. Why I mention this point is the fact that it is directly tied into the budgetary process. 

I support the addition of Title IV, Tribal participation in budget, planning process in its entirety. 

I support the spirit a:1d intent of S.l410 and S.2036 to amend the Self-Determination Act which 

expedite.<~ tribal involvement and decision making both in BIA and lliS on budgets formulation 

and flexibility in program de'ign and use of resources. 

In closing, Self-Determination must be viewed as a government-to-government relationship 

process and not just another federal program unnecessarily bogged down in bureaucratic "red 

tape" and burdensome regulations. 

Thank: you. 

3 
PETERSON ZAH 

PRESIDENT 

THE 

NAVAJO 

NATION 

59 

P. 0. DRAWER 308 • WINDOW ROCK, ARIZONA 86515 • (602) 871-6352-55 

TESTIMONY OF 

THE NAVAJO NATION 

BEFORE THE 

MARSHALL PWMMER 

VICE PRESIDENT 

HOUSE SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

ON 

THE INDIAN SELF-DETERMINATION ACT 

REGULATIONS AND THE INDIAN SELF-DETERMINATION 

ACT AMENDMENTS OF 1994 

PRESENTED BY 

BRITT E. CLAPHAM, II 

SENIOR ASSISTANT ATTORNEY GENERAL 

NAVAJO NATION DEPARTMENT OF JUSTICE 

JULY 29, 1994 
60 

TESTIMONY OF 

THE NAVAJO NATION 

BEFORE THE 

HOUSE SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

ON 

THE INDIAN SELF-DETERMINATION ACT 

REGULATIONS AND THE INDIAN SELF-DETERMINATION 

ACT AMENDMENTS OF 1994 

PRESENTED BY 

BRITT E. CLAPHAM, II 

SENIOR ASSISTANT ATTORNEY GENERAL 

NAVAJO NATION DEPARTMENT OF JUSTICE 

JULY 29, 1994 

The Navajo Nation appreciates the opportunity to testify before the 

Subcommittee and the Chairman regarding the Indian Self-Determination Regulations 

and the Indian Self-Determination Act Amendments of 1994. My name is Britt E. 

Clapham, II, and I am testifying today on behalf of the Navajo Nation. I am currently 

the Senior Assistant Attorney General and coordinate Indian Self-Determination Act 

(ISDA or "Act") activities for the Nation's Department of Justice. I have been 

involved in the Nation's contracting activities for seven years and have been involved 

with the development of regulations to implement Public law 100-472 since passage 

in 1988. From this perspective we have several comments and views on this bill. 

I would like to address several topics, first the regulations development process 

both historically and prospectively; the proposed regulations published on January 20, 

1994 by the Secretary of the Interior and the Secretary of the Health and Human 

Services; and finally the Navajo Nation's view on the need for and support of further 

legislation to make the Indian Self-Determination Act more consistent with its stated 

purposes and what the Nation views as Congress' intent. 

Regulation Development 

As of now, it has been five years and ten months since Public Law 100-472 

was enacted and yet there are no regulations available to implement that Act. When 

passed in 1988, tribes, the Navajo Nation included, felt that the 1988 Amendments 

to the Indian Self-Determination Act would correct inequities in the manner federal 

agencies dealt with tribes, simplify the contract negotiation and operation processes 

and generally usher in a meaningful government-to-government relationship to ensure 

services and foster tribal self-determination. Unfortunately, that has not been the 

case; due to the lack of regulations, tribes now stand somewhere between the preamendment Indian Self-Determination Act and what Congress intended when Public 

Law 100-472 was enacted . The lack of regulations to implement the 1988 

Amendments is the central source of this problem: Congress has improved the law, 

but tribes cannot take advantage of the improvement without corresponding 
61 

Testimony of Britt E. Clapham before Subcommittee on Native American Affairs 

Re: Oversight Hearing on the Indian Self-Determination Act Regulations 

July 29, 1994 

Page 2 

regulations. Agency officials, especially at the Area Office levels, continue to act as 

though the pre-1988 regulations control the statutory scheme rather than 

understanding that the regulations must grow out of, and comport with, the laws 

Congress passes and the President signs. 

Within sixty days of passage of Public law 100-472, tribes began meeting with 

the agencies and among themselves to address the development of regulations . What 

followed has been a long and frustrating experience for tribes. 

In February and March 1989, two large "Regulation Drafting Workshops" with 

tribal representation numbering between 250-400 along w ith officials from the BIA 

and IHS worked to produce a set of regulations to implement Public law 100-4 72. 

The product, draft regulations, now known as the "Yellow Pages" was circulated in 

April 1989. Many of us who participated believed we had negotiated the regulations. 

From April 1989 through late December 1989 the "Yellow Pages" were 

reviewed, reworked and revised by federal officials without "active tribal participation" 

as required by the ISDA. 

In December 1989, a revised set of regulations was released by the agencies 

to Indian Country. It bore little relationship to the "Yellow Pages." During January 

and February 1990, Area Hearings on this document were held and tribes and tribal 

organizations severely criticized that draft. 

In March and April, 1990, another attempt to fully involve the tribes began as 

the agencies accepted the fact that the December 1989 draft was inadequate. A 

group known as the Coordinating Work Group (CWG) was created, comprised of BIA, 

IHS and tribal representatives along with some departmental representation from both 

DHHS and DOl. 

From April through August, in a series of ten meetings, these regulations were 

again negotiated. The CWG product was circulated to Indian Country in September 

1990. What followed was perhaps the most problematic period of this process. For 

a period of two years and five months there was only limited tribal involvement. 

Frequently at these meetings federal officials merely reported. These report meetings 

did not involve any negotiations in the "refinement• of the regulations as required by 

the Act and affirmatively expressed in the legislative history. ~ S. Rep. No. 100-

274 at 38. 
62 

Testimony of Britt E. Clapham before Subcommittee on Native American Affairs 

Re: Oversight Hearing on the Indian Self-Determination Act Regulations 

July 29, 1994 

Page 3 

Then in January 1993, a document, which again bore tittle relationship to the 

"CWG Draft" or even the "Yellow Pages" was started through the federal clearance 

process for the publication of a Joint Notice of Proposed Rulemaking. · Since this 

clearance process coincided with the change of federal Administration, the proposed 

rules were returned by OMB to the new Secretaries for review and analysis. 

In May of 1993, the Senate Committee on Indian Affairs held an oversight 

hearing on these regulations. At that hearing, BIA and IHS officials testified that these 

regulations were being given high priority for review, analysis, and clearance. Tribal 

representatives expressed skepticism and recommended further legislation. 

In January of 1994, the Joint Notice of Proposed Rulemaking was published. 

No significant or meaningful changes in the regulations had occurred from January 

1993 to January 1994. 

In April and May 1994, regional meetings and a National Meeting were held to 

provide for tribal input on the published regulations. Tribes and tribal organizations 

expressed numerous concerns and pointed out how the proposed regulations were 

inconsistent with the Act, the "Yellow Pages" and the "CWG Draft." 

Tribal leaders, made several requests at the National meeting, first to extend the 

comment period for ninety days; this has been done, with the comment period now 

ending August 20. Tribal leaders also sought a process of post-comment negotiations 

on the regulations. That was also agreed to by the agencies. 

A Federal Advisory Committee Act process has been pursued for these post· 

comment negotiations. Recently, tribes were advised that joint funding of the 

Advisory Committee was prohibited by Appropriations Act provisions. The agencies 

are seeking approval through the Fiscal Year 1995 Appropriations process, to fund 

these post-negotiation meetings jointly. We are informed that it is unlikely that 

meetings will begin before November 1994 and if 3-6 meetings occur it will be well 

into 1995 before these negotiations conclude. It remains to be seen whether those 

negotiations will be meaningful. In the past, such negotiations have not been fruitful 

in many respects. The draft regulations are more problematic than the regulations 

prior to the 1 988 Amendments. Fundamentally the regulatory drafting process to-date 

has been unsuccessful from a tribal perspective. 
63 

Testimony of Britt E. Clapham before Subcommittee on Native American Affairs 

Re: Oversight Hearing on the Indian Self-Determination Act Regulations 

July 29, 1994 

Page 4 

January 1994 - Proposed Regulations 

I will address central concerns with the regulations generally here and 

demonstrate how, when read in concert, these provisions narrow tribal contracting 

options. · 

Program Definition 

The definition of program found in Section 900.1 0"2 of the regulations is unduly 

narrow and will likely be used by contracting officials to limit contracts to only service 

functions performed by the federal agencies. Such a definition is not supported by the 

Act or the legislative history. By narrowly defining program to be the "operation of 

services• to the program beneficiaries, these regulati:ms can be used to deny 

contracts at the Area Office and Headquarters/Central Office levels. Such an 

approach is inconsistent with the legislative history. The Senate in Senate Report 

100-274 states: 

tribes are authorized to contract with the Secretary to operate 

headquarters, area office, field office, agency and service unit functions, 

program(s)(sic) or portions of programs. 

S. Rep. No. 100-274 at 23. 

This definition of program is then imported to the contractibility section ot the 

regulations. 

Contractibilitv 

The provisions in Section 900.106 which address contractibility create several 

serious problems. As noted above, the misstated "program" definition is used in 

Subsection (c) and is underscored by stating that these programs "are generally 

performed at the reservation level." The definition can be further used to limit 

functions which may be contracted. This Subsection also includes a provision which, 

according to the discussion in the preamble of the regulations, is an interpretation of 

the Appointments Clause of Article II of the Constitution and the line of cases 

including Buckley v. Val eo, 424 U.S. 1 ( 1975). 

This Subsection makes an attempt to restrict contractibility further by 

preventing a tribe from contracting those functions which would impair the Secretary's 

"obligation under the Constitution to ensure the laws are faithfully executed. • The 

preamble argues that the Appointments Clause allows only properly appointed federal 

officials to exercise a particular function, when that function includes "the exercise of 

significant authority pursuant to the laws of the United States." Such a provision 
64 

Testimony of Britt E. Clapham before Subcommittee on Native American Affairs 

Re: Oversight Hearing on the Indian Self-Determination Act Regulations 

July 29, 1994 

Page 5 

ignores Congressional authority to delegate functions to tribal governments and federal 

Indian law decisions which support that authority. See U.S. y. Mazurie, 419 U.S. 544 

(19751 and more recently Confederated Trjbes of SUet? Indians of Oregon y. U.S. Civ. 

No. 92-1621-BU(D. Ore. December 22, 1993). 

In Subsection (d) there is a non-exclusive list of activities which are deemed to 

be not contractible due to the inherently federal nature of these activities. While the 

drafters of this section indicate that they relied on a September 1992 Federal Register 

publication by the Office of Federal Procurement Policy, which was designed to set 

forth which federal functions are not contractible through procurement contracts with 

individuals, the drafters have erred in several particulars. Congress has made it clear 

that P.L. 93-638 contracts are non-procurement contracts, and are therefore different 

from virtually all other federal contracts. Second, P.L. 93-638 agreements are not 

contracts with individuals but with tribal governments or organizations authorized by 

tribal governments to undertake activities on the government's behalf. Lastly, the 

drafters have gravely misstated the propositions stated in the September 1992 Federal 

Register, to the detriment of all P .l. 93-638 contractors. 

Functions currently under contract could easily fall w ithin the sweep of these 

two Subsections, such a :asult is simply anomalous when Congress enacts laws to 

simplify and liberalize ISDA contracting. Additionally, the draft provisions of Section 

900.106 are also written in a vague fashion which may well be employed to restrict 

activities already contracted by tribes. 

Subsection (h) appears to restrict or prohibit contracts which involve other 

federal laws such as NEPA and the Endangered Species Act. Rather than a 

prohibition, a wiser course would be to ensure that in those instances where such 

laws are applicable, that these legal requirements are adequately addressed and 

funding is provided for the required activities. Clearly this funding should be available 

as either a direct cost or a contract support cost to comply with such federal legal 

requirements. 

Program Division 

Section 900.107 addresses program division, which is necessary to divide a 

program, or portion thereof, between one or more tribes and/or between a contracting 

tribe(s) and the federal agency serving the remaining non-contracting tribelsl. While 

this section only establishes a process to address this issue, the results of this 

procedure will be used pursuant to Section 900.207(c) in determining whether to 

decline a contract. This process appears to be a federally created procedure that has 
65 

Testimony of Britt E. Clapham before Subcommittee on Native American Affairs 

Re: Oversight Hearing on the Indian Self-Determination Act Regulations 

July 29, 1994 

Page 6 

the potential to pit one tribe agc:inst another when used in the declination 

methodology. Such an approach is fundamentally objectionable. Further, during the 

history of prior ISDA contracting, no such provision has been used and one must 

inquire why such a provision has now become necessary. Finally, this provision is 

inconsistent with the process of submitting a proposal to contract because this 

process requires the party proposing the contract to address aspects beyond its 

control (e.g. SP.cretarial budgets, program development, etc.). Any logistical 

difficulties, like the loss of economies of scale and the like, must be borne by the 

Secretary as part of the implementation of the policy of Self-Determination. Clearly 

the Secretary should not interpose those logistical difficulties on tribal contractors 

while also denying the implementation of the ISDA. In the self-governance setting 

"short-fall funding" has been used, in part, to solve this agency problem rather than 

to deny a compact; is not such an approach equally appropriate to ISDA contracts? 

Declination 

Section 900.207 addresses the methodology the Secretary must use to decline 

a contract under the ISDA. As noted above, that process includes factors which are 

inconsistent with the Act and includes factors which will be discussed below that 

appear to be designed to further restrict contracting. Among these factors are the 

manner in which environmental laws are considered, the analysis required on the 

impact upon non-contrccting parties, and the review of management systems internal 

to the tribes and tribal organizations. Further, the contractibility and funding issues 

are not even included here but arise as provisions in Section 900.206, to deny 

contracts. As such, these create threshold issues outside of proper, Congressionally 

enacted declination criteria, and are therefore inconsistent with the Act and legislative 

history. 

Suboarts D. E & F 

These Subparts relate to Financial, Property nd Procurement Management 

systems respectively. As noted above, the fact that the declination provisions address 

these and require assurances consistent with the provisions located in these Subparts, 

create what appear to be "threshold issues" for contracting. This is inconsistent with 

Congressional intent as set forth in the legislative history to P.L. 100-472. Further. 

the scope of these Subparts will invade upon the internal operations of tribal 

governments and, in fact, cause the revision of internal tribal systems in order to 

receive a contract award. Such factors are inconsistent with the Congressional policy 

on self-determination announced in Section 3 of the ISDA, and expand the federal 
66 

Testimony of Britt E. Clapham before Subcommittee on Native American Affairs 

Re: Oversight Hearing on the Indian Self-Determination Act Regulations 

July 29, 1994 

Page 7 

domination of Indian programs. These provisions and their use in the declination 

process are highly objectionable because of infringement on tribal sovereignty. 

Conclusion 

As outlined above, the regulations as written and proposed in the January 20, 

1994 Federal Register Notice of Proposed Rule making are Inconsistent with the 1988 

Amendments to the Act and inhibit, rather than enhance, tribal self-determination 

through the contracting of federal programs. This fact is especially true when the 

Sections noted herein are viewed as a whole rather than looking at each section alone. 

The Navajo Nation has other specific concerns about particular provisions of the 

regulations, including but not limited to: Employment and Contracting Preference 

provisions, the Hearings and Appeals provisions, FTCA and Insurance provisions, the 

Provisions in Subpart J concerning construction, the section on Retrocession in 

Subpart K and the impact of standards contained in Subpart N. 

The Indian Self-Determination Act Amendments of 19941 

The Nation has been informed that the Subcommittee is interested in 

considering further amendments to the Indian Self-Determination Act which are 

somewhat similar in nature, scope and purpose to a bill introduced in the Senate and 

currently under revision, S. 2036 "The Indian Self-Determination Contract Reform Act 

of 1994." On behalf of the Nation, I testified in support of that bill's central concepts 

and purpose on June 15, 1994 before the Senate Committee on Indian Affairs. Since 

then I have, along with others, provided the SCI A staff with additional suggestions on 

the refinement of S. 2036. 

The conceptual framework of such a bill should include the following elements. 

First and foremost it should simplify and expedite contracting between the United 

States and tribal government on a government-to-government basis to further selfdetermination by tribes, without burdensome regulations that seek to limit the Act's 

and Congress' intent to shift control of Indian programs and services from federal to 

tribal purview. 

The Idea of a statutorily created contract form ("model contract") to be 

employed, along with additional provisions bilaterally negotiated between the tribe(s) 

' At the time of this writing no bill has yet been introduced in the House of Representati11es 

but I am informed according to staff such an effort is being considered by the Subcommittee. 
67 

Testimony of Britt E. Clapham before Subcommittee on Native American Affairs 

Re: Oversight Hearing on the Indian Self-Determination Act Regulations 

July 29, 1994 

Page 8 

and the federal agency, would clearly expedite contracting. The Senate version does 

this and the Navajo Nation would support such a bill in the House. 

A limited regulatory structure, tied to negotiated rulemaking with absolute time 

limits for the promulgation of final rules, further assists the contracting process. The 

agencies would still be allowed to issue internal regulations but regulations interpreting 

the statutory scheme should be limited to Federal Tort Claim Act issues; Contract 

Disputes Act and issues, retrocession of contracts, reassumption of contracts; and a 

declination administrative appeal processes. 

Internal tribal administrative systems should be allowed to operate without being 

redesigned to meet burdensome federal requirements. Tribal accountability systems, 

along with annual audits pursuant to the Single Audit Act of 1984, provide sufficient 

controls for the proper use of funds in the areas of procurement, p1 operty and financial 

management. 

A key to the local operation of these programs, services, activities and 

functions, is to not merely allow for, but to encourage the redesign of contracted 

activities to meet the needs of a given tribe. Only through responding to the needs 

of tribal members can these programs assist tribes in attaining the goal of selfdetermination. 

In order to accomplish these concepts, the Act will require further amendments 

to ensure that current statutory provisions operate in concert with anticipated 

statutory contract specifications ("model contract"). Such further amendments to Act 

include, provision for the application of tribal preference laws in the areas of 

employment, contracting and subcontracting; the creation of a tribal option to pursue 

contract declinations appeals either through an administrative appeal or by actions in 

the federal district court, such an approach is consistent with options under the 

Contract Disputes Act where the option is an administrative appeal or a Federal Court 

of Claims action.2 

A further consideration related to contract funding, would be the inclusion of 

a provision, similar to a current regulation, which would allow a tribe to notify the 

government that insufficient funds have been provided for full performance of the 

contract or a function of the contract, and then would relieve the contractor from the 

duty to perform absent an increase in contract funding. The responsibility for 

'Once commenced in one forum either the administrative appeal or the courts that process 

must be completed without resort to the other forum. 
68 

Testimony of Britt E. Clapham before Subcommittee on Native American Affairs 

Re: Oversight Hearing on the Indian Self-Determination Act Regulations 

July 29, 1994 

Page 9 

performance must shift to the government once funds are expended if insufficient 

funds are available to perform fully. 

Such a bill should also provide, consistent with central principles of federal 

Indian law that ambiguities be resolved in favor of Indians and Indian tribes, and that 

contract disputes may, by agreement of the parties, be resolved in tribal court or 

through mediation processes, as well as the Contract Disputes Act. 

Amendment of Sections 102, 105 and 106 of the Act will also be needed to 

address issues of contractibility {through the declination procedures); proper treatment 

of construction contracting and the inapplicability of Federal Acquisition Regulations; 

and finally to address several funding issues which have arisen from the regulations 

development. 

The Navajo Nation, is likely to support such a bill once it is available for review 

and consideration, provided it contains these concepts and provisions. 

Absent such a legislative initiative, the Nation will continue to pursue revision 

of the regulations through the post·comment negotiations but it is currently of the 

opinion that such efforts will consume at least another year and a half and more likely 

two years before regulations are finalized. Since the agencies want to retain the "final 

word" after any post-comment negotiations, we are not encouraged that this exercise 

will be significantly different from our prior experiences with the "Yellow Pages" or the 

"CWG Draft." Because of this, the legislative initiative appears most fruitful to 

achieve a contracting system that is consistent with the statutory scheme, the intent 

of Congress and also be meaningful to tribes. 
69 

STATEMENT OF S. BOBO DEAN, ESQ, 

BEFORE 

THE SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

OF THE 

HOUSE COMMITTEE ON NATURAL RESOURCES 

ON THE 

PROPOSED REGULATIONS UNDER THE IND~~ SELF-DETERMINATION ACT 

July 29, 1994 

Mr. Chairman, my na~e is S. Bobo Dean. I am a partner in the 

law firm of Hobbs, Straus, Dean & Walker of Washington, D.C. and 

Portland, Oregon. I appreciate your invitation to testify on the 

proposed regulations to implement the 1988 Amendments to the 

Indian Self-Determination & Education Assistance Act. Since 1988 our firm has represented a number of Indian tribes and tribal 

organizations in connection with the development of the regulations to implement the Indian Self-Determination Amendments of 

1988. 

I present this testimony on behalf of the Miccosukee Tribe of 

Indians of Florida, the Menominee Indian Tribe of Wisconsin, the 

Seminole Tribe of Florida, the Metlakatla Indian Community in 

Alaska, the Bristol Bay Area Health Corporation (Alaska), the 

Norton Sound Health Corporation (Alaska), the Maniilaq Association 

(Alaska), The Seneca Nation of Indians and the Oglala Sioux Tribal 

Public Safety Commission. 

The 1988 Amendments expressly required that the Department of 

the Interior and the Department of Health & Human Services formulate the regulations with the participation of Indian tribes. The 

statute also required that the regulations be promulgated within 

ten months from October 5, 1988. No regulations have been promulgated. The agencies did involve tribal representatives in a series of meetings between November 1988 and September 1990 and 

developed drafts of the regulations which incorporated significant 

tribal recommendations. 

In particular, tribal and federal representatives meeting at 

Albuquerque, New Mexico, March 21-24, 1989, developed a draft (the 

so-called Yellow Draft) which resolved many self-determination 

issues in a manner acceptable to the tribes. At the time, I 

believed that little remained to be done to finalize the regulations so as to carry out the changes in the statute. 

However, the federal agencies, commencing in mid-1990, shut 

off further tribal consultation and began developing a new draft 

which departed from many agreements reached in the tribal consultation process and added much new language apparently intended, 

not to carry out the amendments made by the Congress, but to 

address difficulties which the agencies had encountered since 1975 
70 

Statement of S. Bobo Dean, Esq. 

July 29, 1994 

?age 2 

in maintaining their paternalistic hold on federally-funded 

programs for Indian tribes. 

The proposed regulations published in January 1994 are the 

result of consultation between the two Departments without any 

significant tribal involvernent between August 1990 and the end of 

1993. They depart in many significant respects from the recom- mendations received from tribes and from earlier drafts which 

reflected tribal input (especially the Yellow Draft). In some 

areas, the agencies have utilized the opportunity to formulate new 

regulations as an occasion to eliminate language in the existing 

self-determination regulations which limit agency authority or 

otherwise encourage tribal self-determination and further the 

goals of the Act. They have also added provisions for the obvious 

purpose of strengthening federal control over tribal government 

decisions. 

lrle have prepared detailed comments on the regulations which 

we will be filing on behalf of our clients with the Secretary of 

the Interior and the Secretary of Health & Human Services today. 

We have provided your staff with a copy of these comments. These 

comments demonstrate the perJasiveness throughout the regulations 

of the agency effort to maintain federa l control over tribal 

programs and to avoid a trJe government-to-government relationship 

in which policies, priorities and long and short range goals are set by elected Indian tribal governments, not by the federal 

bureaucracy. In this testimony we will highlight several of the more serious issues raised by the proposed regulations. 

1. The Scope of P L 93-638 (900.106) 

A major tribal concern is the narrowing of the scope of 

Indian self-determination by language in the proposed regulations 

under the heading •contractibility". It is instructive to compare 

the action by Congress on this point with the proposed regulations. Prior to 1988 some tribes had attempted to contract 

funccions performed for them by the Bureau of Indian Affairs or the Indian Health Servi ce at the Area Office or Central Office 

levels. The response was that P.L. 93-638 does not app l y to those 

levels. See, for example, Indian Self-Determination Advisory No. 

2, dated August 2, 1983, which states: "Activities at the Area/ 

Program Office and Headquarters levels which are necessary for the 

overall management and discharge of IHS managerial responsibilities as a federal agency are not programs or services for the 

benefit of Indians ... These Area/Program Office and Headquarters 
71 

Statement of S. Bobo Dean, Esq. 

July 29, 1994 

Page 3 

ma.:1agement activities, therefore, are not cc·ntractible under 

authority of P.L. 93-638." 

Congress attempted to address this administrative narrowing 

of the scope of self-determination by amending the Act to require 

contracting with tribes to plan, conduct and administer programs, or portions thereof, 'for the benefit of Indians because of their 

status as Indians without ~ tQ ~ ~ m;:. office Qf ~ 

Department Qf ~ ~ Human Services Q£ ~ Department Qf ~ 

Interior rltl:Wl Wlidl it. .U performed.· 

In the proposed regulations the agencies have responded by 

coming up with a different strategy for narrowing the scope of 

self-determination contracting. For the first time since 1975, 

the agencies have proposed a complex regulatory definition under 

which a whole series of hurdles must be overcome before a program can be one "for the benefit of Indians because of their status as Indians." There must be evidence of Congressional intent to 

benefit Indians (rather than simply the fact that Indians benefit) . There must be appropriations in place to support the 

program (a criterion which would void many self-determination 

contracts which are routinely negotiated in advance of the fiscal 

year in which the contract will be performed). Furthermore, the 

regulations define "program" as "the operation of services". The 

agencies maintain that this definition limits contracting to 

activities directly involved in the delivery of services. "which are generally performed at the reservation level" but "may be 

performed at higher organization levels." 900.106(c). 

Thus, the agencies seek to retain the power to refuse to 

permit tribes to contract for activities performed by them at the 

Area or Central office levels without declining the proposed 

contract in the manner prescribed by the statute (in accordance 

with the statutory declination procedure). This provision ignores 

the express language of the Act that tribes may contract "to plan, 

conduct and administer• programs. The scope of this directive 

surely includes those activities engaged in at levels higher than 

Indian reservations to plan and administer the programs carried 

out for the benefit of Indians on reservations and in other Indian 

communities. 

On top of these restrictions the proposed regulations impose 

another limitation based on a line of cases relating to the 

separation of powers between the Executive Branch and the 

Legislative Branch and justify a further narrowing of contracting 

authority under P.L. 93-638 based on these cases. So far as we 
72 

Statement of S. Bobo Dean, Esq. 

July 29, 1994 

Page 4 

can see, none of these cases has the slightest relevance to the 

question of which functions may be contracted to tribal governments under the statutory directive contained in section 102 of 

the Act. We have provided the agencies with a legal memorandum on 

the subject and not received any coherent response. We assume 

this is because they are well aware that their argument on this 

point is specious. 

Further examination of section 900.106 reveals a host of 

other conditions and restrictions obviously intended to subvert 

the Congressional purpose of the Act, in the lan~~age of section 2 

to end "the prolonged Federal domination of Indian service 

programs" which "has served to retard rather than enhance the 

progress of Indian people and their communities.' Indeed. 

§ 906.106 reads like instructions for a board game {or a computer 

game) based on the siege of a medieval castle. with moats and 

battlements and an occasional drawbridge behind which the federal 

bureaucrats are prepared to resist any intrusion upon their 

prerogatives and perquisites. 

The extent to which the agencies have gone in these 

regulations to avoid the impact of the specific amendment in 1988 

clarifying that Indian and Alaska Native self-determination 

extends to functions performed at any 'agency or office" of their 

Departments is remarkable. We understand that this is due, in 

part. to the reluctance of various bureaus within the Department 

(other than BIA) to accept the fact that Congress in 1988 extended 

the scope of P.L. 93-638 to their programs benefitting Indians. 

Our information is that these agencies, with little previous 

experience with tribal governmen~s. may have had a disproportionate influence on the development of Interior Department 

positions in the finalization of the proposed regulations. 

2. Indian Preference 1900.115 and 900.605! 

Another example of the urge of the federal bureaucracy to 

make decisions for tribes which they should make for themselves is 

the Interior Department's position that the requirement in section 

7(b) of the Act to give preference in employment and subcontracting to Indians and Alaska Natives prohibits a preference based on 

tribal affiliation. Quite obviously, when tribal law requires a 

preference for tribal members, there can be compliance with both 

tribal law and section 7(b) by a three-tier preference system 

(first, tribal members; second, other Indians and Alaska Natives, 

and third, others, if no qualified Indians of Alaska Natives are 

available) . We have provided Interior with a legal opinion on 
73 

Statement of s. Bobo Dean, Esq. 

July 29, 1994 

Page 5 

this issue but have received no indication thus far that it will 

retreat from its unreasonable position. 

3. Apoeal Procedures {Subpart H) 

Another major flaw in the re~Jlations is the refusal of the 

IHS to provide a "due process" declination appeal and hearing when a contract proposal is declined because it requ7sts more funding 

that IHS believes the tribe is entitled to rece~ve. IHS argues 

that funding levels are determined under section 106, not section 

102. That is the case, but whether IHS has correctly calculated 

the amount to which a tribe is entitled is clearly a matter on which the tribe should be entitled to appeal above the officials 

who have made the initial calculation. The Act entitles a tribe 

to notice and an appeal and hearing on "any objection' to a contract proposal which is used as a basis for declination. IHS 

argues that, in such cases, it is not disapproving the proposal, 

but actually approving it but at a lower funding level. We do not 

find this play on words convincing. 

Section 102 of the Indian Self-Determination Act mandates 

that when Interior or HHS receives a tribal proposal, it must 

either approve the proposal within the statutory time-frames or decline it, provide notice of the grounds for declination, technical assistance to overcome deficiencies, and an appeal and a meaningful due-process hearing on the objections raised to the 

proposal by the tribe, if requested. In the proposed regulations 

both BIA and IHS take the position that an objection based on the 

amount of funding requested in the proposal is not a 'declination". We find no justification in the plain language of the Act or in reason or public policy for this distinction. While the 

Interior appeal regulations do provide a "due process" hearing as a matter of grace, IHS has adamantly refused to do so and allows no review of IHS funding decisions above the level of the IHS 

Director. We think a right to such a 'due process" hearing and an appeal to a disinterested decision-maker when a contract is 

declined on a funding issue is required for both IHS and Interior 

by the statute. 

4. Construction Contracts 

The treatment of construction contracts in Subpart J is 

another example of federal over-reaching. This Subpart is clearly 

designed to enable the federal construction bureaucracy to retain 

control over the manner in which federally funded construction 

projects for the benefit of Indians are administered. Essen-
74 

Statement of S. Bobo Dean, Esq. 

July 29, 1994 

Page 6 

tially, the principle concession to self-determination made in 

Subpart J is to allow a tribe benefiting from a construction 

project a right of first refusal to build the project under a host 

of Federal Acquisition Regulation clauses which usually apply to 

non-self-determination construction projects. 

While it is true that section 105(a) of the Act provides that 

construction contracts are not automatically exempt from the FARs as are all other self-determination contracts and section 4(j) 

provides that self-determination contracts, except as provided in 

the last proviso in section 105(a), are not procurement contracts, 

these statutory provisions do not (as alleged in the proposed 

regulations) provide that construction contracts ~ procurement 

contracts. Under section lOS the Secretary retains the authority 

to waive any contracting law or regulation (including the FARs) 

that he determines" are not appropriate for the purposes of the 

contract involved or inconsistent with the provision of this Act". 

In a limited way the Secretaries propose to exercise this authority by waiving some of the usual FARs. Many of the required 

clauses (which the Secretaries have so far refused to waive) 

included in the Exhibit I to Subpart J do not stand up against the 

test of appropriateness for a self-determination contract and 

consistency with the goals and provisions of the Act. 

For example, such contracts are required to include a clause 

permitting termination for convenience of the government without 

compliance with the statutory reassumption provisions contained in 

section 109 of the Act. It includes provisions permitting unilateral modification of such contracts, notwithstanding the 

express statutory prohibition against unilateral modifications. 

It includes burdensome and inappropriate "Brooks Act• requirements 

and a series of clauses requiring preferential treatment for 

various groups and entities. It may well be argued that some of 

these requirements (for example, preferences for Viet Nam veterans 

and women-owned businesses) carry out commendable social policies. 

Their inclusion in the exhibit to Subpart J means that these 

policies are so important that the decision to apply them must be 

made by the federal government for tribes, and not by the tribes 

themselves. Is that consistent with the concept that tribes, as a result of their recognized sovereign governmental status, have the 

right to make such decisions for themselves? 

We request that this Committee urge the agencies to re-think 

their whole approach to construction under the Indian SelfDetermination Act. Under this Act funds should be made available 

to tribes and duly authorized tribal organizations to build 
75 

Statement of S. Bobo Dean, Esq. 

July 29, 1994 

Page 7 

schools, hospitals, clinics and other facilities for the benefit 

of Indians and Alaska Natives in accordance with priorities, goals 

and objectives established by tribal governments, rather than by 

the federal construction bureaucracy, We expect that such an approach will reduce the chances that buildings will be con- structed in Indian country and in Alaska without reasonable regard 

to the geographic and climatic conditions at the project site ~~d 

the felt needs of the communities being served, as has occurred 

too often in the past. 

5. Financial Manaaement 

In addition, we wish at this time to bring to the Committee's 

attention certain deficiencies in Subpart D relating to financial manag~~ent. The proposed regulations have diminished tribal 

rights from those previously agreed to in the 1988-1990 consultation in a variety of ways. They have eliminated a requirement 

that there be "documentation" of financial mismanagement to 

justify federal review of a tribe's financial management system. 

They have qualified the previous flat assertion that tribes may use "638" funds to meet matching requirements under other programs. They have made the tribal right to the payment of contract 

support (which is based on section 106 of the Act) dependent on "the process actually utilized by the Secretary to allocate 

resources,• and the payment of indirect costs shortfall, even when 

funds are appropriated for the purpose by the Congress, is made 

optional with the Secretary. 

Subpart D also gives the agencies the power to circumvent 

reassumption requirements of the Act by withholding funds or otherwise modifying payment provisions (in violation of the 

statutory ban on unilateral modifications) with no notice to the 

contractor or appeal rights. 

Tribal representatives throughout the consultation process 

argued that the unique relationship between the United States and 

the Indian tribes and the unique purposes of this Act (to end "the 

prolonged federal domination of Indian service programs•, and to 

encourage "the development of strong and stable tribal governments•) justify the development of certain cost principles 

specific to self-determination contracts. Their view was that 

cost principles issued by the Office of Management and Budget for 

grants to State governments and to private non-profit organizations were not always appropriate for application to the transfer 

of governmental functions from Interior and HHS to tribal governments. In earlier versions of the regulations, the agencies 
76 

Statement of S. Boho De~~. Esq. 

July 29, 1994 

Page 8 

agreed with this view and included certain cost principles which 

could be followed by tribal contracts instead of those promulgated 

in OMB Circulars. 

The proposed regulations have retreated from this concession 

to tribal wishes. They require that tribal governments comply 

with OMB Circular A-87 and that tribal contractors which are non- profit organizations comply with OMB Circular A-122. Our clients 

object to this provision on two grounds. They remain convinced 

that the allowability of costs with respect to certain activities 

should be different for tribes in order to further selfdetermination goals. 

6. Program Guidelines 

Another area in which the agencies have used this chance to 

re-write the regulations for their own bureaucratic purposes 

involves the regulatory requirements with respect to agency 

program guidelines. Since 1975 BIA regulations have provided 

expressly that inconsistencies between tribal program plans and 

designs for contract operation of Bureau programs and Bureau 

Manuals, guidelines, or other procedures that are appropriate to 

programs or parts of programs operated by the Bureau •are not 

grounds for declination•. 25 C F.R. § 271.15(d). This provision 

merely reflects the mandate of the Act that proposals be declined 

on one of the three statutory grounds (unsatisfactory services to 

Indians, non-protection of trust resources, or that the proposed 

program cannot be properly completed or maintained) and that 

tribes are free to depart from BIA guidelines as long as they 

satisfy the declination cr~teria. The burden of proof under the 

existing regulations is on the Bureau to prove that declination is 

based on the statutory grounds. 25 C.F.R. 271.15(a). 

However, under the proposed regulations (Subpart 0) tribal 

proposals must adhere to all regulations, orders, policies, agency 

manuals, guidelines, industry standards and personnel qualifications to the extent that they have actually been observed by the 

federal agency. While the tribe may request a variance, Interior 

has removed the express language of the existing regulations 

quoted above that makes crystal clear that non-conformity with 

agency guidelines does not provide a basis for declining to 

contract. 

In Subpart N, the HHS has introduced a similar approach which 

narrows the flexibility permitted to tribes in developing contract 

scopes of work. In consultation with tribes the IHS represen-
77 

Statement of S. Bobo Dean, Esq. 

July 29, 1994 

Page 9 

tatives agreed that a tribal contractor of a hospital or clinic 

could commit to operate the facility in conformity with the 

standards of the Joint Commission on the Accreditation of Health 

Organizations and, if it achieved and maintained JCAHO accreditation, the contract need not include detailed scope of work 

provisions which have typically been included in such selfdetermination contracts (or, in the alternative, the contractor 

could rely on Health Care Finance Administration requirements). 

The intent was to simplify contract language and use JCAHO or HCFA 

compliance, where possible, as an alternative to detailed 

standards to be included in the contract documents. 

As these provisions have emerged in Subpart N of the proposed 

regulations, a tribal proposal must now include an assurance of 

compliance with JCAHO (or HCFA) standards and the regulations 

contain no provision for an alternative in case a facility is not 

accredited or in compliance with such standards. The proposed 

regulations imply that a program not in compliance with JCAHO or HCFA standards and for which JCAHO or HCFA standards exist can be 

contracted and that, if a contracted facility falls out of com- pliance, the contractor would be in default and the IHS might well 

be entitled to utilize such default as a basis for cancelling the 

contract and reassuming the operation of the facility. IHS staff 

have informed us that their intention was to be flexible in 

applying these provisions. Based on prior experience, we are uncomfortable in relying on such assurances. 

CONCLUSION 

In conclusion, we urge that the Congress intervene actively 

in this process to assure that the goals of the 1988 Amendments are finally achieved. While we are pleased that the agencies have 

agreed to re-negotiate the regulations under the Federal Advisory 

Committee Act late this year, our clients cannot, of course, be 

assured that the bureaucracy will listen more carefully the next 

time around. Many of the issues and problems which we have 

identified in the regulations are addressed in the proposed Indian 

Self-Determination Act Amendments of 1994, H.R. 4842. The 

enactment of this bill would, in general, be supported in my view 

by Indian tribes across the country. We are providing the 

Committee staff with a summary review indicating those provisions 

of the draft which we are confident would receive broad tribal 

support. We are confident that 98% of the provisions of the bill 

fall into this category. While I have not had an opportunity to 

receive instructions from our clients as to all of the provisions 

of the draft bill, we should note in particular that a number of 
78 

Statement of S. Babe Dean, Esq. 

July 29, 1994 

Page 10 

our tribal clients have voiced concern (1) that the bill should 

permit additional contract clauses subject to tribal consent 

beyond those mandated in statutory language and (2) that the 

agencies should be permitted (indeed, directed) to issue impl e- menting regulations in areas not fully covered in the statute (at a minimum in such areas as FTCA, contract disputes, and procedures 

governing declination, reassumption and retrocession). H.R. 4842 

does accommodate these concerns. 

\Ve appreciate the opportunity to provide these views to the 

Subcommittee. 
79 

Before the 

United States House of Repreaentattnts 

Natural Resources Committee 

Subcommittee on Native Am.erlcan Afralra 

Oversight Hearing on the 

JncUan Self-Determination Act 

Testimony of Lloyd Benton Mmer 

Sonoaky, Chambers, Sachse & Endreson 

Washington, D.C. 

Sonoaky, Chambets, Sachse, Mmer, 

Munson&Clocksln 

Anchorage, Alaska 

July 29, 1994 
80 

Befo:e the 

Ulllted Stat.M HoUH of Be~ 

Natunl Resow:cet Commitllle 

Sul:leommittee on Native .Anwr!can Afalrw 

Testimony of Lloyd Benton Miller 

Sonoeky, Clwnbera, Sachle & Endzuon 

Sonoeky, Chambera, Sachse, Miller, 

Ml.lllllon &c Clocbln 

July 29, 1994 

Good morning Mr. Chainnan. My name is Lloyd Miller. For the record, I am a 

partner in a private, public-interest law firm representing Native American tribal interests 

throughout the United States from Maine to Alaska I am deeply honored by the 

Subcommittee's invitation to testify today on matters related to the Act, and in particular 

to the urgent need for further legislative reform. 

1. Introduction. 

With specific regard to today's hearing, for the last decade a major focus of my 

practice has been representing tribes a.'1d tribal organizations in matters relating to the 

Indian Self-Determination and Education Assistance Act of 1976, the cornerstone of the 

Federal Government's Indian policy for over twenty years. In such matters our firm 

represents both some of the smallest tribes in the United States and some of the largest 

tribal contractors in the Nation (including the Yukon Kuskokwim Health Corporation of 

Alaska, operatin9 a $40 million IHS hospital and regional health care delivery system 

serving a vast area considerably larger than South Dakota, and three quarters the size of 

Arizona). 

Due largely to the resistance of various federal agencies to the imperatives of the 

Act, our experience in this arena is unfortu11ately extensive. Thus, in recent years I and 

my finn have (1) worked closely with the Committee's staff in the two years of hearings 

and deliberations which led to the 1988 amendments, (2) authored the National Indian 

Health Board's 1988 blueprint for development of new regulations, (3) actively participated 

in several Area meetings in 1988, 1989 and 1990 to explore implementation issues, (4) 

taken a lead role on our clients' behalf in the 1989 national regulatory drafting workshops 

(producing an April 1989 joint federal-tribal working draft regulation), (5) prepared master 
81 

comments on the December 1989 federal draft that rejected most tribal poeitions, (6) 

attended virtually every "Coordinating Work Group" meeting convened by the agencies 

in 1990 and in that process authored countless tribal position papers and legal 

memoranda (a process which ultimately led to the issuance of a new compromlH tribal· 

federal draft in September 1990). (7) served on the four-member Tribal Negotiating Team 

(comprised of two tribal chairmen and tribal attorney Britt Clapham of the Navajo Nadon) 

to press forward tribal positions in the period 1990-1992, (8) worked with congressional 

stalf in the development of the 1990 Technical Amendments and in the development oC S. 

3237 in the last Congress and S. 1410 and S. 2036 in this Congress, and (9) developed a 

set of master comments on the latest agency regulatory proposals published earlier this 

year. 

It is with this perspective that we come to today's hearing. 

As the Subcommittee is well aware, in 1988 Congress enacted a aet of 

comprehensive amendments to the Indian Self-Determination Act. The Amendmenlll were 

developed to address a wide range of problems that had emerged since the Act was 

originally passed in 1975 (at the urging of Presidents Johnson and Nixon). At that time it 

was clear that most of the problems lay not in the language of the original act, but in the 

narrow and grudging interpretations that been given the Act by the Department of the 

Interior and the Department of Health and Human Services. 

Sadly, history has now repeated itself. Thus, instead of timely promulgating new, 

simplified and liberal regulations within ten months after the AmendmenfS' passage in 

1988 ··as Congress and this Committee expressly instructed in section 107 - the 

Departments have for six years endeavored to erect formidable new barriers to the 

contracting imperatives of the Act. 

Two of my colleagues on this morning's panel will be sharing with you in detail the 

unfortunate experiences tribes have suffered under the 1988 Amendments·- not because 

of anything Congress did or failed to do at that time -- but because of the entrenched 

resistance within the Departments of Interior and of Health and Human Services to the 

mandates of those amendments. These experiences include years and years of delay in 

promulgatino implementing regulations with only cosmetic tribal consultation, culminating 

last January in a proposed set of regulations that do severe violence both to the 

government-to-government Federal-Tribal relationship, and to Congress's express intent 

to liberalize contracting opportunities under the Act. 

The regulatory process to date has been a disaster. It has consumed nearly six 

years, with still another two years before anticipated completion. It has cost tribes 

hundreds and hundreds of thousands of dollars. It has impeded "638" contracting. It has 

Toatimony ol Lloyd Benton Mlllor 

s.tor. th• Houae SubcommifiM on 

Na!Mo-.., Allairw 

OVeniQhl Heorinq on the lndlan S.~· 

O.wmination Act 

july29,1994 

P-2 
82 

led to massive confusion throughout all levels of the Depart:menlll regarding the current 

state of the law. 

It hall pn~cluded meaningful and effective tribal participation by soliciting tribal 

input, but then ignoring it It has resulted in a document which six yeans later it hardly 

worth the paper It Is printed on. Worst of all, it has led to a set of proposals which would 

block "638" contracting, rather than advance it as Congress explicitly intended. 

Earlier this year a national meeting of tribes called for the establishment of a 

federal-tribal advisory committee to review the regulations that have been proposed. The 

tribes did so because they had no alternative so long as the agencies continued to press 

forward, and so long as Congress waited before stepping in and taking action. While 

tribes therefore have little choice but to participate in the new advisory committee process 

•• and will do so with the utmost good faith ·• skepticism throughout Indian country 

abounds that despite the best intentions of the Assistant Secretary and of the Director of 

the Indian Health Service, federal positions will not change and the result will be but a 

repetition of the past. 

Given this history, the tribes and tribal organizations we represent strongly endorse 

the core concepts reflected in H.R. 4842, the new proposed amendrnenlll to the Act 

introduced earlier this week by the Chairman and Vice Chairman and now pending before 

the Subcommittee --that is: (l) amend the starute to definitively address all the critical 

contracting issues that have arisen in the course of the past six years, and (2) eliminate 

the regulatory process altogether, save for a few key exceptions. 

In this manner Congress once and for all will have spoken clearly and in detail --

and without possibility of further agency misinterpretation •• to all of the essential issues 

which have plagued implementation of the !988 Amendmenlll. Further, in so doing 

Congress will be able to resolve many of the conflicting interpretations which have 

emerged over the years among the various agencies charged with administering the Act. 

And finally, by enacting new amendments Congress will be able to put into place several 

provisions whose absence even the agencies will agree have impeded full and effective 

implementation of the Act. 

Before discussing H.R 4842, I would like to address in greater detail the regulatory 

process. 

3. '1'bt lack of tribal participation In the ntgulatory proceu. 

Mr. Chairman, as we look back over the past six years we are reminded of how 

poorly the regulatory process has been going, a process that has hardly reflected the sort 

of "active (tribal) participation" the Congress anticipated when it directed "the Secretary 

T-ny of Llo,.t BotniOn Miller 

llo!o"' 1M HoUM Sllbc:ommi- on 

NoJ!ooo-..., A!l&lro 

O..l'llght Hoo.ring 011 tho lndlao SoliO.IonninalionAct 

July at. l9M 

P-3 
83 

of the Interior and the Secretary of Health and Human Services to work closely with tribes 

in the initial- drafting of these regulations, as well as in the subsequent refinement of 

proposed rules for publication." S. Rep. No. 100-274 at 38. Rather, after cosmetically 

indulging the emphatic demands of tribal representatives and the insistence of this 

Committee and of the Senate Indian Affairs Committee that tribes be involved in the 

regulatory proceu, .tam AllfiUIIt 1990 until thtll ~~ -IINiiT lour 7fHIDI - YirtJMII1T no 

lDIIflllinglblldbttl pmiclpatlon hllll bHn permjttecl. Instead the Dep.artments, working 

behind closed doors, have at a sna.ll's pace developed a vast set of proposed regulations 

which seek to inhibit, complicate and burden tribal contracting under the Act, rather than 

encourage and simplify those activities. Only in the last two months have the agencies 

indicated a willingness to embrace at least an "advisory'' proce!ls for increasing tribal 

participation, a development which comes six years late and is likely to consume yet 

another two years before final promulgation. 

Whether the end result will be improved regulations remains to be seen. In this 

regard we note that twice already the agencies have rejected the critical elements of 

tribally negotiated drafts, once in 1989 when the so-called "Yellow Draft" was rejected, and 

aga.ln in January of this year when the Departments rejected the 1990 joint tribal-federal 

clra!t. This history gives little cause for optimism. 

4. Departmental delaYI in promulgating regulationa. 

The bureaucratic delays experienced in the regulatory process have been nothing 

less than outrageous. Initially, BIA and rns were reluctant to work together at all. Not 

until eleven months after enactment of the 1988 Amendments-· and one month after the 

final regulations were to have been promulgated under Congress's original schedule --

did the two agencies finally co-sign a letter formally committing to work together in the 

development of joint regulations. 

Even after the BIA and IHS rejected the negotiated April 1989 tribal-federal clra!t 

and produced their own draft later that year, the federal draft lacked any endorsement 

from other Interior Department agencies. Six months of subsequent meetings with the 

tribal-agency Coordinating Work Group proved to be as much a setting for the airing of 

disputes among BIA's sister agencies (BLM, MMS, F&W and BOR) as it was a setting for 

negotiations with tribes. 

Not until December 1990 •• over two years after enactment of the 1988 

Amendments - did former Secretary of the Interior Manuel Lujan finally issue a directive 

to all Interior bureaus and agencies to join together in developing new implementing 

regulations. Then, another year passed before each Department issued not a new clra!t, 

but two separate versions of implementing regulations. Thereafter it would be yet another 

full year before informal issuance of a single draft at the beginning of this Administration, 

T•timony or t.Joyd Benton Miller 

htottei tM HoUM Subcommittee on 

No--...Alfoin 

~t HMI'inQ' on the1ndian Self· 

Determination Act 

11aly29,1994 

I'IQo 4 
84 

and incredibly one more additional year until its publication in the Federal Register last 

January. 

Ewn today, - cannot see the light at the end of the regulatory tunnel Jill noted 

earlier, pniHDtly- are in the regulatory comment period which expires in August. 

Thereafter a MW Tribal-Federal Advisory Committee apparently will begin meeting to 

review the proposed regulation and the comments generated on the regulation (although 

Interior has now identified legal impediments to furlding this process which will require 

congressional action. meetings are currently anticipated to begin in January and may last 

six months). Also, the agencies will take some number of months to thoroughly review 

and respond to the comments received on the proposed regulation. as required by the 

Administrative Procedure Act. 

The Secretaries will have to consider the recommendations of the Advisory 

Committee. Ultimately the final regulation will have to be cleared through the two 

Departments and through the Office of Management and Budget, after which this 

Committee will have one last thirty-day oversight opportunity before final promulgation. 

In sum, final publication of regulations implementing the 1988 Amendments is likely two 

years away. In the meantime, BIA Agency, IHS Service Unit and other line officials 

continue to operate largely as if the 1988 Amendments had never been enacted. 

Ai the end of the process, a good eight years will have been consumed by the 

agencies in developing hundreds of pages of regulations that severely limit and undermine 

638 contracting. Particularly given the intent in 1988 to simplify the 638 contracting 

process, it is diflicult to attribute any other cause for both these delays and the content 

of the regulations than an intense and entrenched resistance in the departments' mid-level 

career bureaucracy to the reforms mandated by Congress. 

The time for further legislative reform has come. If this were not clear enough from 

the past six years, it is abundantly clear from the content of the 1994 proposed regulation. 

8. O...rvfew of the January 1993 Prcpceed l8gu1ation PubUshecl. at 89 Fed. Rag. 

3188-32110 aamwv ao, 1994) 

In 1988 the Subcommittee's sister committee in Senate directed that •t~~e reguhd/01116 

lflt18l'dinl1 CCIIIhct:l I.II'Jder t:hJ Indian Se/1-Detsrminatfon Act mould bit lfllathely llimp/e, 

.night-tetw.rd;, ..xl.he ollllll'/tiCflll1 requirament.lr (or)~-- S. Rep. No. 100-

274 at 38. In dellance of that directive, what has emerged is a several hundred page 

document that neb to control virtually every aspect of the "638" contracting process. It 

i.s, indeed, an ironic development: ln 1988 Congress moved aggressively to liberalize the 

"638" contracting process in favor of tribes. In response, and with the opportunity to write 

new regulations, both Departments have instead done their level best to produce 

T-oY of Lloyd hn1Dn Millor 

- !he Ho-Subc:omml- Oft 

Nom American A!!alrs 

OvwaigiU IIMriiiQ on U\e Indian S.H· 

Dot<lrml""llon Al:t 

)111y2$,19$4 

"-s 
85 

regulationa which restrict and impede contracting. It is not an exaggeration to say they 

have defied the will of Congress. 

I haw Hparately furnished the Subcommittee's majority and minority stalJ with a 

copy of a comprehensive Commentazy detailing the many deficiencies which permeate 

the January 1994 proposed regulation, deficiencies which deeply undercut Congress' goal 

of promoting maximum self-determination. A:s explained at length therein, the proposed 

regulation unlawfully or improperly: 

• removes huge portions of the Departments' Indian progranuJ and functions 

from the reach of the statute (the "contractibility" issue), both insulating the 

bureaucracy and driving up tribal needs for contract support costs. 

• removes departmental decisions regarding how contractors are funded from 

the statutory "declination" procedure and from any meaningful appeal 

process. 

• permits the Departments to decline contract proposals which meet the 

statutory criteria if the Departments anticipate an adverse effect on the 

Government's services to non-contracting tribes. 

• applies the federal procurement system to the BIA roads program, to 

cadastral survey programs, and to the Housing hnprovement Act program. 

• prohibits implementation of local tribal member employment preference 

ordinances. 

• removes contractor flexibility to redesign programs, imposing upon tribal 

contractors all the same program standards and requirements which dictate 

how the agencies operate. 

• establishes an inadequate means of reporting to Congress the shortfalls 

suffered by tribes in indirect costs and contract support costs. 

• denies tribal contractors mandatory access to the same GSA sources of 

supply {including negotiated airfares) which the agencies are able to access 

in their direct operation of programs. 

• imposes excessive, antiquated, burdensome and unnecessary "acquisition" 

and "procurement" requirements on tribal contractors engaged in 

construction activities. 

T•dmony of Lloyd Benton MWer 

hfore tM HoUH SubcommiU.. on 

NallnAmoricanAl!ain 

o..ndghtiiMrifto on lhe Indian Sell· 

Oe1ermin&tion Act 

July 29, 1994 

"-6 
86 

• impedes immediate transfer to tribal contractors of federally-owned property 

used in a contract, even though the regulations could permit tribal 

contractors to take title to new property purchased with contract funds. 

• impedes the full distribution to tribes of savings realized by the agenciea as 

their programs are transferred to tribal operation. 

• continues the policy of not covering all indirect cost shortfalls, including 

shortfalls caused by the failure of other departmental agencies to pay their 

full shares of such costs. 

• establishes in the Departments the power to unilaterally suspend a contract 

or withhold contract funds entirely outside the procedural protections of the 

statutory "reassumption" process. 

These, together with scores of other deficiencies, are detailed in our Commentary report. 

Let me address just one of these issues by way of example, so that the 

Subcommittee gets a flavor for how far the agencies have departed from Congress' 

original intent. 

"Conn:r:actibity." No other place in the proposed regulations so clearly 

demonstrates the unabashed resistance of both Departments to the mandate of the Act •• 

notwithstanding the 1988 Amendments. In working closely with the House Natural 

Resources Committee, the Senate Committee made the issue clear, insisting 

[T]hat the Secretary is not to consider any program or portion 

thereof to be exempt from self-determination contracts. Tribes 

have the right to contract from BIA Aqeney functions, DiS 

Service Unit functions, and BIA and DiS Area Otfice functions, 

including program planning and statistical an.J.yaia, technical 

assistance, administrative support, financial management 

including third party health benefits billing, clinical support, 

tra.i.ning, contract health services administration, and other 

program and administrative functions. 

The intent of the Committee is that administrative functions of 

the Indian Health Service are contractible under the Indian 

Self-Determination Act. 

T-nf ol Llof'l llenton Millor 

Belore tM Hout Suhcommin.. on No.---- ~~ lleorinq on the Indian Soli· 

Dolonnirlalion kt 

July ze. 1994 

"-1 
87 

. . . Section 102 as amended further authorizes tribes to 

contrac:t with the Secretary to operate any program. or any 

ponion of any program, without regard to lhe organizaticmal 

level that such program is operated within lhe Department of 

lhe Interior or the Department of Health and Human Services. 

Again, this emphasizes the intent that tribes are authorized to 

contract with the Secretary to operate headquarters, area 

office, field office, agency and service unit functions, programs 

or portions of programs. 

S. Rep. No. 100-274 at 23-24. 

In marked contrast to the statute and to this explanatory report, the regulation in 

Section 900.102 defines the term ''program" and the concept of "contractibility" -- that is, 

what programs are contractible under the Act •• so narrowly as to theoretically Insulate 

all higher level departmental functions from the Act. Thus, lhe term *program" is defined 

to mean merely "the operation of services," while Section 900.106(c) restricts contracting 

to "service delivery programs" "generally performed at lhe reservation level. ... • By theM 

terms, Anta OJD'ce, Headqusrten and cmm 6Upport/N 6.eld aclhitJM ant tlrtflotwtlcal17 

mndeled Yl.rtuaJJy ellltli'I,Pt .tom the mandate of ths Ia,. )I 

To further support this restrictive view of the Act, lhe preamble to the proposed 

regulation peculiarly advances the fallacious argument that any broader contracting of 

departmental functions would somehow violate the Appointments Clause of Article n of 

the Constitution. The draft regulation at Section 900.106(d) goes on to exempt from 

contracting any "inherently Federal responsibilities involving the exercise of significant 

authority under the Constitution, and functions integral to the exercise of discretion, 

judgment, or oversight vested in the Secretary by law or by virtue of the Secretary's trust 

responsibilities." To a similar effect is subsection (e). 

J/ The proposed regulation invokes the federal government's ''trust responsibility'' as a 

barrier to contracting, in direct defiance of the 1988 Amendments. SeeS. Rep. No. 100· 

274 at 2644. If, indeed, no aspect of the federal government's trust responsibility could 

be contracted under the Act, there would be nothing left or federal Indian programs to 

contract at all. By invoking the shield of ''trust responsibility" the Secretaries seek to 

reserve to themselves the sole and virtually unreviewable authority to determine 

whether or not to approve contracts under the Act. 

T-ny of Llo>"'-n Mill« N--- -.1M HoUM SUI>co- on 

OYvli;ht I!Arinq on th<t ln<ll&n S.llO.IitrminaOon Act 

July 29, 1994 

P-8 
88 

These provisions, if applied by their literal terms to all activities of the Department 

of the Interior and the Indian Health Service, would bar virtually all of the contracting 

which has tabn plac:e since the original 1975 Act was signed into law. These proviaio1111 

are all the more curious when they come from Departments which have simultaneously 

been mandated, under Title m of the Act, to simplify contracting even further through the 

execution of self-governance compacts. IWCII11 "-1 the 'l'ltlfl BI ..U~ 

demt:llllltRtlon FO}tH:t dOfMI not upflnC/ the •aope of what ltJ c:orHn~c:fble. but «ttT the 

dltJcretlon which com,pacting ~ enjoy in reaJloca1ing .ftmdlr within • et:JmOlJdlded 

funding ag.nHIIlHillt A more detailed analysis of the "contractibility" section is contained 

on pages 6-8 of our Commentary. 

The Departments' approach to what is "contractible" under the Act is more than a 

matter of mere philosophical or linguistic quibbling. k a practical matter, such language 

will provide the agencies with an opporturdty to insulate the bulk of their higher level 

operations from "638" contracting. Even at the "services" level the Departments will have 

the ability to invoke section 900.106 to assert the power to refuse contracts. And, perhaps 

most importantly, the Departments' approach will insulate from contracting all of the 

diverse administrative functions which support the delivery of services in the !i.eld, 

resulting in a concomitant substantial increase in the need for additional contract support 

cost funding from Congress to carry out those functions. 

That is, if warehouse, personnel, or financial management functions supporting a 

field operation are not contractible, funds representing those supportive functions will be 

retained by the agencies and will not be included in the Section 106(a)(l) contract 

amount, leading to a higher tribal need for "contract support costs" to perform these 

functions. It is precisely this sort of approach to contracting which over the past 18 years 

has led to the maintenance of an ever-grovving agency bureaucracy, even as the 

contracting process has taken over ever larger shares of the Departments' Indian budgets. 

"Divisibility" l!lld other issues. As itemized earlier, the "contractibility" issue is not 

the only place where the regulations are deficient. For instance, prior to the 1988 

Amendments neither Department ever identified the need to raise "divisibility" as a 

potential impediment to 638 c.:>ntracting. Now, with the opportunity to draft new 

regulations in the face of legislative reform, the agencies have found a novel new way to 

undercut those very reforms and thereby deny tribes their starutory right to contract. And 

yet, on this very topic the Departments have developed procedures in the Title m selfgovernance compacting initiative to protect the interests of non-compacting tribes (such 

as through the setting aside of "residuals" and the securing of "shortfall" funding). There 

is no reason in logic, nor any basis in the Act, for either Department to take a contrary 

position when it comes to contracting under Title I. 

T•tirnony of Uoyd Benton Miller 

Befor• the HoUM Subc:ommi~ on 

N•m American 1Jl&in 

Ov•rsioht Hu.rinQ on th• lndiu. Self· 

O.t.rminaticn Act 

July 2&. 1994 

P-9 
89 

To the same effect are the newly asserted authorities to suspend contracts and to 

suspend coa:~tract payments in a process entirely outside the protectmt "ntaasumption" 

proceu eatablithed by Congress in Section l 09 of the Act. Congress carefully addreued 

the iuue of tdbll1 accountability by mandating the preparation of annual audit repcm. 

pursuant to the Single Agency Audit Act. And, in instances of "gross milmanagement" 

Congreu autbodled the agencies to step in and involuntarily "reassume• operation of 

contracted programs from a ttibe. In so doing, Congress carefully provided !or due 

process •• notice and an opportunity for a hearing. 

Congress could have -· but chose not to - pennit the agencies to intervene more 

actively in the administration of tribal programs. Instead, and u noted on page 21 of the 

Senate Report, it determined that 

the Federal Government should not intervene into the afl'aim 

of ... tribal governments except in instances where civil rights 

have been violated, or gross negligence or mismanagement of 

federal funds is indicated, as provided in Section 109 of the 

Act. 

In defiance of this carefully crafted scheme, Section 900.307 of the proposed regulation 

asserts the new power to immediately suspend a contract upon the curiously vaque basis 

that "the contractor's continued performance would impair the Secretary's ability to 

discharge his trust responsibility." Similarly, in Section 900.408(e) the Departments now 

assert the authority to withhold contract funds from tribal contractors in the event the 

contractor in any way "fails to comply with the terms of the contract including the 

provisions of these regulations." Here, again, the agencies seek to take control and micromanage contractors in a manner never envisioned by Congress in 1976, and in a manner 

deliberately rejected by Congress in 1988. 

The time has come to put an end to this regulatory process. 

e. ,. Med !or fLu:thar ltatutory reform .. reflected In H.ll. 4842. 

With the foregoing in mind, I would now like to speak briefly to the provisions of 

section. 2 and 4 of H.R. 4842, introduced by the Chainnan and Vl.ce Chairman earlier this 

week to relorm the Indian Self-Determination Act. I will reserve for discussion by my 

colleague Barbara Karshmer sections 3, 6 and 6 of the bill. All you will hear, we believe 

these reforms are urgently needed today, before another two years passes. 

First, let me speak to the history of sections 2 and 4. These two sections are 

familiar to the Chairman and to all those involved in "638" contracting. In the main they 

were originally developed in 1990 when it was rapidly becoming apparent that the agency 

T-ny of Lloyd S...!On Mlllor 

a.foN the: Hou.e Subcornmitwe on 

N&M-AI!oino 

Oooni;llt l!earlnq on 1M Indian S.U· 

o..t.mw.tlcn Act 

July:~$, 1994 

~10 
90 

drafters were bent on undermining the 1988 Amendments and in dragging on intemlinably 

the regulatory process. At that time the amendments were warmly endomed throughout 

Indian country and by the National Indian Health Board and the National Congress of 

American lncllana. Congress was requested to act 

In response, a small set of technical amendments wu made in 1990 in the form of 

Public Law No. 101-644. However, based upon the Departments' requeslll that the 

regulatory process be given more time to work. this Committee and the Senate Select 

Committee on Indian Affairs deferred any action on the larger set of amendments. 

Over the next two years little progress was made in moving the regulatory process 

forward. Indeed, a negotiated tribal-federal draft regulation produced in 1990 wu in most 

key respects abandoned by the agencies. In light of these developments, Senator Inouye 

was moved to act late in the last Congress and introduced S. 3237. Although that bill was 

reported out of the Senate Select Corrunittee on Indian Affairs, Congress adjourned before 

the bill could be taken up by the House. 

That was 1992, when the Departments were assuring the Corrunittees that 

regulations would be out within a few months. In fact, nothing happened. Accordingly, 

and at the request of a large number of tribes, NCAI and the National Tribal Leaders 

Forum, this same package of amendments was reintroduced in this Congress by Senator 

Inouye asS. 1410. It is those provisions which we now see divided into two parts and 

reflected in sections 2 and 4 of the bill now pending before this Corrunittee. 

I should note here that the Departments are well aware of these provisions. On 

May 14, 1993 the Senate Corrunittee on Indian Affairs held an oversight hearing on the 

Indian Self-Determination Act, a hearing at which the Departments testified and at which 

these proposed amendments were extensively discussed. Several weeks later Senator 

Inouye formally introduced the amendments asS. 1410. At that time the Departments of 

Interior and of Health and Human Services were requested to comment on the bill. To 

date -- a year later -- we are informed they have still failed to do so. 

Now let me tum to a discussion of sections 2 and 4 of H.R 4842. 

Section 2(1) deals with tribal contracting of federal Indian constmction activities, 

and is one of three sections which would reform how the Departments deal with Indian 

tribes in this area. The other sections are section 2(9)(amending section 105(a) of the 

Act) and section 2(12)(adding new construction contract negotiation procedures in section 

IOS(m) of the Act). We strongly agree that amendments along these lines are absolutely 

necessary if Congress's goals under the Act are to be realized in the construction arena. 

TMtimony ol Lloyd S.nton MUJ.r 

~~o~o ... u.. Ho-sw.::c- on 

N.--..nliJ!olro 

Otwlight HMring on the Indian S.U· 

O..IOnnio&t!onkl 

July 211, 19$4 

"-11 
91 

Aa things now stand, both agencies deal with Indian tribes just like they would an 

ordinary sole source bidder on a federal project. They for~;et they are dealing with a 

parallel branch ol ~;ovemrnent that is accountable to its tribal citizens. They refuse to 

disclose fedenal cost estimates. They impose anachronistic federal acquisition regulaliona 

that conflict with the Act. They fall to act as partners with tribes, and they l'ail to ntlpect 

tribal independence and responsibility. 

In the end, they squelch innovation and creativity in an attempt to force tribal 

contractors to do exactly what the government would do if it were building the project 

itself. Plainly that is not what Congress had in mind when it authorized tribes to take over 

the construction of federal facilities on Indian reservations under authority of the Act. We 

applaud the Chainnan and Vice Chainnan for proposing reform in this important and 

growing area of "838" contracting. 

We also commend the Subcommittee for considering a reduction in reporting 

requirements as is proposed in section 2(2) of the bilL The reporting burden on tribal 

contractors today is crushing. Despite report language and some statutory reform in 1988, 

the agencies have continued to impose excessive requirements on contractors -- and they 

have done so without any showing that doing so is necessary to assure that satisfactory 

services are provided to program recipients. 

Aa an example, one would think that if a tribe was able to secure and maintain 

accreditation from the Joint Commission on Accreditation of Hospitals acAH) or from the 

Health Care rmancing Administration (HCFA), doing so would be enough to assure the 

lHS that the hospital or clinic is being soundly run. But this is not the case. Aa a 

consequence, tribal contractors see their contract support costs driven up to pay for the 

preparation of often mindless reports that serve no essential tribal purpose. 

The Committee's approach to this problem is sound. Reporting requirements would 

be negotiated between the tribe and the agency. If the tribe resists a reporting 

requirement that the agency believes is necessary to protect trust resources, assure 

satisfactory services, or assure completion of the contracted activity, the agency can 

decline the contract under section 102 of the Act, subject to the tribal right of appeal. We 

strongly support section 2(2} of the bill. 

We also applaud the Subcommittee for considering sections 2(3) and 2(4), dealing 

with Indian preference issues. The latter provision is particularly noteworthy, for it 

resolves the ongoing conflict between Interior and the Department of Health and Human 

Services over the propriety of tribal preference requirements in the context of ''638" 

contracting. 

T•timony or Lloyd Benton Mill• 

Belont the Houa SubcommittM on 

---

~ IIMriag on !he Indian Sell· 

~.Act 

Jllly2S,I~ 

"-12 
92 

We resexve special praise for the Chairman's and Vice Chairman's proposal to 

clarify the scope of contracting through section 2(5)'s amendment to section 102(a)(l) of 

the Act. Aa U. Subcommittee will hear from other witnesses, and aa I discUS8ed earlier, 

the agency drafters have in recent yean; sought to codify in regulation a very restrictive 

view of what Ia contractible under the Act. Most significantly, they have sought to put off. 

limits their administrative functions that directly or indirectly support contracted progranw. 

In this way, the agencies have managed to retain their enormous bureaucracies while 

forcing tribes to incur ever larger shortfalls in contract support costs and indirect coslll. 

Congress should not pay for double administration. When a program goes over 

to a tribe, so should all the administrative support for that program. Although the 1975 Act 

and the 1988 Amendments (together with their legislative history) appeared clear on this 

issue, the bill would finally eliminate any further creative interpretations of the law. 

We also support strongly the proposed amendments to section 102(a)(2) of the Act, 

as set forth in section 2(6) of the bill. These amendments are essential if the agencies are 

to be compelled to abandon their overly restrictive misinterpretations of the Act. For 

instance, section 2(6) addresses the "divisibility'' issue in a number of respects, an issue 

which none of the DHHS or Interior agencies ever dreamt up until after the 1988 

Amendments. Here, the agencies are now seeking to legitimize in regulation a new 

reason for refusing to turn over a program to a tribe: that it is too hard to divide up and 

separate out the tribe's portion of the program. 

But interestingly, the Bureau of Indian Affairs agrees that "divisibility" is not a proper 

basis for refusing a contract, and that in such situations some way must be found to meet 

the tribe's statutory rights while protecting the interests of other tribes. Unfortunately, 

other agencies at Interior, together with the Indian Health Service, believe otherwise. 

Thus, the bill responds to a very real need fer statutory resolution of this confiict. 

Along similar lines, Section 2(6) also makes several important clarifications 

regarding the "declination" proceu which governs when an agency "declines" a tribe's 

contract proposal. Regrettably, these changes too are only compelled by a persistence 

within both departments to narrowly interpret these vital tribal protections. We strongly 

support section 2(6) of the bill. 

We especially praise the Chairman and Vice Chairman for including several 

sections in the bill which, though technical, are necessary·· and we believe ought not to 

be controversial - if contracting activities under the Act are to proceed more efficiently. 

For instance section 2(10) would clarify the "retrocession" procedures that govern when 

a tribal program is turned back to the federal government. Section 2(11) would put into 

place the same regime governing the ownership and administration or property in the 

''contract" setting as currently applies in the "grant'' setting. Section 2(1.2) would establish 

T .. tlmony of Lloyd Benton Mill<tr 

Before the HoUM Subcom.min.. on 

N.- Alnerican Allaino 

OY<mighl Hoorinq on lh<o lndlan S.ll· 

tletlomUnatlon Act 

July 29, 1994 

P-13 
93 

detailed procedures !or dividing programs, for redesigning contracted programs, and for 

accessing federal airfares and lodging rates. We support these changes, and in our 

opinion all of these provisions should be welcomed by the agencies as valuable 

improvementa. 

We also thank the Chainnan and Vice Chainnan for including sections 2(13) 

through 2(19) to address a number of technical funding and related issues which have 

come up in the course of administering contracts under the Act. Although I will not 

comment on each of these provisions in detail, suffice it to say that if section 2(13) is 

enacted, we believe the federal burden to support contracted programs will actually 

diminish as each agency transfers to tribal contractors their !air tribal share of agency 

administrative funds. Further, we believe that through the strengthened reporting 

recrillrements set forth in section 2(14), Congress will be in a considerably better position 

to monitor overall agency and tribal performance in this area. At the same time, the 

improved flexibility afforded tribes under section 2(19) of the bill, regarding the 

expenditure of contract funds, can be expected to reduce tribal administrative costs and 

thus further enhance funding available for direct services. F'mally, we strongly support 

Section 2(19)'s express prohibition on the agencies' newly-invented authority to "suspend" 

or "withhold" contract payments in derogation of the important ''reassumption" safeguards 

of the Act. 

Finally, let me briefly discuss section 4 of the bill, which beth addresses key issues 

involved in the "reassumption" process (where an agency ''reassumes" operation of a 

contracted activity in the wake of alleged contractor misconduct), and also addresses the 

administrative and judicial remedies available under section 110 of the Act. 

With respect to emergency reassumption, section 4(1) would improve upon the Act 

by requiring that notices be in writing and served on the contracting tribe (in addition to 

the tribal organization), and by specifying with greater particularity the findings which 

must be made before this extraordinary procedure may be invoked (coMistent with 

administrative rulings in this area). Further, the bill specifies the burden of proof which 

the Secretary must meet in any reassumption proceeding. These are critical statutory 

improvements which we support and which are generally consistent with the Departments' 

current practice. 

Section 4(2) provides greater detail on the remedies which a district court can 

award in appropriate circumstances, details which we believe are necessary 

improvements to eliminate any perceived uncertainties regarding how district court review 

is to occur. Finally, we support section 4(3) of the bill, which would direct IHS contract 

appeals away !rom the Aimed Services Board of Contract Appeals and instead over to the 

Interior Board of Contract Appeals, a body which clearly has far more experience in 

'l'oo<imony of Lloyd Bo>lton Mlll<or 

a.tor• ~ HoUIIit' SubccmmittH on 

NaU..Jbnorie.u~AIIoln 

Ov.noight I!Mzlnq on 1M lndlan Self. 

De......un.atlonkt 

july 2$, 1994 

"-14 
94 

issues involving federal Indian law and the Indian Self-Determination Act Thill, too, is a 

change which IHS supports. 

The Coalilion on whose behalf I am testifying today strongly supports and endorses 

the conceplll and content of H.R 4842. After trying in vain for nearly silt yeara to 

aggressively work with the two Departmenlll to simplify, facilitate and encourage 

contracting under the Act, and to do so within the broader framework oftribe!IIOftreignty, 

independence and self-determination, we lind ourselves instead facing a sewral hundred 

page, bureaucratic nightmare. While some changes, and hopefully some improvemenbl, 

may be made at the margins before final regulations are promulgated •• and tribes will 

continue to vigorously press the two Departmenlll for such improvetneniB - it is di1licult 

to imagine how after silt years, including two years under a new Administration. the tnidlevel bureaucracy will cede control and pertnit a more enlightened approach to the 

regulatory process. 

Enough is enough. The agencies have had their chance more than once to 

demonstrate to Congress their willingness to embrace the principles of self-detenninalion. 

At least in the context of "638" contracting they have failed to do so. They have defied the 

will of Congress, and this Comtnittee and the Senate Indian Affairs Comtnittee have made 

an ample record of this defiance in prior hearings. We agree that it is time to move on. We therefore strongly endorse Chairman Richardson's and Vice Chairman Thomas' 

proposal to free tribes of the regulatory process and simply declare in legislation what the 

rules of "638" contracting will be. 

We applaud the Subcomtnittee, and in particular the Chairman and Vice Chairman, 

for taking a leadership role in monitoring the Interior Department's and the Indian Health 

Service's very deficient implementation of the 1988 Atnendtnenlll, and for taking the 

initiative to propose new legislation to finally bring to an end the uncertainty and barriers 

which have faced tribes for many years. We are arudous and enthusiastic to work with the 

Subcommittee during the balance of this session to move this bill through the legislative 

process as swiftly as possible. 

Thank you Mr. Chairman for inviting me to testify on issues relating to 

implementation of the Indian Self-Determination Act Amendmenlll of 1988. We stand ready 

to assist you and the Subcomtnittee in whatever way you feel would be most appropriate. 

T..umony of Lloyd S.nton MW•r 

s.tote the Houa. Subc::ommitt.e on 

N.-~-

Ovwni;ht -'01 on tn• Indian Sell· Dolonnln&&n kt 

july 28, 1994 

"-lS 
95 

BEFORE THE U.S. HOUSE OF REPRESENTATIVES 

COMMITTEE ON NATURAL RESOURCES 

SUB-COMMITTEE ON NATIVE AMERICAN AFFAIRS 

REGARDING H.R.4842 

THE INDIAN SELF-DETERMINATION ACT AMENDMENTS OF 1994 

TESTIMONY OF BARBARA E. KARSHMER 

ALEXANDER & KARSHMER 

ATTORNEYS AT LAW 

2150 SHATTUCK AVENUE, SUITE 725 

BERKELEY, CA 94704 

(510) 841-5056 

JULY 29, 1994 
96 

TESTIMONY OF BARBARA E. KARSHMER 

BEFORE THE HOUSE OF REPRESENTATIVES 

COMMITTEE ON NATURAL RESOURCES 

SUBCOMMITTEE ON NATIVE AMERICAN AFFAIRS 

REGARDING H.A.4842 

THE INDIAN SELF-DETEAMINA TION ACT AMENDMENTS OF 1994 

Mr. Chairman and Members of the Committee: 

I appreciate the opportunity to appear before you to provide you with comments on 

H.A. 4842, the Indian Self-Determination Act Amendments of 1994, which has just been 

introduced and on the January 1994 proposed regulations promulgated by the Secretaries of 

Interior and Health and Human Services. I am an attorney at law and my firm represents 

numerous tribes and tribal organizations which are involved in contracting under P.L. 93-638, 

the Indian Self-Determination and Education Assistance Act, as amended by P.L. 100-472 

(hereinafter referred to as "the Act" or "the Indian Self-Determination Act"). I personally have 

spent the last 19 years representing tribes and tribal organizations. My first practical 

acquaintance with P.L. 93-638 was in 1975 shortly after the Act became law. During a tribal 

meeting on a small remote reservation in Riverside County, California, I witnessed a BIA 

Agency Superintendent address the tribe about the new law. He specifically advised that 

Self-Determination really meant "termination" of the tribe because all the BIA officials would 

lose their jobs and there would be no one left to protect the tribes or their interests. Such 

prophesies of doom, not uncommon at the time, were wholly unwarranted since even bigger 

bureaucracies developed to administer and monitor Self-Determination Act Contracts.' Since 

1975. I have advised tribes and tribal organizations on and negotiated innumerable SelfDetermination Act contracts, participated in the 1 988 Amendment process, participated in the 

regulation drafting process, and have been an active participant in the most recent legislative 

efforts in the Senate on S.1410 and S.2036. 

Today, I appear on behalf of three California tribal organizations representing 

approximately thirty tribes and one individual tribal health program in California. Together 

they have a service population of nearly 40,000 Indians. These tribes and tribal organizations 

request your assistance in enacting these amendments to the Act so that they may finally 

obtain the intended benefits of both the Act and its 1988 amendments which have been 

largely denied to them due to the failure of the Administration to enact regulations. It is on 

their behalf. and on the behalf of other clients as well. that I have been involved in the 

regulation drafting process over the last five years. That process has been costly. frustrating, 

and replete with unfulfilled expectations. Because of my clients' very reasonable frustration 

with the process and its current results, they request that you quickly pass the Bill which will 

obviate the need for a large portion of the proposed regulations and will clarify issues 

important to tribes and tribal organizations who are capable of and are already running their 

own programs under the Indian Self-Determination Act. 

While we do not question the good faith intentions of the various agencies which are 

currently involved in the process, we believe that bureaucratic inertia and lack of control that 

agencies will have over tribal programs. coupled with their unjustified lack of faith in the 

' For example, in 1975 when the Act was passed, there was only a handful of IHS employees in California 

(providing sanitation services onlyl and there was no California Area Office. Today, despite the fact that there 

are no direct health care services provided by IHS in California and all services are provided by 25 tribal 

organizations through P.L. 93·638 contracts or by 7 Urban Indian organizatrons, the IHS California Area Office has 

nearly 125 employees and a huge budget. What do they do 7 Only award and monitor contracts, all when the 

tribes are severely underfunded for the provision of dlfect health care services. 
97 

TNtimony ol-aro E. Kottlhrnor 

S.loro th6 - olllopnoontotiws C<>mmittoo on Natural Rooour- Sub·Comrnltt•• on Ndve Arn.rlctn Affloi~ 

Rtrgarding The Indian s.H..O.termination Act Amendments of 1994 

July 29, 1994 

capability of tribes to operate programs on their own, will continue to impede the process for 

development of regulations. The tribes have found themselves caught between two agencies 

who serve very different functions and who take divergent views of the law and the extent 

of their authority under the law in many respects. We believe that the 1994 Amendments 

which you have proposed will go a long way toward resolving many of the questions which 

have arisen during the regulation process to date and toward providing clearer direction to the 

Secretaries and the tribes in regard to Congressional support tor Self-Determination and the 

implementation of the Act. 

1. Comments On The January 1994 Proposed Regulations. 

To date, the regulation drafting process has been a dismal failure in that the 

Department of the Interior and the Department of Health and Human Services have largely 

ignored tribal input and have promulgated Proposed Regulations which are wholly 

unacceptable to the Indian tribes. See 59 Federal Register. No. 13, Thursday, January 20, 

1994 (hereinafter referred to as Proposed Regulations). Tribes and their representatives 

participated in countless weeks of drafting sessions over the course of several years during 

which compromises were reached between the tribes and the federal agencies. Yet when the 

proposed regulations were published. they bore little, if any, resemblance to the compromises 

reached during those several years of work. For example, those 1988 amendments were 

clearly intended to simplify the contracting process and to avoid extensive and unnecessary 

reporting by tribes to the agencies. The proposed regulations do the opposite. Your Bill is a 

positive attempt to avoid further years of debate over regulations that will probably never be 

satisfactory to the tribes and which may never be consistent with the intent of the 1988 

amendments to the Indian Self-Determination Act. 

In drafting the Proposed Regulations, DOl and DHHS wholly ignored the canon of Indian 

law that "statutes passed for the benefit of Indian tribes are to be liberally construed in their 

favor." Instead, the agencies promulgated regulations which are contrary to both the letter 

and the intent of the law. We will provide just a few examples of the most egregious 

problems with the Proposed Regulations. 

Perhaps most objectionable is that the proposed regulations purport to limit the ability 

of tribes to contract by providing that tribes can only contract for the "operation of serv;ces 

for tribal members and other eligible beneficiaries." See Proposed Regulations, Section 

900.102 (hereinafter referred to as Section 900. ). The Senate Committee Report on the 

1988 Amendments was clear, however, that "administrative functions of [the agencies! are 

contractible under the Indian Self-Determination Act," not just provision of services. See 

pages 22-23, Corromittee Report No. 100·27, Senate Select Committee on Indian Affairs, 

December 22, 1987 (hereinafter referred to as Report). The Report went on to say that 

Tribes have the right to contract for BIA Agency function, IHS 

Service Unit functions, and BIA and IHS Area Office functions 

including program planning and statistical analysis, technical 

assistance, administrative support, financial management 

including third party health benefits billing, clinical support, 

training, contract health services administration, ard other 

program and administrative functions. 

2 
'98 

Teetimony of BerbM'a E. Kllt1Jhmw 

a.t .... tho H.._ of ~ntat!w. committM on Noturalllub-CcmmittM on Nathle Amori- Affainl R<lgardlng Tho Indian s.II-Oatermlnation Act Amondmon!O of 1994 

July 29, 1994 

See Report, Page 23. 

Second, in several areas, the Proposed Regulations allow for unilateral Secretarial 

modification of the contracts with the tribes or tribal organizations. ~- .!W}., Proposed 

Regulations, Section 900.304(2), allowing the Secretary to extend a contract for a period of 

up to one year without the tribe's approval; and Section 900.3081bH5l allowing a unilateral 

contract modification by the Secretary. These provisions fly in the face of the clear language 

of the Act at Section 110(b) (25 U.S.C. Section 450m-1(bH which states that 

Unless otherwise agreed to by the resolution of an Indian tribe, 

the Secretary shall not revise or amend a self-determination 

contract. 

Similarly, the Proposed Regulations attempt to make tribes comply with not only the 

law and regulations, but also "orders, policies. agency manuals, guidelines, industry standards 

and personnel qualifications. • See Proposed Regulations, Section 900.1501. The Act itself. 

at 25 U.S.C. Section 450k(al. provides that 

all Federal requirements for self-determination contracts and 

grants under this act shall be promulgated as regulations ... 

Clearly. requiring tribes to comply with all of these unpublished manuals. unspecified "industry 

standards"'. policies that may be unwritten and unknown to anyone but the decision makers. 

and guidelines that may be unobtainable and unspecific is absolutely contrary to very language 

of the Act itself. 

One of the problems with the Proposed Regulations is that. contrary to the stated 

intent of the Act. the regulations remove the possibility of any flexibility in operating the 

programs which may be contracted under the Act. Despite language to the contrary in the 

preamble to the proposed Regulations, the Secretaries appear to be requiring the tribes to take 

over programs and to run them just as the Secretaries would have done which perpetuates 

the very paternalism that the Act intended to overcome. They do this by requiring the tribes 

and tribal organizations to adhere to extensive uniform rules and standards that can only be 

met by operating a program that is the mirror image of the one which was formerly operated 

by the Sec;etary. ~. SWL,. Section 900.1 03!b)(3). The experience of tribes in the SelfGovernance compacting process under Title Ill of the Act has clearly demonstrated that tribes 

can quite capably make decisions about priorities and operate programs as they see 

appropriate. 

Similarly, the program division section of the Proposed Regulations. Section 900.107. 

is contrary to the law. That section provides that the Secretary may decline to contract with 

a tribe or tribes based on the effect that such contract would have on another tribe. despite 

the fact that the Act provides each tribe with the absolute right to contract without the need 

to consider the desires of other tribes. Not too long ago, a situation arose in California 

' Are these written standards? If so. by whom are they established? Does every industry have only one set 

of standards? How is a tribe to know which set of standards they are expected to meet? How can such nebulous 

"standards" be complied with or enforced? 

3 
99 

T eatimony of Barbaro E. Ka,.nmer 

Before the Hou•e of Repruentativet Co!"TW1'1ittM on Noturtl RMourcea 

Sub..Conmittee on Nettve American Affeirw 

R4tgerding The Indian Se!f-Determination Act Amendment$ of 1994 

July 29. 1994 

wherein a tribal consortium had been providing health care to the members of all the tribes 

in southern San Diego County for many years. One very small tribe decided, however, that 

it did not want to continue to participate with the other eight tribes in the consortium. IHS 

refused to contract with the remaining eight tribes in the consortium (who wanted to continue 

to serve about six thousand Indians but not the members of the one tribe which withdrew 

from the Consortium) saying that the tribes needed to obtain authorizing resolutions from all 

the tribes in the service area. and they were lacking a resolution from this one tribe of less 

than one hundred members. The consortium went to federal district court, and the court held, 

in Southern Indian Health Council y. Bowen (U.S.D.C., Southern District of California), that 

the Secretary was required to contract with the tribal consortium to provide services for their 

members, without regard to the needs of the tribe which did not chose to participate or 

contract, because Section 102 of the Act provides that the Secretary may decline to contract 

only if the proposal is deficient in that the tribal organization cannot ensure adequate 

protection of trust resources. the services to be provided will not be satisfactory. or the tribal 

organization cannot properly complete or maintain a proposed contract. 

Contrary to the law and this federal court decision, the Secretaries now propose, 

through Section 900.107. to determine whether to decline the proposal based on "the effect 

the proposed contract will have on the level. scope. and quality of services ... for those tribes 

and individuals ... who would not be served under a contract proposal." This is clearly 

contrary both to the law itself, which only allows the Secretary to determine whether the 

proposed services would be satisfactory for the tribes/Indians who will benefit. and contrary 

to the holding in Southern Indian Health Council v. Bowen. 

The provisions of Section 900.304(bH 1) regarding carryover funding are contrary to 

the law in that they purport to require further justification and authorization for the use of 

carryover funds. Both Section 8 of the Act itself and the appropriations acts make such 

justification and authorization unnecessary. yet the Secretaries ignore the clear mandate of 

Congress and insert contrary and illegal regulatory provisions. 

We could go on ad infinitum describing the portions of the regulations which are clearly 

illegal in that they are contrary to the law that they propose to implement. and we could 

further describe the many ways in which the regulations thwart the clear intent of Congress 

to promote Indian Self-Determination and to allow tribes to take over programs and redesign 

them in ways that are appropriate to tribal needs. but we will not do so at this time. We 

would be happy to provide further written testimony on these issues at a later date if 

requested by the Committee. Whether illegal or merely contrary to Congressional intent. 

many provisions of the proposed regulations are wholly inappropriate in that they reflect the 

Secretaries' best efforts to stifle and thwart Indian Self-Determination in order to maintain the 

status quo. to prevent the loss of federal employees' jobs. and to require tribes to operate 

programs in the exact seme way that the federal government has operated them rather than 

making them more responsive to tribal needs. 

Some of our clients believe that they would be better off with the old long-standing 

regulations to the extent that they have not been superseded by the 1988 Amendments than 

they would be with the Proposed Regulations. Moreover, our clients believe that the new 

process for redrafting the regulations through negotiated rule-making means the passage of 

another two veers before regulations are promulgated. and further, they believe that the 

process may not result in sufficiently significant changes to justify the lengthy and costly 

4 
100 

THtimony of Bwbttr• E. Karehinot 

S.for. the Houta of R.,:treNntMiw• CommittH on N•tura( ~ouroea 

Sub~ComrnittH on Native Anwricwl AffW. 

Reprdino The lnditln Self.OOtermination Act A~ndmltnt• of 1994 

July 29. 1994 

process. Therefore, they urge that you rapidly pass the 1994 Amendments to the Indian 

Self-Determination Act which will provide the tribes with many of the benefits of the law 

which Congress originally intended in the original Act in 1975 and the 1988 Amendments, 

far too many of which have been denied to tribes due to erroneous administrative 

interpretations. 

II. COMMENTS ON THE INDIAN SELF-DETERMINATION ACT AMENDMENTS OF 1994 

Your efforts to move beyond the onerous and burdensome regulations which are being 

proposed by the two departments are to be commended. The tribes and tribal organizations 

which my firm represents strongly support the 1994 Amendments inasmuch as they will 

shortcut the proposed regulatory process by one-and-one-half to two years. The 1994 

Amendments are extremely valuable to both the tribes and tribal organizations and to the 

respective Secretaries of HHS and Interior in that they clarify many preexisting sections of the 

Act and provide for a uniform contract that will be entered into by all tribes, much like the 

model self-governance compact that has been developed and used for Title Ill compacting 

under the Act. 

A. General comments. 

• Invaluable are the provisions throughout the Amendments specifying that not 

only service programs, but instead all programs. activities, functions and services provided 

by the Secretary, are contractible. These provisions make the amendments consistent with 

the intent of the Act which the Secretaries have refused to accept as shown in their proposed 

regulations. 

• The provisions which require the Secretary to carry the burden of proof by clear 

and convincing evidence that a contract proposal should be declined are critical, as is the 

requirement that decisions on appeals be made a level higher than the level of the agency 

whose decision is being appealed. These provisions allow for the tribes to be accorded 

fundamental fairness in the administrative processes. 

• Your revisions to Section 1 05(al regarding exempting contracts with tribes from 

general Federal Contracting laws and regulations are critical because they allow tribes to have 

the flexibility required to operate programs and remove barriers to true self-determination and 

enhance the ability of tribes to respond to local situations and the needs of their members. 

• The revisions to Section 105(d) regarding retrocession provide a much needed 

process for retrocession or rescission of contracts. The agencies would require a tribe to give 

one year notice of retrocession even if there were only six months remaining on the contract. 

Your amendment makes it clear that a tribe cannot be required to continue to operate a 

program beyond the remaining life of the contract or for one year. whichever is sooner. 

• Your amendments to Section 1 05(h) of the Act regarding administrative division 

of the program are critical in that they create a sensible process for such division which 

maximizes the opportunity of tribes to work things out among themselves but does not allow 

one tribe to thwart another tribe's right to a Self-Determination Act contract. You have 

specifically addressed the issue discussed above in Southern Indian Health Council y. Bowen 

5 
101 

Te.timony of S.rbara £. Kerehr'I'Wtf' 

hfore the Hou" of Repte•ntetiv.tt Committee on Natural Ruourcee 

Sub-Committee on N•tive American Affairt 

Regarding 1M Indian s.tf..t)etetmination Act Amendment• of 1994 

July 29. 1994 

in a way that is wholly consistent with the law and with the holding therein. 

• One of the most valuable amendments you have made is in Section 1 05(jl 

where you have clearly stated that tribes have the opportunity to redesign programs, 

activities, functions and services under the contract. This should eliminate administrative 

objections to tribes attempting to make these contract functions most effective for the tribes 

themselves without requiring them to be modeled in the image of those same programs, 

activities, functions and services that the Secretary might have provided. 

• We strongly support the provisions which you have included in the Bill regarding 

Indian preference being governed by tribal law. The BIA and IHS take opposing viewpoints 

on this subject, so the bill provisions are extremely important to resolve this ...:ispute and 

clarify that tribes have the right to apply their own Indian preference laws. 

• Without going into detail, we strongly support and endorse all of the 

amendments which you have made to Section 106 of the Act. These will have the practical 

effect of making it possible for the tribes to be assured appropriate funding of their contracts 

and to be able to use the funds for appropriate purposes. Further, these provisions ensure 

that Congress is advised of the amounts necessary to fund the tribes pursuant to the 

requirements of the Act, as well as any deficiency of funds. 

• Regarding further regulations to implement the Act, our clients support the concept 

of limiting the areas in which regulations may be enacted to those enumerated areas you have 

specified in the Bill, due to the problems tribes have encountered with the regulations since 

1g88. We believe that there is a need for procedural protections to be provided through 

regulations including those relating to the implementation of the Federal Tort Claims Act. 

However, the regulations should be kept to a minimum, as you have provided and as intended 

by the 1988 Amendments to the Act, and those regulations must be consistent with both the 

letter and intent of the Indian Self-Determination Act. Your provisions regarding the use of 

negotiated rule-making should create regulations that are consistent with the spirit of the Act 

and that are workable for tribes and the administration alike. 

• We believe that including Section 108 regarding Contract specifications and 

setting forth the required contract is an excellent idea. The Self-Governance model compact 

has succeeded in providing a standardized agreement for the tribes involved in the 

implementation of Title Ill of the Indian Self-Determination Act, and the same should be done 

for contracts under the remainder of the Act. The provisions which you have included in 

Section 108 are sufficiently flexible to meet the needs of both the Administration and the 

tribes, yet set forth the basic ground rules for contracting. Not only do the contract 

provisions become standardized, but they also become the law by including them in the Act. 

• Your inclusion at Section 108(1)(8) of the canon of interpretation that laws for 

the benefit of Indians are to be liberally construed in their favor is to be applauded. This sets 

the tone for the entire contract and will remind those required to administer the contract of 

this very important and basic principal of Indian law which must be observed in the 

implementation of the Act and the contract. 

• We endorse your giving tribal courts a significant role to play in adjudications 

under your Bill, and for allowing those tribes which do not have tribal courts the opportunity 

6 
102 

T 'ntimony of Barbera E. Karshmer 

S.tore the House of Represent-rive• ComrnittM on Natural RMouro.a 

Sub-Committee on Ne'rive American Atfaire 

Regarding The Indian Self·Determination Act: Ame-ndments of 1994 

July 29. 1994 

to utilize alternative tribao adjudicatory bodies. In California (as well as a number of other 

states), the State was given criminal and limited civil jurisd•ction over the reservations in the 

mid-1950's pursuant to P.L. 83·280. Although there are more than 100 separate Indian 

Reservations in California, there are or.ly two tribal courts at present. Where there are not 

tribal courts, the governing body of the tribe normally acts as the adjudicatory body for any 

disputes, and your recognition of this tact is most beneficial. 

• My clients support the idea of a three year contract with an annual funding 

agreement to implement it. Most important is the fact that in Section 1 08(2HCHii) you have 

included a paragraph regarding the limitation of costs. This paragraph is critical to ensure that 

tribes are not required to provide services beyond the funding amounts which they are 

provided through the Contract and that the Secretary will continue to have responsibility to 

provide services for which funding has not been provided. The requirements of Subsection 

(b)(4) are most helpful because they make the payment options for tribes more flexible and 

make the Prompt Payment Act applicable to contract funding amounts. 

• The records and monitoring provisions found at Subsection (2)(E) are excellent. 

They ensure that both the tribes and the agencies are protected yet prevent the agencies from 

conducting excessive monitoring in lieu of being able to require excessive record-keeping. 

Because these are so similar to the provisions of the proposed regulations, we would 

anticipate that these should be agreeable to the Administration as well. 

• Section 1 08(2)(F) carries out the original intent of the Act to place tribes and 

tribal organizations in the same position as those government agencies that would otherwise 

be carrying out the activities, so that no benefits or cost savings are lost merely by virtue of 

the contracting of the activity by the tribe. This section as a whole provides important 

safeguards for tribes so that they can truly stand in the shoes of the government when they 

are carrying out contracts and receive the same benefits as to property, equipment. etc. 

• The provisions for utilizing alternative dispute resolution found in Section 

1 08(2)(J) are an excellent idea. This approach has been endorsed through other federal 

legislation. The fact that there are a number of different alternatives allows the maximum 

flexibility to utilize the one most appropriate for the situation requiring resolution. 

Although we could continue to analyze and comment on the model contract in Section 

108 paragraph by paragraph, let it suffice to say that we believe that it contains all the 

necessary elements to make it beneficial and workable for both the tribe or tribal organization 

and the federal agencies involved. We believe that its use will result in the contracting 

process being simplified. and it will eliminate the opportunity for disputes over onerous 

contract terms. Your Bill will also ensure that tribes and tribal organizations, wherever 

located, are treated uniformly. 

II. Specific Recommendations for Changes to the Bill. 

We would make the following comments and suggests for specific limited revisions of 

the Amendments to the Indian Self-Determination Act of 1 994: 

• Declination. Federal agencies charged with implementing the Act have taken 

advantage of several provisions of the Self Determination Act --and the Act's silence in other 

7 
103 

T..-y ota.bato E. Kollefonllhe - of~-CommittM on Noturol -ourcoo Sut..Cornnfttee on N-Amorlcon Atflira 

Rogordlng Tho lndlon Stolf.O.tormlnatloo Act Amondrnon,. ot 1994 

July 29, 1994 

areas -- to perpetuate federal control of Indian programs, with often disastrous results for 

Indian programs. In the 1966 Amendments to the Act, Congress narrowed the grounds on 

which the Secretary could decline a 636 contract proposal [section 210(a)(2)J. Specifically, 

Congress eliminated the collection of considerations originally listed under the heading 

"deficient in performance." Most importantly, Congress eliminated from the Secretary's 

purview the catch-all phrase "other necessary components of contract performance", an 

amorphous loophole that effectively gave the Secretary carte blanche to dictate program 

requirements -- and to decline 638 contract proposals -- on an ~ and arbitrary basis. In 

the 1968 Amendments Congress sought to completely close this loophole by expressly 

requiring that "all Federal requirements for self-determination contracts and grants under this 

Act shall be promulgated as regulations in conformity with section 552 and 553 of Title 5." 

[section 207(a)J. 

Prior to the 1988 Amendments the Indian Health Service had promulgated declination 

regulations, at 42 C.F.R. § 36.214 at seq. These regulations, which IHS still relies on today 

in its 638 contracting decisions, are based on the original language of the Act. These 

regulations incorporate the declination factors that Congress specifically eliminated in the 

1966 Amendments, including the overbroad "other necessary components of contract 

performance" consideration that Congress intended to eliminate through the amendments. 

As recently as last year IHS invoked these clauses of its regulations to decline a 636 health 

care contract proposal and to defend such declination on appeal. 

Since 1988 litigation over contract declinations has revealed another problem with the 

statutory declination standards. The existing section 21 0(aH2l allows the Secretary to decline 

a contract proposal if the service to be provided the beneficiaries "will not be satisfactory." 

Although the outdated IHS regulations discuss declinations, IHS has never promulgated the 

required definition of the term "not satisfactory. • As a result, if IHS does not like a 638 

contract proposal, it is able to conjure up an lW..JJQQ and often arbitrary definition of "not 

satisfactory." Worse, the HHS Departmental Appeals Board has upheld such decisions, on 

the grounds that "satisfactory• was not defined by Congress, and that IHS knows what is 

best for the Indians. 

The practical importance of this declination loophole to Tribal organizations cannot be 

overemphasized. A Tribe may be prevented from establishing a 638 program, or IHS may 

arbitrarily prevent the expansion or renewal of an existing program. In one recent case, .w;l 

!:J.w:. definition of "not satisfactory" was not found in any IHS regulation, policy, or rule. Yet 

this ~ definition was directly responsible for shutting down a twenty-year-old Indian 

clinic in Trinity County, California, leaving hundreds of Indians without access to their chosen 

health care. IHS and the HHS Appeals Board permitted this result based solely on the 

"personal experiences" and "professional judgments" of IHS staff, admittedly exercised 

without limitation. 3 

Regrettably, the administrative appeals process cannot be deemed an adequate 

safeguard against IHS' arbitrary use of the "not satisfactory" language of the Act. IHS has 

been able to convince administrative law judges and the HHS Departmental Appeals Board 

that Congress has authorized IHS personnel, based on their admittedly~. subjective, and 

CR!HB and Blue LaJ<e y. !HS, Docket No. C-93-013, Decision No. CR273 !June 23. 1993). 

8 
104 

T-'monv of-.,. E.""'""""" .._lhe_of~-CommittMonNanwlll­

~on N.U..AmaricanAff"'"' ~Tho Indian 81111-0et......,.tlon Ac:t A..-ndmonu of 1994 .July 29, 1994 

unregulated •personal experiences" and "professional judgments", to decline these contracts 

as "not satisfactory" for reasons not found in any regulation, policy, or rule. One AW's utter 

deference to IHS' paternalism is summed up by his nutshell analysis of the Self Determination 

Act: "The Act does not require the Secretary to enter into contracts which are not in the best 

interests of Indians. ·• The HHS Appeals Board rubber stamped this decision. 

A few further amendments to the Act will help prevent recurrences of such arbitrary 

federal agency decision-making. First. it is necessary to eliminate the Secretary's ~ 

~discretion to decide what is or is not "satisfactory. • We propose the following 

language. which retains the Secretaries' power to decline genuinely problematic proposals, 

but reduces the Secretary's discretion to arbitrarily designate anything it doesn't like as 

unsatisfactory. 

We recommend amending Section 102(a)(2) of the Act to read as follows: 

(2) If so authorized by an Indian tribe under paragraph (1) of 

this subsection, a tribal organization may submit a proposal for 

a self-determination contract, or to amend or renew a selfdetermination contract, to the Secretary for review. Subject to 

the provisions of subsection 4 hereof, the Secretary shall, within 

ninety days after receipt of the proposal, approve the proposal 

and award the contract unless. within of the 

(A) the service to be rendered by the tribal organization to the 

Indian beneficiaries of the particularpr?~~~rn ?'. f~~cti?~ t? .. ~. 

~~~-~-~llc!!l~ i~ Wil!!f~flt~fttlll'·~~~!ll#~ ... ~.ill .• ~~~ .•.. ~.~ .•.• efl~i.~ffl .... t~r.f · ~~)~!fo~~·~i .·: . .. ·.· ......... . 

The purpose for making these changes is to ensure that only proposals that will 

endanger the health, safety. or welfare of the beneficiaries are subject to declination under 

this subsection. Moreover, the Secretary must show such detriment by clear and convincing 

evidence, not merely a preponderance of the evidence as permitted by the HHS Departmental 

Appeals Board. It is fundamental to the Act that tribes and tribal organizations be trusted to 

make their own self-determination decisions, and the Secretary must satisfy a high burden of 

proof before it can deny the tribal organization this statutory right. The amendment also 

ensures that the Secretary not just approve or decline the proposal within a specified time 

period. but also award the contract within the ninety day timeframe as provided in your BilL 

This will prevent the current agency practice of sometimes sitting on approved proposals 

without funding them in a timely manner. 

~note 3, M!Jl. Decision No. CR273 at 12. 

9 
105 

T-imony of Bari>ar• E.~ 

S.fCfll tiN- of Rop,...ntllti- Committee on Nat\lrlll--

lub-commttt.. on N•tlv.e Anwrlcon Atf•lrit 

~Tho lndlon Solf.O.torminatlon Act Amondmonto of 1994 

July 29, 1994 

• Time limits in Act are Mandatory. Following Section 102(aH2){C), a new 

paragraph should be added: 

The importance of this new paragraph is illuminated by at least two recent declination appeals 

in which IHS argued that it did not need to decline a proposal within 60 days, as required by 

Section 102(a)(2), because this time limitation was simply a procedural matter that can be 

ignored under appropriate circumstances. One ALJ has agreed with this position, and another 

ALJ has the matter under consideration. This amendment is needed to clarify that the 

prescribed limitations periods are mandatory, and can only be changed by voluntary consent 

of the tribal organization. This will avoid a multiplicity of administrative law rulings making 

exceptions to the 60-day and 90-day rules on a case-by-case basis, in contravention of the 

intent of the Act. 

• Right to engage in discovery. We urge Amending Section 1 02(bi(3) in the 

following manner: 

under such 

Secretary may promulgate, subject to the tribe's or tribal 

organization's option to proceed directly to federal district court 

as provided in section 110(a). 

Requiring a tribal organization to spend a year or more in the administrative appeal 

process may mean the kiss of death to the program. even if the Tribe ultimately prevails. The 

time and money expended. and the lack of funding in the interim, are hardships many 

organizations cannot survive. By allowing a tribal organization to proceed directly to federal 

court and providing the usual remedies of injunction and mandate, tribal organizations with 

just complaints are much more likely to obtain timely redress. Also, existing regulations are 

ambiguous as to the right of the tribal organization to take discovery on a declination appeal. 

The Appeals Board has denied such discovery, placing tribal organizations at a serious 

disadvantage when trying to prove agency violations of law and agency policy, and when 

trying to rebut evidentiary matters. This amendment levels the playing field in both the 

administrative forum and in federal court. 

• Burden of Proof. Amendments should be made to Section 102(ei so that it 

would read: 

{e} In any hearing or appeal provided under subsection {b}{3), 

I 

10 
106 

T elltlmony of Berber• E. Kanah'"-r 

lefor• the lfouH of Repruantatlw. Committ .. on Natural RMoutc. 

Sub~ on Notiw Amoricon Affolno 

R-o-dino TM lndMtn s.tf.Oetwmination Act A,..ndmrctnta of 1994 

.July 29, 1994 

made at a level higher than the 

whose decision under section (b) is being appealed. 

Although the legislative history of the Act specifies that Congress intended the 

Secretaries to "clearly demonstrate" that a proposed contract was properly declined, the HHS 

Appeals Board has determined that this does not constitute a "clear and convincing evidence" 

standard of proof. Given the fundamental principles of self-determination at stake in these 

appeals, it is necessary to specify the exact burden of proof to be carried by the Secretary, 

and to confirm that Congress demands more of the Secretary than mustering a 

"preponderance of the evidence. • The amendment also specifies that the Secretary must rely 

solely on those grounds specified in the declination notice, which grounds must be one of 

those cited in the statute. This is the current law, but IHS frequently argues on appeal new 

matter that was not incorporated in the declination notice, or never promulgated as a 

declination criteria, which new matter is often accepted by the Appeals Board. Also, it must 

be dear that the Secretary bears the burden of proving that the required technical assistance 

could not overcome the objections to the proposed contract. 

• Restriction on regulations. There should be amendments to Section 1 07(ai 

which would read as follows: 

Sec. 107(al. General. Except as may be specifically authorized 

herein and elsewhere in this Act, the Secretary of the Interior and 

the Secretary of Health and Human Services shall not promulgate 

any regulation. nor impose any non-re~;~ul'!~~~y ~~"l~ir~~~llt. 

relati determination contracts ~to:~·-~~~.;{tj; 

~;~-~~lt< provided however, that the 

retary may . . . . · 

These changes are necessitated because IHS has argued in declination appeals that this 

section applies only to contracts, not to proposed contracts, awards, or declinations. This 

amendment is necessary to assure that the Secretary does not ignore the Act's protections 

with regard to the latter. 

IlL CONCLUSION 

In closing, I would like to take the opportunity to again express my gratitude to you, 

Mr. Chairman and members of the Committee, for inviting me here today to testify before you 

on this subject which is of immense importance to my firm's clients. I look forward to having 

the opportunity to work further with your Committee on these Amendments. 

11 
fedCTal RotisW' 

Vot 58. No, 176 

Tuc$d&y, September 14, t99J 

Title 3--

The President 

lF'R Ooc:. 93-ll!&.t! 

Fit.d 9-ll-93< U:lS ~~ 

BiUing todllt ll~s--Gl...P 

107 

Presidential Documents 

Execulive Order 12861 of September 11, 1993 

Elimination of One-Half of Executive Branch Internal 

Regulations 

48255 

By the authority vested in me as President by the Constitution and the 

laws of the United States of America. including section 301 of title 3. 

United States Cede. and section 1111 of title 31. United States C()de, and 

to cut 50 percent of the executive branch's internal regulations i11 order 

to streamline and improve customer servlcn to the American people. it 

is hereby ordered as follows: 

Section 1. Regulatory Reductions. Each execuUve department and agency 

sball undertake to ellmin,ate not less than 50 percent of its civilian internal 

management regulations that are not required by law within 3 years of the effective date of this order, An agency internal management regulation, 

for the purposes or this order, means an agency directive or regulation 

that pertains to its organization. manag1:ment. or personnel matters. Reduc· tions in agency internal management regulations shall he concentrated in 

areas that will result in the greatest improvement in productivity. strcamlin 

ing of operations. and improvement in customer service. 

Sec. 2. Coverage. This order applies to aH executive branch departments and agencies, 

Sec. 3, Implementation. The Director of tbe Office of Management and 

Budget shall issue instructions regarding the implementation of this order, 

including exemptions necessary for the deli very of essential services and 

compliance with appliuble law. 

Sec. 4. Independent Agencies. All independent regulatory commissions and 

agencies are requested to comply with the provisions of this order. 

THE WHITE HOUSE. 

September 11. 1993. 

£dilori.i.J no1e-: For th11t President'$ romarks Cl\ ;;igning this Executive o«ier, see iuue no. 

37 o!tbe Wrtldy Ccmpilation of ~idential Documents 
108 

1345 Rudakof Circle. Suite 206 

Anchorage, Alaska 99508 

TESTIMONY OF 

JOSEPH DEXTER, CHAIRMAN 

ALASKA NATIVE HEALTH BOARD 

Phone: (907) 337-0028 

FAX: (907) 333-2001 

CONCERNING DEVELOPMENT OF REGULATIONS FOR THE 

INDIAN SELF-DETERMINATION AND EDUCATION ASSISTANCE ACT 

AS AMENDED 

SUBMITIED TO : 

SUBCOMMITIEE ON NATIVE AMERICAN AFFAIRS 

OF THE 

COMMITIEE ON NATURAL RESOURCES 

UNITED STATES HOUSE OF REPRESENTATIVES 

JULY 29, 1 994 

KOOAK AREA NA'f!VE l\SSOCtAT:(~ 

lllEUT\j,NJPRIBllOF iSlANOS ASSOCIATION 

BRISTOL 8<\Y AREA HEALTH CORPORATION 

CHUGACHM!UT 

WNIILAQ ASS<X::!ATION SOUTHC€NTFI.Al.. roUNDAi~ 

METlAKATlA INDIAN COMMUNITY SOUTHEAST Ai.ASKA REGJONAL HEALtH CORPORATION 

NOAtH SlOPE SOAOUGH KEALTH DEPARTMENT T.ANANA CHIEFS CONFERENCE 

COPPER RIVER NATiVE ASSOCIATION NORTON SOUNO HEALTH CORf>QR.ti.TIOO YJKON"KUSK:Oi<WIM HEALTH CORPORATKlN 
109 

U.S. House of Representatives 

Committee on Natural Resources 

Subcommittee on Native American Affairs 

July 29, 1994 hearing: 

Indian Self-Determination and Education Assistant Act Regulations 

Witness Information: 

Name: 

Title: 

Organization: 

Organization address: 

Organization telephone: 

Residence: 

Residence Phone: 

Joseph Dexter 

Chairman, Board of Directors 

Alaska Native Health Board 

1345 Rudakof Circle, Suite 206 

Anchorage AK 99508 

907-337-0028 

P.O. Box 62082, Golovin, AK 99762 

907-779-2111 
110 

Chairman Richardson and Members of the Subcommittee: 

My name is Joe Dexter, Chairman of the Alaska Native Health Board. I am 

from the Chinik Eskimo Community of Golovin, Alaska, and also serve as chairman of the Board of Directors of Norton Sound Health Corporation, a consortium 

of 20 tribal governments managing an Indian Health Service P L. 93-638 

contract based in Nome, Alaska. 

I appreciate this opportunity to present the observations of the Alaska 

Native Health Board with respect to the regulations currently being developed by 

the Indian Health Service and the Bureau of Indian Affairs for amendments to 

the Indian Self-Determination and Education Assistance Act since 1988. 

The Alaska Native Health Board and its member regional Alaska Native 

health organizations have monitored and participated in the development of 

these regulations since the passage of the major amendments by the Congress 

in 1988. We are extremely concerned about their implementation because selfdetermination has been the cornerstone of the development of the Alaska Native 

health care delivery system. Approximately thirty Alaska tribes and tribal health 

consortia manage over $150 million annually through Indian Health Service Title 

I Self-Determination contracts in the state. 

Many of our Board members, staff, and legal representatives have spent 

hundreds of hours and well over $200,000 in ANHB resources over the past six 

years to ensure that the regulations enacted by these agencies meet the needs 

of American Indian and Alaska Native tnbal governments and tribal health 

organizations and fulfill the intent of the Congress. 

We have maintained personal representation on the Indian Health Service's national advisory committee on the regulations in both face-to-face and 

teleconference meetings over a five-year period. We have attended all of the 

national consultation meetings and conferences designed to ascertain tribal 

concerns and reconcile them with agency concerns. We have provided staff 

support to the IHS/BINtribal technical working group that developed regulations 

in 1989-1991. We have submitted written comments following each release of 

draft regulations. 

For several years we participated in the Ad Hoc Tribal Committee on the 

Indian Self-Determination Act Regulations and contributed to an inter-tribal 

review of the regulations and the process. We have submitted testimony to 

DHHS officials at the national IHS/tribal consultation meetings, in other congressional committees, at the National Congress of American Indians, and at all 

other opportunities we have had to advocate for the establishment of these 

regulations. 
111 

Testimony of Joseph Dexter, Alaska Native Health Board 

Indian Self-Determination and Education Assistance Act Regulations 

July 29, 1994 Page Two 

For all Alaska Native tribal representatives who have been involved, this 

has been a long, arduous, and frustrating process. At times the agencies have 

been highly considerate of tribal comment and willing to consider approaches 

and compromises that will make these regulations work. However, for the 

majority of this process the agencies have been disorganized in their internal 

considerations, non-communicative in their inter-agency relations, inconsistent 

with the positions and commitments made, and resistant to the full degree of 

tribal consultation anticipated and expected by Congress and the tribes. 

Now that tribal comments have been received in the regional and national 

consultation meetings this spring, it is essential that these comments be considered in the final promulgation of the regulations. We are not optimistic that 

the process for this final review will be any more productive from a tribal 

perspective than has been the case over the past five years. 

In their effort to overcome criticism about the lack of tribal participation in 

recent years, it is our understanding the BlA and IHS are proceeding to form a 

48 member committee of tribal representatives to review the comments and 

participate in the final regulations review. This approach will involve up to six 

one-week meetings beginning in January 1995. 

We feel that using such a large group is not a reasonable approach to 

resolving the issues at hand. Not withstanding the costs of such meetings, 

maintaining communications and reaching consensus with this size of a group 

will be complex if not impossible. It is likely that this approach will only serve to 

slow down the final review process. The agency's current timetables do not 

anticipate completion of the regulations for another 18-24 months. 

It will be particularly fruitless if such a major endeavor is undertaken 

without a commitment from the Indian Health Service and the Bureau of Indian 

Affairs to make significant changes in the regulations to accommodate tribal 

concerns. We truly hope that such a commitment will be made and acted upon. 

At this time, we do not expect the agencies to significantly modify their 

positions on the critical issues embodied in the regulations. Implementation of 

the amendments will mean less control by both agencies over tribal affairs and 

resources. Full implementation also threatens to reduce the overall size of the 

agencies. Such changes are inherently resisted by federal agencies. 
112 

Testimony of Joseph Dexter, Alaska Native Health Board 

Indian Self-Determination and Education Assistance Act 

July 29, 1994 Page Three 

In the interim until the new regulations are officially published, agency 

contracting officers and project officers are required to work within the framework 

of the 1976 regulations and the limited revisions that have been authorized since 

then. While many agency officials are properly attempting to assist tribes in selfdetermination within the intent of the new amendments and the draft regulations, 

their ability to make the full benefits available to tribes is limited. 

The message that tribes have received from the Departments of Health 

and Human Services and lntenor is that the agencies do not trust the tribes with 

health services management and seek to delay the impacts of tribal health 

program assumption as long as possible. This message has caused the Alaska 

Native community to seek participation in the Title Ill Tribal Self-Governance 

Demonstration Project with both departments. 

Most of the provisions in the draft Title I regulations that tnbes throughout 

the nation have found unacceptable will likely only be truly resolved through 

legal challenges or, preferably, through passage of additional amendments to 

the Act by the Congress which make the intent of Tribal Self-Determination 

crystal-clear and limit the regulatory prerogat1ve of the agencies. The Alaska 

Native Health Board encourages the Subcommittee on Native American Affairs 

to initiate legislation which will include such new amendments. 

In 1993, we contributed to the efforts by the Senate Committee on Indian 

Affairs to propose approximately 25 new amendments which were outlined in 

8.1410. Our Board fully endorses these provisions. We are also reviewing 

8.2036 as introduced, which establishes by legislation the terms of a model P L. 

93-038 contract and limits agency regulatory revisions to such an agreement. 

We will submit specific comments on this bil! at the conclusion of our review. 

The amendments will address the priority concerns of tribal governments 

and tribal health providers in such areas as contractibility and divisibility of 

programs, declinations and appeals, contract support costs, and construction 

contracting. Unfortunately, the agencies need to be reqUired to remove a variety 

of barriers they have created in the new regulations. 

II is our understanding that the Senate Committee on Indian Affairs is 

soon to consider legislation that will consolidate the best elements of these two 

bills. We encourage the Subcommittee on Native American Affairs and the 

Committee on Natural Resources to promulgate similar legislation for 

consideration in the House of Representatives. 
113 

RAMAH NAVAJO SCHOOL BOARD, INC. 

P.O. Box 10 • Pine Hill, PMw Mexico 873S7 • (505) ns-S2511• Fu (505) 775-3240 

UI!CUTIIIE DIAICTOA 

Bennie Cohoe 

Honorable Bill Richardson 

U~'>- Representative 

2549 Rayburn !lowe Office 6uilding 

Washin#On, DC 20515-3103 

July 28, 1994 

RE: July .2~) Oversi~ht Hearin~ on lSD A Regulations/S.2036 

Dear Con&ressman Richardson: 

Relative to the heating to be held on the Indian Self-Determination Act (ISDA) 

regulations by the Native American Affairs Subconunittce, l wish to submit the 

following comments for the record on behalf of the Ramah Navajo School Board, lnc. 

(RNSB). 

ln the six year (and still counting) proceSll to draft implementing regulations 

for the I 988 Amendments to the lSDA, RNSB has contributed th01lli11!1cb of staff 

hours, and considerable resources, to attendance at national regulation drafting 

worbhops, Tribal-Federal Coordinating Workgroup meetings, and national and 

regional hearings; we have suggested regulatory language, written tribal pl!Sition 

papers, reviewed joint dr11fts, presented oral testimony, and submitted copious 

written comments. Despite these efforts, and like efforts on the part of tribal 

representative.~ nationally for six years, the fedend asencie,'l have still failed to 

embrace the spirit and intent of the Act. Despite a change in Administration, c~~reer 

bureaucrats in the agencies continue to stymie 11ttempts by tribes lmd tribal ~ani:r.lltions to n:verse the federal d"mination and control of programs for Indians 

through a liberalization of the ~gulations that is truly ~flective of self-determination 

policy. 

It is the RNSB position that lhe final product of the agencies published as a 

Notice of Proposed Rule MAking (NPRM) in lhe federnl Resister on January 20, 

1994, is fatally flawed, and will lead to a wot'SC state of affairs in contracting under 

the Act than exists with current regulations. While we have agrcod to pat'ticipate in 

futu.re tribal negotiations with Interior and Health and HultUU\ Service to try and 

reverse regulatory provisions in the NI'RM hostile to tribes and self-determination 

policy, because we must, we hold little hope that the federal agencies will make the 

dramatic, even miraculous, turnarollltd nece.~ry to make the regulations workable. 
114 

}'or that reason we support and lulve participated in the development of 

S.2036, the Indian Self-Determination Contract Reform Act of 1994, to d!Ltc. The 

perfection of this bill and it.!! merging with the provisions of S.l410, which would 

fUrther amend the ISDA to provide protection~ and benefit~ for tribal contractors 

cormstent with the A.cl, is currently the most viable alternative to achieve the dc!ircd 

implementation of self-determination policy in the face of an entrenched and 

recalcitrant bureaucracy. RNSB ha3 a. vested interest in the success of this Federal 

policy as a tool for continued development in this community where virtually no 

services existed prior to the advent of the Indian self -determination concept in the 

early 1970s. 

We understand that you have introduced a companion bill to S.2036 very 

recently in the House. We applaud this news and on behlllf of RNSB, I would like to 

personally express our appreciation for your continued attention to this 

organization's concerns, the concerns of tribes and tribal organizations in New 

Mexico, and of those nationally as well. We believe you will lmd coru~Cnsus for this 

legislation in New Mexico M well u nationally. 

If RNSB can be of any assistance to y(lU in furthering the cause of this bill, 

please do not hesitate to call upon me. We fully support your efforts in the HoUIIC in 

this regard. 

Sincerely, 

BC/RN/mc 

RAMAH NAVAJO SCHOOL BOARD, INC. 

~ 

h<£:~ 
115 

STATEMENT OF HENRY FLOOD 

ON BEHALF OF 

THE SAINT REGIS MOHAWK TRIBE 

AND 

THE SELF DETERMINATION INSTITUTE 

I Introduction 

Thank you, Mr. Chairman. My name is Henx" ~lood. I appear before 

you today on behalf of the Saint Regis Mohawk Tribe located at 

Hogansburg, NY. I am a Development Specialist with the tribe. I 

also appear before you in my capacity as President of The Self 

Determination Institute, a non-profit corporation created to help 

Native Americans address legal and regulatory problems in Indian 

Country. My expertise is in Native American affairs and Federal 

Administrative Law. 

Your invitation to present information about the development and 

promulgation of the Self Determination Regulations implementing 

the 1988 amendments to the Self Determination Act (25 U.S.C. 450 

et seq.) is most appreciated. My testimony will contain technical 

comments on the proposed Self Determination Regulations issued 

for comment on January 20, 1994 (see 59 FR 3166-3249) and a 

clarion call for this sub~committee use its broad legislative 

powers to re-focus Self Determination policy for a stronger 

future. 

II Development of the Self Determination Regulations 

My allotted time for live testimony does not permit a detailed 

discussion of the technical problems with the 83 page proposed 

regulation. However, our legal counsel S Bobo Dean of Hobbs, 

Straus, Dean and Wilder has performed an extensive review of the 

proposed regulations. The Saint Regis Mohawk Tribe agrees with 

the technical analysis conducted by our counsel and we 

respectfully request that this document be entered into the 

printed record as an appendix to this testimony. 

This is a classic case of implementation going bad. First, it 

should never have taken six years to develop the Self 

Determination regulations. Second, the gap between Congressional 

intent contained in the 1988 amendments to the Self Determination 

Act and the proposed regulations is enormous. Third, these 

regulations cumulatively weaken rather than strengthen the 

benefits that Congress and the tribes are striving to achieve 

from the Self Determination law. Finally, the passage of precious 

time and the emergence of Indian Federalism along side of a 

venerable self determination policy make further Congressional 

changes essential. 

1 
116 

III Summary Critique Of Proposed Regulations 

A Contractible Functions 

Perhaps a good place to start out in any critique of the proposed 

Self Determination regulations is the question of what is and is 

not contractible (see 900.106 of the proposed regulations). While 

the 1988 amendments ~nd ~ccompanying Sen~te Report clearly 

broaden the scope of BIA and IHS functions that can be 

contracted, the proposed regulations narrow the scope of what 

will actually be contracted. This grand reversal is achieved 

through a series of contractibility threshold requirements and a 

series of functions that are not contractible because they must 

be carried out by "Officers of the United States". 

BIA and IHS justification for reserving to themselves broad 

discretionary authority to administratively narrow the scope of 

what can actually be contracted is premised on a series of 

separation and delegation of powers c~ses: Buckley v. Valeo, 424 

U.S. 1 (1975); Bowsher v Synar, 478 U.S. 713 (1986); Morrison v. 

Olson, 108 S.Ct. 2597 (1988); and Mistretta v. United States, 107 

SCt. 647 (1989). Taken together, the BIA IHS interpretation of 

these cases and what they wish them to stand for constitutes one 

of the most contorted constitutional interpretations I could 

imagine. These cases have nothing at all to do with the Self 

Determination Act, Indians or contracting with Indians. Instead, 

these cases address power and delegation authorities between 

branches of the Federal government. 

B Protection Against Inadequate Funding 

A key outcome objective of the 1988 amendments was to shield 

tribes from "inappropriate administrative reduction [of funding) 

by Federal agencies" (see Senate Report 100-274, pages 8 and 30) 

Section 900.114 of the proposed rules takes several steps back 

from the 1988 amendments. 

Particularly objectionable is thA language to the effect that 

when Congress provides additional funding to tribes, the 

additional amount is "deemed to include contract support costs" 

C Inappropriate Application of Civil Rights Act 

In clear violation of the exemption provided in 42 U.S.C. 200De 

of the Civil Rights Act, the proposed joint draft imposes these 

requirements on tribes as "employers" Agencies are not permitted 

to •impose these requirements in the face of a specific exemption. 

Indian tribes are not under the Fourteenth Amendment of the U.S. 

Constitution for the purposes of the Civil Rights Act. Instead, 

Congress intended civil rights issues to be addressed through 

tribal implementation of the Indian Civil Rights Act and 

development of tribal court systems in Indian Country. 

2 
117 

D Application Requirements 

Sections 900.203 and 205 of the proposed regulations appear to 

limit tribes in advance to no more than the Secretarial amount 

plus contract support costs when tribes contemplate entering into a self determination contract. It seems to me that these matters 

should be negotiated based on mutual information disclosure and a proposal based on sound cost estimates and a proposed scope of 

services. Circumstances vary widely from tribe to tribe. Some 

tribes may be able to operate with less than the secretarial 

amount based on efficiency of operations or a scope of work that 

is different than what is presently supported by the secretarial 

amount. Other tribes may require an amount that exceeds the 

secretarial amount plus contract support costs. The regulations as now written seem to foreclose the projected costs question in 

advance of a contemplated application. 

A related issue is what should be in the proposal. Some proposed 

contracts wil l require greater or less detail depending on the 

scope of the contract undertaking. It is quite possible that the 

proposal requirements are too extensive and leave too much 

discretion to BIA and IHS regarding proposal sufficiency. 

E Rebuttable Presumptions In Declination Criteria 

Section 900.207 contains a number of presumptions favoring 

approval of contracts with tribes. Why make these presumptions 

rebuttable if a tribe can demonstrate through its proposal that 

it meets the criteria to contract? This seems like a handy way 

for the right hand to take away what the left hand givith. 

F Financial Management\Allowable Costs 

The Saint Regis Mohawk Tribe believes that something more than 

"reason to believe" is needed before BIA or IHS initiate a special review of a tribe's financial management system. Some 

type of documentation requirement is needed. Particularly 

upsetting is the decision of the regulation drafters to back 

completely away from the previously negotiated exceptions to OMB 

Circulars A-21, A-87 and A-122. Gone too is the tribal discretion 

to select which of the circulars it wish to follow depending on the type of program being operated. 

Given these circumstances, OMB approval of the exceptions does 

not seem likely given its preference for uniformity and granting 

exceptions "sparingly". A better way to handle costs is to 

develop a set of cost principles exclusively for Indian Tribes 

and Tribal Organizations. 

3 
118 

G Indirect Costs 

Many unfavorable changes have been made to the indirect cost 

regulations that are several steps backwards from the 1990 

understandings. No longer would the indirect cost agreements be 

negotiated with the Inspector General and then subsequently be 

accepted by the Secretary. If the proposed rules are adopted as 

is, indirect cost rates would be negotiated with the Secretary. 

Indirect cost rates would have to be approved in advance of 

funding. Apparently, temporary or interim rates are precluded. 

This is particularly disadvantageous to smaller tribes. 

The language on indirect rate shortfall funding now contained in 

the proposed regulations (see 900.406(d) ) is contrary to the 

1988 Self Determination Act amendments and the will of Congress 

as reflected in the legislative history of the Self Determination 

amendments. 

H Tribal Procurement Systems and Contract Approvals 

The Saint Regis Mohawk Tribe believes that Indian Tribes should 

have at least the same right as States pursuant to the Common 

Grant Management Rule to use their own procurement system in lieu 

of that specified by the BIA or IHS. We believe that IHS and BIA 

should accept the certification of a tribe that its procurement 

system is substantially equal to the standards of the Common 

Rule. Alternatively, a tribe might elect to use a procurement 

system based on the well known Model Procurement Code and 

Regulations, or the procurement requirements contained in the 

Common Rule on Grant Administration. 

We also believe that the threshold for agency prior approval for 

contracts ($25,000 and higher) is too low. The threshold should 

be $100,000 if a tribe demonstrates through certification or 

other documentation that it has a sound procurement system. 

I Indian Preference Policies 

Once again, the right of tribes to give preference to Indian 

organizations and Indian-owned Economic Enterprises is not 

acknowledged in the proposed regulations. The decision to grant 

or waive Indian preference on a particular procurement should 

rest with tribes rather than the Federal government. This again 

points to the need for revised Indian Preference legislation to 

clarify this important tribal issue and its relationship to 

Federal policy towards Indian tribes. 

4 
119 

J Appeals and Disputes 

Meaningful appeals that are both fair and independent of the 

initial decision maker are a matter of fundamental administrative 

equity. The proposed rules are deficient here in several 

respects. IHS funding disputes are limited to whether the funding 

amount was reached correctly using IHS allocation procedures. A 

tribe may not request more funds that the Secretary determines to 

be available. Funding disputes would be handled by a new Contact 

Funding Appeals Board (FAB) appointed by the IHS Director. 

Disputes of this importance should be handled elsewhere in DHHS 

by someone who is truly independent. Although Section 102 of the 

Self Determination Act requires an "on the record" hearing, the 

proposed rules regarding financial disputes are contrary to the 

law. The tribe directs the Subcommittee's attention to pages 29-

33 of our counsel's Commentary on the Proposed Regulations 

Implementing the 1988 Amendments to P.L. 93-638 for additional 

analysis of the various appeals mechanisms. 

I could go on and on but just these ten (10) areas that have been 

highlighted are ample evidence that the proposed rules are far 

from satisfactory. They violate both the letter and the spirit of 

the Self Determination Act. After six long, frustrating years, 

Indian Country deserves better regulations than these. 

IV Steps To Correct Regulation Deficiencies 

How can we promptly get out of this implementation swamp? I don't 

have any magic formula but here are a few suggestions to ponder: 

A The House and Senate Indian Affairs Committees should 

seriously consider further amending the Self Determination Act to cure the most serious implementation deficiencies by writing 

desirable solutions directly into law. This process could be 

greatly facilitated by having the committees meet with the 

members of the tribal negotiating team that helped prepare the 

1990 "yellow book" draft that previously contained much of what 

the tribes thought desirable. 

B Tri bes should send any comments on the proposed Self 

Determination rules to the Congressional committees as well so that they might be considered as legislative solutions are developed. To facilitate this process, the Saint Regis Mohawk 

Tribe recommends that the record of this hearing be held open for 

thirty (30) days to receive additional comments or hearing 

statements. 

Regardless of how the committee might amend the Self 

Determination Act, some kind of implementing regulations will be 

needed. The classic problem that always arises with any 

implementing regulation is simply this: People want more and less 

at the same time. 

5 
120 

The more radically one veers towards less regulation, the closer 

you get to lack of standards and specificity. The more one veers 

towards chapter and verse regulation, the closer you come to 

defeat of both the law and the concept of Self Determination as 

broadly understood by Indian Country. 

C My one suggestion for the joint drafters of this 

proposed regulation is to focus on the needs of the intended 

beneficiaries of Self Determination contracting. The needs and 

rights of tribal governments are paramount. The agency agenda 

should be viewed as secondary. BIA and IHS should be going as far 

as possible to encourage tribes to take over and successfully 

operate as much of the BIA and IHS functions as possible. 

V Refurbishing The Self Determination Concept For The Future 

We are accustom to thinking in concepts and categories. Concepts 

and categories are handy tools that bring order, direction and a 

measure of certainty to what we do. Philosophers, theologians, 

lawyers and politicians are especially fond of their concepts and 

categories. 

As we approach the silver anniversary of the modern Self 

Determination concept let me urge the committee do more than 

engage in the technical craft of fixing these unsatisfactory 

regulations through legislation. I believe firmly in the legal 

doctrines and intended outcomes of Self Determination. But after 

nearly 25 years of traveling along this path, there have been 

some major detours along with notable accomplishments. Clearly 

there are some weeds in the path and some fresh plowing is needed 

to refurbish the venerable Self Determination concept and reposition the relationship with Congress for the year 2000 and 

beyond. 

In recent years several court decisions have eroded tribal rights 

in a number of areas. Regulations and regulatory interpretations 

have whittled down the applied meaning of Self Determination. I 

believe that this is an appropriate time to re-visit the roots of 

what Self Determination really means and initiate a new 

Reformation that will bring a new vitality to the legal doctrines 

of Self Determination. The emerging Indian Federalism is a good 

platform upon which this committee might begin to refurbish Self 

Determination. 

6 
121 

Where do we begin and what must be done? While I do not offer 

definitive answers, I do offer several suggestions as points of 

departure. 

First of all, sovereignty and self-governance must always be the 

cornerstones of Self Determination policy. It has been 60 years 

since anyone has rendered a comprehensive official interpretation on the scope of tribal government sovereignty and authority (see 

55 Interior Decisions at 14) . This decision relates largely to 

tribes under the Indian Reorganization Act. Non-IRA tribes were not included. As Indian Federalism enters more into discussions 

between Congress and the tribes, maybe it is time for Congress to 

do a thorough revision of the IRA Act. I think a new sovereignty 

and governance charter is needed for Indian country to replace 

the aging IRA Acts. 

Since Congress possesses "plenary authority" in Indian affairs, 

Congress should work with the tribes to enhance sovereignty and 

self-governance authorities so that protection is afforded 

against Executive Agency and Court decisions that diminish tribal 

traditions, culture and governance choices. 

Congress engaged in a bit of the very concept I am talking about 

with the passage of the 1991 Civil Rights legislation. Since its 

landmark passage in 1964, regulatory implementation and court 

decisions had taken away some of the vitality of this important 

law. Congress refurbished the 1964 Civil Rights law by extending 

its coverage to new groups and notably abrogating several court 

decisions that had narrowed the scope of civil rights protection 

to minorities over time. Congress should engage in this same process to strengthen tribal sovereignty and self-governance for 

all Federally recognized tribes. 

Examples that quickly come to mind are court decisions that 

narrowed Indian religious freedoms, planning and zoning 

authorities or other governance authorities. Congress has done 

this selectively when it abrogated the Duro v Reina case. A more comprehensive focus is now needed. 

By acting soon to re-invigorate tribal sovereignty and governance through new legislation, it will be easier to restore regulatory 

balance and a client-centered perspective to the Self 

Determination contracting process. The conceptual models to 

accomplish this important task are available. 

One notable example for fruitful thought is to examine Charlie 

Wilkensens' Indians. Time and the Law. Written in 1986, it is a masterful interpretation of Indian legal doctrine and offers 

valuable insights as to how both the past and the present can be 

used effectively to enhance tribal authority and Self 

Determination. 

7 
122 

This would also be a good time to examine the role of the 

Administration for Native Americans and their relationship to 

tribal sovereignty and Self Determination policy. This small 

agency with a staff of only 28 has recently been re-authorized 

with a much broader mandate to help Federally recognized and non- recognized tribes and tribal organizations. New to their mandate 

is environmental protection and mitigation programs, Native 

American language programs and a broader mandate to help tribes 

strengthen both sovereignty and governance. 

Maybe it is time to extent partial Self Determination Act 

coverage to ANA so that Federally recognized tribes can receive 

Self Determination grants and contracts rather than traditional 

grants from this agency. ANA is also severely understaffed for 

its mission and needs at least six to eight more people to cope 

with the new program authorities it now has. 

This concludes my testimony. I would be pleased to answer your 

questions or supplement the record. Thank you. 

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July 29, 1994 

Indian Self-Determination 

Amendments Regulations Comments 

Chief, Regulations Branch 

Office of Planning, Evaluation 

and 

Indian Service 

12300 Twinhrook Parkway, Suite 450 

Rockville, MD 20852 

Dear Ms. Penn: 

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We submit herewith our comments on the proposed regulations set forth in the Notice of Proposed Ru l e-Making ('NPRM") published 

jointly by the Departments of the Interior and Health & Human 

Services on January 20, 1994. We are submitting these comments on behalf of the following tribes and tribal organizations: the 

Alamo Navajo School Board, the Bristol Bay Area Health 

Corporation, the Maniilaq Association, the Menominee Indian Tribe 

of Wisconsin, the Seneca Nation of Indians, the Norton Sound 

Health Corporation, the Seminole Tribe of Florida and the Oglala 

Sioux Public Safety Commission. 

We have represented these tribes and tribal organizations in 

the development of the Indian Self-Determination Regulations since 

1988. our clients are shocked at the degree to which the proposed 

regulations published in January 1994 fail to reflect tribal 

recommendations and, in some instances, make changes designed to address federal agency priorities and concerns, rather than 

carrying out the evident purposes of the underlying statutory 

provisions -- to end •the prolonged federal domination of Indian 

service programs that has served to retard rather than enhance the 

progress of Indian people and their communities.• 

Our clients are also deeply disturbed at the failure of the 

agencies to continue after 1990 the consultation with tribal 

representatives which produced early drafts of the regulations. 

The proposed regulations in their present form are a complete re- write done behind closed doors by federal bureaucrats. Their 

purposes are evident from the substantive changes introduced in 

the final year of the process. The attitudes of many of the 

federal participants are reflected in the statement of one of them 

during the consultation process that the purpose of the 
124 

M$. Betty J. Per~ 

July 29, 1994 

Page 2 

regulations is to create a "level playing field" between the 

Indian tribes and federal employees. 

These regulations were unanimously determined to be 

unacceptable by tribal representatives at the May 2-4, 1994 

national conference in Albuquerque which demanded that the 

agencies agree to re-negotiate. Our clients are pleased at the 

commitments which have now been made by the Secretary of the 

Interior and the Secretary of Health & Human Services to engage in a thorough re-negotiation of the regulations through the 

procedures available under the Federal Advisory Committee Act. 

They look forward to active participation in the negotiation of 

the final regulations. 

As our comments herewith demonstrate, this process can only 

succeed if the federal representatives come to the process with a wholly new approach -- a determination to develop regulations 

which strengthen, rather than weaken, tribal authority, place 

discretion in the hands of tribes and tribal organizations 

{instead of in the hands of federal bureaucrats) and eliminate 

burdensome, impractical and unnecessary restrictions on the 

ability of tribes to serve their members. 

We have prepared our comments in the format of a section-bysection review of the NPRM, identifying our concerns with 

individual draft regulations (if any) and proposed revisions 

intended to address those concerns. At certain points where more lengthy or detailed analysis or information were deemed necessary, we reference legal memoranda included as attachments to these comments. 

In the course of the comments, we note that certain issues 

require reconsideration through negotiations between tribal 

representatives and federal representatives. These issues include 

among others certain financial management topics, appeal 

procedures and construction contracting. In preparing these 

comments, we found that negotiated solutions identified in earlier 

drafts adequately address our clients• concerns. In such cases we have recommend~~ restoration of the previously negotiated 

language. 

We are available to further explain and discuss any of the comments set forth herein. As explained in detail below, the 

proposed rules, while streamlining self-determination contracting 

procedures in some respects are, in numerous instances~ more 

restrictive and burdensome than existing regulations. The 

imposition of new obstacles to tribal contracting under the Act is 

directly contrary to the intent of Congress in enacting the 1988 

Amendments -- the law which the proposed rules must implement. We 

urge that the Departments of the Interior and Health & Human 
125 

1994 

Services work with tribal leaders in a close, creative and 

understanding manner to remedy deficiencies in the pYoposed rules 

as identified in these and other tribal comments. 

SUBPART A GENERAL 

DefinitiQn~ (900.102) 

~constructionft -- Representatives from both the Department of 

the Interior and Department of Health and Human Services agree 

that road maintenance and Housing Improvement Programs (HIP) 

should be exempt from the de f inition of construction~ Tc date, 

however, no effort has been made correct this oversight. 

Recommended Reyisio~: 

Replace the final sentence of the definition of c onstruction 

with the following: 

Construction does not include• (1) the manufacture, 

production, furnishing, construction, alteration, repair, 

processing, or assembling of modular buildings, vessels, 

aircraft, or other kinds cf personal property; or (2) 

contracts ( i) limited to providing architectural and 

engineering service&, planning services, and/or 

construction management services; and (ii) for the Rousing 

Improvement Program, and road maintenance program 

administered by t"he Secretary of the :Interior; and {iii) 

for the health facility maintenance and improvement 

program administered by the Secretary of Health and Human 

Services. 

'Pass-through funds" (3179) -- The regulation drafters, in 

the definition of the term •pass-through funds' state that the 

identification of what constitutes •pass-through funds' under a 

contract will be limited to those funds which the contractor and 

the Secretary agree upon ~ which are so designated in the 

indirect cost agreement. The September 1990 proposed regulation 

stated that 'pass-through funds' were those funds which the 

contractor and the cognizant federal agency agree upon sm.Q.. are so 

designated in the indirect cost agreernenc. 

The proposed revision is subject to significant ambiguity. 

It may mean that, if the indirect cost agreement does not 

expressly identify which funds are •pass-through funds' the 

Secretary retains the right, under the proposed to 

negotiate this issue with the contractor. While 

to the present policy which clearly requires that the contractor 

and the cognizant federal agency negotiate the indirect cost rate 

and have that rate honored by the DOI or DHHS, it probably would 
126 

Ms 0 Penn 

July 1994 

Page 4 

not create too much of a problem since indirect cost agreements do 

generally identify "pass through" funds excluded from the 

calculation of the rate. However, the more likely interpretation 

and intent is that the Secretary (i.e., IHS or BIA) may establish 

additional categories of pass- through funds subsequent to and 

inconsistent with the rate negotiations (as IHS has attempted in 

the past). 

As noted in our discussion of indirect costs below, the 

regulation drafters have omitted language included in the 

September, 1990 version which required the Secretaries to honor 

the indirect cost rate, and the direct base, negotiated between 

the tribal organization and its cognizant federal agency. These 

changes would permit the agencies to second guess the cognizant 

agency as to whether so called "pass-through funds" are included 

in the direct cost base. 

At regional and the national conferences held to review the 

NPRM with tribal representatives, officials of both agencies 

stated that it was their intent to honor indirect cost rate agreements negotiated between tribal contractors and the cognizant 

federal agency. The language of the September 1990 draft should 

be restored in order to implement this federal commitment. 

Recommended Beyia1on: 

Replace the definition of "pass-through funds" as follows: 

"Paaa-through fund• • -ana thoae funda in a contract that do not receive the aama degree of administrative 

effort aa do other direct activitiaa performed by a 

contractor. Theae fund• may include, but are not limited 

to, aubcontracta, capitalized equipment, and capital 

iJDprov-nta. '!'hay shall be limited to those funds which 

the contractor and the cognizant federal agency agree to 

characterize •• paaa through and are ao deaignated in the 

indirect coat agreement. 

~ (3179) --There is no justification, nor authority 

under P.L. 93-638 as amended, for limiting •program• to the 

•operation of services• as a means of restricting tribal rights 

under the Act. See further discussion under § 900.106. 

Recgmmended Rey1«ionz 

Replace the definition of •program• as follows: 

•Program• -an• any service, program, function or 

activity of the Depart-nt of the Interior or the 

Department of Health and Ruman Services and ahall include 

administrative function• including program planning and 

statistical analyaia, technical aaaiatance, administrative 
127 

Ms. Betty J. Penn 

July 29, 1994 

Page 5 

support, financial management including third party health 

benefit.s billing, clinical support, t~aining, contract 

health services administration and other administrative 

functions of the Departments which support the delivery of 

services to Indians, including those administrative 

activities related to, but not part of, the service 

delivery program, which are otherwise contractible, 

without regard to the organizational level within the 

Department where such functions are carried out. 

Trust responsibility -- The IHS currently defines the phrase 

"trust responsibility" to mean "the responsibility assumed by the 

government by virtue of treaty, statutes and other means legally 

associated with the role of trustee to recognize, protect and 

preserve tribal sovereignty and to protect, manage, develop and 

approve authorized transfers of interests in trust resources held 

by Indian tribes and Indian individuals to a standard of the 

highest degree of fiduciary responsibility." 42 CFR 36.204(1). 

Current regulations of the BIA read as follows: "Trust 

responsibility means for the purposes of this part only, to 

protect, manage, develop and approve authorized transfers of 

interests in trust resources held by Indian tribes and Indian 

individuals to a standard of the highest degree of fiduciary 

responsibility." 25 CFR 271.3(t). 

The phrase "trust responsibilities" is referenced in the 

proposed regulations and there is no justification for this term 

to be omitted from the definition section of the regulations. We 

recommend that the definition found in current IHS regulations be 

included in the revised regulations. 

Secretarial Policy ( 900 .103 (b) ( 3) ) ( 3180) -- This provision 

states that the r egulations are designed to facilitate and 

encourage "Indian tribes to participate in the planning, conduct 

and administration of those Federal prograrns serving Indian 

people" and provide that Indian tribes will be afforded 

"flexibility". Instead, the regulations should state, as the 

September 1990 draft regulations provided, that the regulations "shall be internreted so as to afford Indian tribes ... the 

flexibility, information and discretion necessary to design 

contractible programs and services to better meet the needs of 

their communities.• We should note here that, in general, the 

statement of Secretarial policy is consistent with the goals and 

purposes of the legislation. However, we find a number of 

specific provisions of the regulations which appear inconsistent 

with the policy statement, as well as with the legislation. 
128 

Recommended Revision: 900.103fbl <31: 

Ms. Betty J. Penn 

July 29. 1994 

Page 6 

The rules contained herein shall be interpreted to 

facilitate and encourage Indian tribes to participate in 

the planning, conduct, and administration of those Federal 

programs serving Indian people. These regulations shall 

afford Indian tribes and tribal organizations the 

flexibility, information, and discretion necessary to 

design contractible programs to -et the needs of their 

communities consistent with their diverse demographic, 

geographic, economic, cultural, social, religious and 

institutional needs. 

We also recommend deletion of the concluding sentence of 

103 (b) (3). 

Contractibility ( 900.106) ( 3180) -- The 1988 amendments to 

the Act broadened the scope of what was contractible under the Act 

by providing that an Indian tribe or tribal organization could 

contract with either DOI or DHHS to administer a program for the 

~ 

benefit 

.t.Q. 

of 

.t.W:. 

Indians 

nn 

because 

s;u;: 2.tii= 

of their 

2.f. .t.W:. 

status 

pepartments 

as Indians 

2.f. Interior 

~ 

s;u;: 

~ l1oilli limn Services !!llhin ~ .t.W:. services =performed. 

The proposed regulations seek to limit the effect of the 1988 

amendments by defining narrowly the phrase 'program for the 

benefit of Indians because of their status as Indians.' We 

consider § 900.106 t~ be in conflict with § 103(b) (8) of the Act 

which states that 'the Secretary is committed to ... extending the 

applicability of this policy [of Indian self-determination] to all 

operational components within the Department.• 

Section 900.106 sets forth a three-part test to determine if 

a program or service is for the benefit of Indians. The three 

criteria are: 

a. Primary or Significant Beneficiaries Requirements 

1. Does the authorizing statute or legislative 

history specifically identify Indians as the 'primary or 

significant beneficiaries of the program'; 

2. Does the appropriation specifically target 

Indians as the •primary or significant beneficiaries of 

the program,• as evidenced in bill language, committee 

reports, etc.; 

3. Do regulations identify Indians as the 

"primary or significant recipients of the services" or 

reflect a departmental intent to benefit Indians? 
129 

Ms- Betty J. Per.n 

July 29, 1994 

Page 7 

This "threshold test" narrows. rather than expands, the scope 

of contractible programs and services under the Act by requiring 

that Indians be the "primary" beneficiaries of the program rather 

than simply an identifiable recipient of a federal progrdm. 

b. Appropriations Requirement -- The proposed regulations 

also provide that in order for a progrdffi to be subject to 

contracting under the Act, it must be one for.which Congress has 

appropriated funds. While the funding of a contract is certainly 

subject to available appropriations, requiring an appropriation 

prior to approval of a contract is wholly unnecessary, 

inconsistent with present practice and inconsistent with section 

102 of P.L. 93-638 which directs the Secretary to contract 

programs without any restriction as to whether funds have been 

appropriated therefor. 25 U.S.C. § 450f(a). This position is 

also inconsistent with the legislative history to the 1988 

amendments (P.L. 100-472) which stated: "Furthermore, the fact 

that the Secretary has decided to allocate funds to a local agency 

in a particular mdllner should not bar the tribe from contracting 

for functions, such as criminal investigation, for which funds 

have not been allocated to that particular agency." S. Rep. No. 

100-274, 25 (1987). Tribes should be able to re-design programs 

to meet tribal priorities. 

This matter should not be h=dled under "contractibility." 

The availability of funding for dilY self-determination contract 

is, of course, subject to the appropriations made by the Congress 

dllnually. See 25 U.S.C. § 450j-l(b). 

c. Functions v Services -- The proposed regulations 

drdmatically narrow the field of contracting under the Act by 

defining the term ~programR as "~ operation Qf seryices for 

tribal members and other eligible beneficiaries". Proposed 

§ 900.106(c) notes that some contractible services may be 

performed at higher organizational levels within the DHHS and DOI, 

but states that this "does not permit the transfer ... of 

inherently Federal responsibilities involving the exercise of 

significdllt authority under the Constitution, and functions 

integral to the exercise of discretion, judgment or oversight 

vested in the Secretary by law or by virtue of the Secretary's 

trust responsibilities." 

The proposed limitation on the contractibility of supervisory 

tasks is contrary to the intent of Congress and section 102 of the 

Act which authorizes the Secretary to enter into contracts with 

tribal organizations •to plan, conduct and administer programs." 

The Senate Indian Committee emphasized the breadth of the 1988 

amendments to the Act: 
130 

Ms. 13et:ty J, Penn 

July 29, 1994 

Page 8 

"Tribes have the right to contract for BIA Agency 

functions, IHS Service Unit functions, and BIA and 

IHS Area Office functions, including program 

planning and statistical anal ysis, technical 

assistance 1 administrative s upport, financial 

management including third party health benefits 

billing, clinical support, training, contract health services administration, and other program 

and administrative functions, The tribes also have 

the right under the Indian Self-Determination Act 

to work with the Secretary to redesign BIA and IHS 

Area Office, Field Office, Agency and Service Unit 

functions to better meet the needs of the tribes 

served directl y by such offices, 

"The Committee has also included language to direct 

the Secretary to enter into contracts with tribal 

organizations to plan, conduct and administer any 

or all of the functions, authorities and 

responsibilities of the Secretary of Health and 

Human Services under the Act of August 5, 1954 (68 

Stat. 674), as amended. The intent of the 

Committee is that administrative functions of the 

Indian Health Service are contractible under the 

Indian Self-Determination Act.• Emphasis added. 

S. Rep, 100-274, 23-24 (1987}. 

We find nothing in the legislative history of P.L. 93-638 

that indicates that what Congress intended by •program• was 

limited to the •operation of services.• Indeed, the statute 

itself and the legislative history consistently use the phrase 

•programs or services,• or •program or function• which implies that the content of •programs• is broader than just •services.• 

25 U.S.C. § 450f. If 'functions• were not intended to be 

contractible under the Act, why do the proposed regulations go to the trouble of preparing a non-exhaustive list of Federal 

•responsibilities and functions• which cannot be contracted? See 

§ 900.106(d). The legislative history notes that trust functions are to be contractible under the Act: 'The intent of the law is 

to enable tribes to improve the protection of trust resources by 

operating the technical functions relating to the trust responsibility while preserving the Federal Government's 

obligations as trustee for Indian lands and resources.• S, Rep. 

No. 100-274, 25 (1987), 

As proposed, § .900.106(d) sets forth a non-exbaustive list of 

11 Federal responsibilities and functions which are not contractible under the Act, (e.g., deciding Federal administrative 

appeals), together with a 5-part test to determine which Federal 
131 

Ms. Betty J. Penn 

July 29, 1994 

Page 9 

responsibilities and functions are non-contractible (e.g., 

required by law to be carried out by Federal officials), followed 

with an 8-part test to determine whether an applicant tribe 

benefits from a program proposed for contracting (e.g., whether 

the program is within the tribe's geographic base), and topped off 

by a 7-part test wherein any positive finding would result in the 

Secretary declining the contract proposal (e.g., program would 

require an environmental impact statement before contracting) . 

These complex and wholly unnecessary hurdles clearly 

represent one more attempt by the authors of this language to 

thwart federal Indian policy established by Congress and the 

President (and, indeed, by the Secretaries, themselves). "Mutiny• 

would not be too strong a word to describe it. By expanding those 

"functions• which~ be contracted, agency officials will be 

enabled to effectively decline a contract proposal which seeks to 

contract an agency "function" even though Congress contemplated 

the contracting of such function, by simply declaring it noncontractible and so exempt from the declination appeal procedure. 

Paragraph (d) which sets out the non-exhaustive list of 11 

functions which are not contractible under the Act, begins by 

stating: 

•contracting for the operation of services to tribal 

members and other eligible beneficiaries, however, does 

not permit the transfer to the tribe or tribal 

organization of inherently Federal responsibilities 

involving the exercise of significant authority ~ 

~ Constitution, and functions integral ~ ~ exercise 

.Q.f. discretion, judgment or oversight vested in the 

Secretary by law or by virtue of the Secretary's trust 

responsibilities." Emphasis added. 

This provision is so broadly worded that, if it were to be 

literally read, very few contracts could be awarded under the Act. 

See Legal Memorandum attached as Exhibit A. 

BecgmmeDded Beyi«iop: 

We recommend deletion of language at 900.106 (a) (1) (v) which 

begins "A program or portion of a program• ... through 

900.106 (a) (1) (v) (A), (a) (1) (v) (B) and (a) (l) (v)C. 

We recommend deletion of §900.106(a) (2) in its entirety. 

Note, also, our proposed change in definition of •program• as 

we have recommended at 900.102. In addition, we recommend that 

900.106(c) be revised to read: 
132 

Ms, Betty .:t. Penn 

July 29, 1994 

Page 10 

(c) The Act directs the Secretary to contract for 

"programs or portions thereof. • The term •program• is 

defined in 1900.102. Programs subject to contracting 

under these regulations 11111.y be performed at any 

organizational laval within the DHHS and DOI, includins;r, 

but not limited to, determining the eligibility of 

appli<:ants for, and the amount and extent of, •••istan<:a, 

benefits, or services in accordance with the terms of the 

aontract and applicable regulations of the appropriate 

secretary: Provided, that the Secretary shall not 11111.ka any 

contract which would impair the ability to discharge trust 

responsibilities to any Indian tribe or individuals or 

obligatio%! under the Constitution to en•ure the laws are 

faithfully executed. 

We recommend deletion of paragraphs 106(d), 106(e), 106(f), 

106(g) and l06(h); proposed l06(e) should be replaced with the 

following language: 

(e) The Secretary is not authorized to enter into any 

contract under this Part if such a contract; 

(1) is entered into on behalf of an Indian tribe 

that has not approved the letting of the contract by 

tribal resolution1 

(2) authorizes or requires the termination of 

any trust responsibility of the united States with respect 

to the Indian people1 or 

{3) i• prohibited by law. 

Divisibility 1900 107) (3182) -- The clear wording of the Act 

does not impose upon the Secretary the requirement to apply the 

three-part declination criteria (program or function to be 

contracted will not be satisfactory, protection of trust resources are not assured, project or function to be contracted cannot be 

properly completed or maintained) against the non-contracted 

portion of the contract. Nonetheless, the proposed § 900.107 on •program division• takes the position that the Secretary must apply the declination criteria to the non-contracted portion of 

the program. If a contract proposal would result in 

unsatisfactory services to the remaining Indian beneficiaries, the contract proposal must be declined, even when it cannot be 

declined on any criteria applicable to the applicant's proposed 

plan of operation. 

We note that the BIA, until the publication of the NPRM, took 

the position that, unlike the IRS and the non-BIA bureaus of the 
133 

Hs . Betty .] . Per~n 

July 29 1994 

Page 1: 

Interior Department, it would not apply the declination c:r·iteria_ 

to t.he non-contracted portion of a program. 

Upon receipt of a ccnt:ract proposal requiring the Secretary 

to divide a program se:r-vi:::lg mere than one tribe, the Secretary 

must, within 10 days, send copies of the p~cposal to all affected 

tribes and provide them an opportunity to comment on the contract 

proposal. This provision is appropriate in view of the fact that 

other tribes served by the program may be adversely affected by 

the proposed contract, but the re~llations are dangerously vague 

as to what constitutes an "affected tribe". The regulations 

should provide that copies of the proposal will be sent within ten 

days to all tribes for whose programs, projects or activities 

funding ro~y be reduced as a result of the approval of the proposal 

or if the proposed contract would impair the Secretary's ability 

to discharge a trust responsibility to such tribe or its merr~ers. 

While we disagree with the approach of applying declination 

criteria to non-contracted portions of a program, we recognize the 

difficulty of the problem. We agree with the emphasis placed in 

§ 900.107 on a negotiated resolution of divisibility issues a~mong 

affected tribes. Of course, in matters so directly affecting 

tribal welfare, a consensus solution may not be possible. 

However, the Act simply does not authorize a declination on the 

ground that services to Indi~,s ~ served under the contract will 

not be satisfactory. A declination in such cases should be based 

on the third declination criterion. The Secretary's trust 

responsibility to all tribes precludes his diverting financial 

assistance from a non-contracting tribe or tribes so as to reduce 

the level of funding available for services to it and he is 

expressly not required to do so under the provisions of the Act. 

25 U.S.C. §§ 450j(g), 450j-l(b). Consequently, a ccntract may not 

be "properly completed or maintained" if it adversely affects the 

Secretary's ability to support service levels for other tribes or 

which impairs the Secretary's ability to discharge a trust 

responsibility to another tribe or its members. 

We think that the regulations should affirmatively state, as 

the present Interior re~~lations do, that a proposal should be 

declined when the Secretary determines that the requested funding 

cannot be provided •without significantly reducing services under 

the non-contracted programs or parts of programs." 25 C.F.R. 

§ 271.23(d) (2) (i). This would be a declination under the third 

declination criterion because the Secretary is not required to 

enter into a self-determination contract which adversely impacts a 

non-contracting tribe. Consequently, such a contract cannot be 

properly completed or maintained. This approach would be 

consistent with§ 900.103(b) (7) of the proposed regulations which 

states that "the Secretary will insure that non-contracted 

programs are not adversely affected." Congress has demonstrated 
134 

Hs. Betty J. Penn 

July 29, 1 994 

Pag<"? 

and reinforced its intent to maintain ser~ices to non- cont racting 

tribes in section 306 of Title III of the Indian SelfDetermination Act providing for self-governance compacts. 

IVhi le the policy of the Act is to encourage t ribal selfgovernment, it is clearly not the purpose of the Act, or the 

policy of the United States, to encourage the self-goverrrment of 

one federally-recognized tribe to the detriment of the legal 

rights and welfare of another federally-recognized tribe. 

Nevertheless, declination should be firmly based on statutory 

authority and, in addition, the proposed regulation gives 

inadequate guidance to agency officials as to the circumstances 

when a proposal should be declined bec ause of such adverse impact. 

When such a declination occurs, the agency's judgment should be 

subj ect to challenge in a declination appeal. 

Recommended Revision: 5900.107!bl 

We recommend §900.107(b) (1) be revised as follows: 

(b) In order to facilitate contracting of programs 

serving more than one tribe, the Secretary 8hallt 

(1) Within 20 days of receiving a proposal from 

a tribe or tribal organization to contract for its 

proposed 8hare of a program •erving other tribes: ( i) 

provide the tribe submitting the proposal with a notice 

indicating the amount of funding the Secretary has 

determined pursuant to 1900.114 to be available in 

connection with that program pursuant to 106 (a) {1); and 

(ii) send copies of the proposal to all affected tribes 

other than those submitting the contract proposal, 

§900.107{b) (3) should be revised to include affected agencies 

in consultations regarding program division by adding the words 

"and tribe-agency• between "inter-tribal" and ·consultation." 

Recommond1d R8v1«ion 

We recommend that § 900 107{d) shou l d be revised as follows: 

(d) For purposes of determining whether or not to 

decline the proposal under 1900.207, the Secretary, after 

thorough consideration of options available to the 

Secretary for redesign of the program, which is proposed 

for division in order to achieve the goals serving the 

interests of both the contracting and non-contracting 

tribe, shall consider whether the proposed contract can be 

properly completed and maintained with the available 

funding. 
136 

Ms Betty J. Penn 

July 29, 1994 

Page 14 

tribe's negotiated indirect cost pool or in its direct cost base. 

See ISDM No. 92-2 for present IHS policy on this matter. 

Recommended Reyisiop: 

We recommend the following revisions to 900.108(a) (1): 

(1) 'l'he Secretarial &JDOunt shall consist of the 

amount that the Secretary would have provided for the 

Secretary's operation of the progr&Dl( s) to be contracted. 

This &Dlount shall be determined based on the amount 

previously provided by the Secretary for operation of the 

program, adjusted to reflect actual appropriation• for the 

currant year. :In the case of prograJU initially funded by 

Congress, allocations for contracts shall conform to 

congresaional directives and be otherwise equitable. 

Specific Types of Costs (900.10S(b) -- Eighteen examples of 

contract support costs are listed in the proposed regulations. We are concerned about several of these examples. 

a. Legal Fees -- Legal fees for appeals and litigation are 

only payable under the Equal Access to Justice Act (EAJA) . The 

ability of tribes to challenge tentative and appealable decisions 

of lower and middle level federal decision-makers through the 

dispute and appeal procedures provided in the Act using contract 

funds is essential for the accomplishment of the fundamental 

purposes of the Act. Legal fees for advice on the exercise of 

appeal rights under the regulations up through a final 

Departmental decision should be an allowable cost payable from contact support funds in accordance with the intent of Congress. 

See Senate Report 100-274 at page 35. 

Exclusion of such costs would deny legal assistance to tribes 

which is essential to the assertion of tribal rights at the 

Departmental review level. The strict standards applicable to the 

recovery of costs under EAJA should not limit legal advice to tribes in seeking Departmental review of BIA and IRS decisions. 

In the negotiation of self-governance compacts under Title III the 

agencies have agreed with this position. We find no basis in the 

legislation for the agencies to make it easier for a compacting 

tribe under Title III to pursue an administrative appeal in the event of an administrative denial of tribal rights than it is for a tribal contractor to do so under Title I. 

Recommended Reyjs1ont 

§ 900.l08(b) (10) should be revised to read: 

( 10 l Legal services, including reasonable expenaes to 

retain legal eounael for activitiea related to the 

operation of progr&Dls and a4mini•trative matters, 
135 

Ms Betty J. Penn 

July 29, 1994 

Page 13 

Amount of Funding (900.108) (3183) -- 'litis section is 

intended to implement § 106 of the Act which pertains to contract 

funding. Congress considered inadequate funding of selfdetermination contracts to be perhaps the wsingle most serious 

problem with implementation of the Indian self-determination 

policy." The intent of the 1988 amendments was "to protect and 

stabilize tribal programs by protecting and stabilizing the funds 

for those programs from inappropriate administrative reduction by 

Federal agencies." Senate Report No. 100-274 at 8 and 30. 

Section 900.108, like section 106 of the Act, divides funding 

into two separate allocations. Tribal contractors shall receive 

the "Secretarial amount", which is the direct program amount which 

the Secretary would have had to operate the program "based on the 

processes actually utilized by the Secretary to allocate resources 

among program activities." Often contractors do not know what 

processes are actually used by the Secretary to allocate 

resources. Conflicts over funding and divisibility could be 

lintited and tribal financial planning could be enhanced if such 

information were provided regularly to tribes. 

Added to the direct program amount is an amount for contract 

support costs "in accordance with the allocation processes 

actually utilized by the Secretary." Contract support costs in 

section 106(a) of the Act are defined as "reasonable costs for 

activities which must be carried on by the contractor to ensure 

compliance with the terms of the contract and prudent management, 

but which (A) normally are not carried on by the respective 

Secretary in his direct operation of the progra~ or {B) are 

provided by the Secretary in support of the ccntracted program 

from resources other than those under cont.r-act." 25 U.S. C. 

450j-l (a) (2). 

Our principal objection to § 900.108 is the reference to 

"processes actually utilized by the Secretary" which appears to 

control the amount to which a tribal contractor is entitled, 

rather than the statutory definition. If the "processes" of the 

Secretary do not produce the amount to which the tribe is entitled 

under section 102 of the statute, then on appeal the tribal 

contractor should be entitled to challenge such "processes". 

In previous versions of the proposed regulations, "contract 

support costs" were defined as being either recurring or nonrecurring to the contractor and may be recove:r·ed as direct costs 

or a combination of direct and indirect costs in accordance with 

the Financial Management subpart of the regulations. This 

language has been removed in the latest version without 

explanation. It should be restored since activities funded from 

"contract supportn as defined in the statute may be included in a 
137 

Ms. Betty J. Penn 

July 29, 1994 

Page 15 

including policy and contract review, employee functions, 

and administrative appeals of decisions of contracting 

officers pursuant to 55900.802 and 900.803, but not 

attorney fees for litigation in federal court which shall 

be payable under the Equal Access to Justice Act (EAJA) in 

accordance with 5900.804 (b) of this Subpart. 

b. Facility and Capital Equipment Costs -- The September 30, 

1990 Joint Draft, which reflected substantial negotiations between 

the agencies and tribal representatives, included "amortization or 

depreciation of contractor owned property" and "replac~~ent and 

cost recovery" of capital equipment as allowable contract support 

costs. These were cost items the importance of which were 

stressed by tribal representatives and financial advisors. We 

urge that they be restored as otherwise tribes may not in many 

instances be fully reimbursed for tribal property provided for the 

use of federally-funded programs. 

c. Agency Sayings -- The proposed regulations permit, but do 

not require, the Contracting Officer to identify agency savings 

resulting from contracting and provide them to tribal contractors 

provided satisfactory levels of services to other programs are 

maintained and trust and other federal obligations are fulfilled . 

This section should be revised to ~ the agency to transfer 

savings to tribal contractors when the specified conditions are 

met and that they will remain available until expended. We note 

that§ 103(b) (7) contemplates that Secretarial function will 

change in scope and extent as a result of Indian selfdetermination and that savings may result but reserves the right 

to provide additional services as well as to provide such savings 

to tribes. Is this consistent with Congressional intent? 

Recommended Revi«ion: 

§900.108(e) should be revised to read: 

(e) As programs are contracted and as 

available, the Secretary will identify such 

shall provide them to tribal contractors to 

which: 

(balance of section unchanged) 

savings become 

savings and 

the extent to 

d. Congressional •Earmarks• -- In clear violation of the 

Act, the proposed regulations at 900.108(g) (p. 3184) state that 

when Congress provides additional funding specifically for an 

Indian tribe or tribal organization, "the amount provided shall be 

deemed to include contract support costs, unless otherwise 

provided by Congress.• This language reflects a policy illegally 

implemented by the Indian Health Service in 1992 with respect to 

program increases appropriated by Congress. It is crystal clear 
138 

Ms. Betty J. Penn 

July 29, 1994 

Page 16 

that the distribution of congressional increases to tliballyoperated and "638"-operated activities of IHS on the same basis 

(i.e., without an adjustment to provide 'contract support• to "63B' contractors) violates the plain language of section 106 of 

the Act. We have called this violation to the attention of the 

Indian Health Service, which has ignored the matter. Funds 

specifically earmarked for tribes may be administered either 

directly by the agency or under contract by the tribe. If 

contracted, section 106 of the Act requires the addition of contract support costs in order to prevent a financial penalty for 

contracting the services. To the extent that congressional 

appropriation language bars such an adjustment, Congress would be 

acting inconsistently with the plain language of section 106. 

Under established principles of statutory construction, every 

effort should be made to avoid that result. Certainly, it should not be mandated by regulation. 

Recommended Rev!•!on: 

§900.108(g) should be revised to read 

(g) 'l'he Secretary •hall provide contract •upport 

funds in support of programs funded by Congr••• 

•pec:ifically for 11. tribe or tribal organization in the 

•ama III.IUUler as provided in 1900.108(a) (2) unle•s otherwise 

provided by law. 

Funding and/or Contractibility Imoasse {900.109) (3184) --

This section is misleading in implying that in a funding dispute a tribe has full appeal rights under the proposed regulations, 

including a due-process hearing. In the case of IRS, the proposed 

regulations in Subpart H do not accord such rights. See 

discussion below under Subpart H. 

Limitation of Funds (900.110) (3184) -- The proposed 

regulations change the 'limitation of costs• language now included 

in all cost-reimbursement contracts under P.L. 93-638. See, for 

example, 48 C.F.R. Ch. 3, Appendix A, § PHS 352.280-4A, Clause No. 

3. The changes remove specific provisions making clear that the amount of the contract is based on an estimated cost and expressly 

providing for notice by the contractor to the contracting officer 

'if the contractor has reason to believe that the total cost to the Government, for the performance of this contract, will be 

substantially greater ... than the estimated cost thereof•, 

together with a revised cost estimate. The new clause retains 

language under which the Secretary is not required to increase the amount of the contract in such circumstances and the contractor is not required to continue performance or otherwise incur costs beyond the amount of the contract. However, the changes seem to move the award instrument in the direction of a "fixed price' 
139 

Ms. Betty J. Penn 

July 2 9, 1994 

Page 17 

contract. Language referring to "estimated cost .. and notice of a 

funding deficiency should be restored. 

Becgmsended Revision: 

§ 900.110(c) should be revised to read: 

900.110(c) -- The contraetor shall not be obligated 

to continue perfo:naance beyond the amount of funds 

awarded, and if at any ti- the Contractor has reason to believe that the total amount for performanee of this 

contract or a specific activity of this contract will be 

greater than the amount awarded, the contractor shall 

notify the appropriate Secretary. Xf the a1110unt awarded 

is not increased, the Contractor DUlY cease performance. 

:In auch avant all duties and rasponaibilities previously 

aasUJIUld by the Contractor shall become the duties and 

responsibilities of the Secretary. 

Increases to Contracts (900.114) (3185) -- The proposed 

regulations have revised this section to read that, when 

additional funds become available, the Secretary shall provide 

such funds to contracted programs on the same basis as such funds are provided to programs operated directly by the Secretary. 

Earlier drafts had also required the Secretary to notify Indian 

tribes and tribal organizations within 60 days of the availability 

of additional funds. Without explanation this language has been 

removed and it should be restored to assure the tribes are fully 

informed as to the availability of such funds. 

Indian Preference and Equal Opportunity (900.115) (3185) --

Under the proposed regulations, contractors must, to the greatest extent feasible, give preference to Indians regardless of tribal 

affiliation in training and employment. A contractor, however, is 

subject to any •supplemental Indian preference requirements 

established by the tribe receiving services under the contract.• 

In the proposed regulations the Departments solicit public comment on whether the regulation should prohibit tribal 

supplemental requirements which give preference to Indians on the 

basis of membership in, or affiliation with, a particular tribe. 

We have reviewed the DOI legal opinions referenced in the 

supplemental information. We think that the law clearly permits a three-tier preference policy under which qualified tribal members 

receive first preference, qualified Indians and Alaska Natives a second preference, and the position is then opened to other 

qualified persons. The regulations should make clear that there must be compliance with tribal law requiring such an approach. We 

have attached a legal memorandum, dated April 15, 1994, on this 

issue as Exhibit B. The regulations should clarify that a tribal 
140 

Ms. Betty J. Penn 

July 29, 1994 

Page 18 

preference may be given (if required by tribal law or at the 

option of the tribal contractor) so long as an opening is not filled by a non-Indian until all Indians (including Alaska 

Natives) are given preference. 

Recommended Bevia!op1 

We recommend revising 900.115(a) as follows: 

Contractors, subcontractors, grantees, and 

aubgranteea shall, to the greatest extent feaaible, give 

prefere:nce i:n trainillg and employae:nt to J:ndiana in such 

11UU111er and to auch extent aa may be provided by tribal law 

and, in the abaence of tribal law, shall give preference 

to J:ndiana without regard to tribal affiliation aubject to subparagraph (d) below. 

Equal Opportunity and Ciyil Rights (900.116) -- This section 

is contrary to both Title VII of the Civil Rights Act of 1964 and 

the Indian Self-Determination Act, and should be deleted. Title 

VII prohibits an "employer" from discriminating against an employee "because of such individual's race, color, religion, sex or national origin." 42 U.S.C. § 2000 e-2(a). The term "employer• is defined to exclude 'an Indian tribe." 42 U.S.C. § 

2000 e(b). Thus, tribes are exempt from Title VII. ~Wardley. 

Ute Indian Tribe, 623 F.2d 670, 672 (lOth Cir. 1980). Tribal 

organizations under the Self-Determination Act are also considered 

'tribes" exempt from Title VII. Barnes y Bristol Bay Area Health 

~. No. A92-459 Civil (D. Alaska 1993). 

We understand that the agencies claim that the proposed 

regulation is authorized by Executive Order 11246, despite the 

tribal exemption from Title VII.l We disagree, since Executive 

Order 11245 cannot make unlawful activity which is lawful under 

Title VII. ~United States y East TeXAS Motor Freight System, 

564 F.2d 179, 185 (5th Cir. 1977); Weber y Kajser Aluminum & 

Chern Corp., 563 F.2d 215, 227 (5th Cir. 1977), ~ gn ~ 

g~~ 443 U.S. 193i United States y. Trucking Management. Inc., 

The proposed rule goes beyond Executive Order 11246 in that it prohibits 

discrimination based on age or handicap -- types of discrimination not covered 

by the executive order. Since tribes are not subject to feder~l laws 

prohibiting discrimination in employment based on age or handicap~ to this 

extent. at least 1 the regulation baa no basis in law. ,Se.e. Americans with 

Disabilities Act, 42 U.S.C. S 12111(5) (adopting Title VII definition of 

'"employ-er, • thereby excluding tribal employees from coverage}; E E 0 C y 

Fond du Loc Heoyy Equip Corp., 986 F.2d 246 (8th Cir. 1993) (tribal employers 

exempt from Aqe Oiscrimin&tion in Empleyment Act (ADEA) suit brought by tribal 

members); E,E o c y, Cberokee Hotign, 871 F.2d 937 (10th Cir. 1989) (tribe 

exempt from ADEA suit). 
141 

Ms. Betty J. Penn 

July 29, 1994 

Page 19 

662 F.2d 36 (D.C. Cir. 1981). Furthermore, the Self-Determination 

Act provides that self-determination contracts are not procurement 

contracts, 25 U.S.C. § 450 b(j), and are expressly exempt from the 

Federal Procurement Policy Act, 41 U.S.C. § 401 ~- ~. and the 

FAR. 25 U.S.C. § 450j(a). As Executive Order 11246 is 

implemented in the FAR, it should be deemed to have been waived by 

Congress in the Act. 

Even if Executive Order 11246 were not contrary to Title VII 

or the Act, the Secretaries should waive the order pursuant to 

their authority to do so under the Act. 25 U.S.C. § 450j(a). The 

imposition of the anti-discrimination provision is contrary to the 

congressional policy of treating tribes as governments capable of 

running their own affairs, as recognized in the Act, Title VII, 

and numerous other laws. Remedies for discrimination by tribal 

employers should be left to the tribes and tribal courts. ~ 

Santa Clara pyeblo y Martinez, 436 U.S. 49, 65 (1978) ("Tribal 

forums are available to vindicate rights created by the [Indian 

Civil Rights Act, 25 U.S.C. §§ 1301-1303]"). Moreover, the effect 

of the proposed rule would probably be to subject all of a tribe's 

operations to Executive Order 11246 since neither the rule nor the 

order is limited to the contracted program. ~ Board of 

Goyernors Yniy of North Carolina y United States Department of 

~. 917 F.2d 812 (4th Cir. 1990) (all campuses of state 

university subject to Executive Order 11246, not just those 

campuses receiving federal funds) . 

Record-keeping (900.121) (3186) -- The proposed regulations 

require contractors to maintain records to "allow the Secretary to 

meet his legal records program requirements under the Federal 

Records Act," as well as to facilitate contract retrocession and 

reassumption, without specificity as to what records are intended 

by this language. The Federal Records Act applies to federal 

agencies and not to contractors. Its purpose is to assure the 

preservation of information •necessary to protect the legal and 

financial rights of the Government and of persons directly 

affected by the agency's activities.• 44 U.S.C. § 3101. 

Compliance with the Act will be extremely burdensome for 

contractors and is not necessary to protect the rights described 

above. As noted in the Senate Report on S. 3237, • [o]ne of the 

primary goals of the 1988 amendments was to eliminate excessive 

and burdensome reporting requirements.• S. Rep. No. 444, 102d 

Cong., 2d Sess. 5 (1992). The specific requirements of section 

5(a) (1) of the Act as to financial data, retention of records and 

the program data requirements of Subparts N and 0 are adequate to 

fulfill the goals of the Act without imposing additional 

requirements on tribal contractors. 
142 

Ms. Setty J. Penn 

July 29, 1994 

Page 20 

~ 

To the extent that any additional types of reports are required, they should be listed in the regulations. 

However, there is no legal basis for imposing the requirements of 

the Federal Records Act on tribal '638' contractors. More 

specific and limited record retention language should be 

negotiated with tribal representatives and language c l arifying 

that contractors may dispose of or destroy records at the end of 

the retention period should be included in the regulations. The 

agencies have introduced a new burdensome requirement that records 

be transferred to the National Archives. It is difficult to see how this new requirement serves the 'primary goal' noted above. 

Recommended Bey1•1on: 

Section 900.121(a) should be revised to read: 

(a) Record-keeping. Each contractor ahall keep 

record.e neceeaary to facilitate contract retroceeaion or 

reaaewaption under Subpart It of thia Part which ehllll be 

identified in a liat approved by the Secretary and the 

contractor. Record-keeping requirement a to be epecified 

in a contract ahall be aub:lect to negotiation and appeal 

under the declination criteria and appeal procedure• in 

Subpart B. 

We further recommend that 900.12l(c) (1) and (c) (2) be revised to read: 

(c) Retention of Becord1. (l) The contractor 1hall 

retain ita financial record• and 1uch other record• a1 IIIAY 

be 1pecifically identified in the contract for three years 

from the ltarting data apec:ifiad in paragraph (c) (4) of 

thia aection. l:f any litigation, claim, negotiation, 

audit or other action involving the record• hal been 

atarted before the expiration of the three-year period, 

the recorda aball be retained until the action ia 

completed. 

we also recommend that a new §900.12l(c) (2l be included: 

(2) 

deatroyed 

1900.12! 

At the en4 of the retention period recorda may be or otherwi•e diapoaed of. 

KONI'l'()IIIJG 

Honitoring (900.124) (3186) -- Tribal representatives urged 

that federal monitoring visits (with specified exceptions) take 

place no more than one each year for each self-determination contractor. Section 900.124 allows each •operating division, 

Departmental Bureau, or Departmental agency• or duly authorized 

representative, to make no more than one monitoring visit ~ 
143 

Ms. J, Penn 

July 1994 

Page 21 

contract. In view of the small staffs and limited resources of 

many tribes, the one-per-contractor limitation should be set forth 

in the regulations. Tribal contractors may, of course, agree to more frequent federal monitoring visits as may be appropriate for 

the particular program. 

Recommended Revision; 

We recommend that the first phrase of 900.124(c) read: 

The Secretary or a duly authorized repra .. entative may 

make no more than one annual formal performance monitorin51 

visit per contract or, unleSS! 

SUBPART B PRE-AWARD AND APPLXCATION PROCESS 

Tribal Resolution (900.202) (31S7) -- Re-delegation 

authority, specific to Alaska, contained in the last draft, has not been restored to the proposed regulations despite support for 

such language from the IHS Alaska Area Office and Alaska tribal 

representatives. Under such authority, a tribal organization in 

Alaska could re-delegate its authority to contract under the Act to another tribal organization so long as advance notice was provided to the effected tribes. Under the Alaska proposal, 

tribal villages, would retain the authority to restrict or rescind 

their tribal resolutions. 

The re-delegation authority language is supported by Alaska 

tribal representatives due to the multiple entities qualifying as Indian tribes in Alaska, the vast areas covered by selfdetermination contractors, the isolation of Alaska Native villages 

and the resulting high cost of duplicative consultation 

requirements between villages and tribal organizations to which 

they have delegated contracting authority. The requested 

provision would have no effect on any tribes or tribal 

authorizations, except those in Alaska. We think these Alaskaspecific regulations should reflect the wishes of Alaska Natives 

and the unique circumstances of Indian tribes in Alaska. 

Pre-Application Tecbnical Assistance (900.203) (3187) -- The 

proposed regulation$ provide that tribes and tribal organizations 

interested in contracting should request information on the 

"Secretarial amount• ~ to their submission of a contract proposal. The Secretary has 30 days (up from 15) to identify the 

"Secretarial amount• as well as information on available contract support costs. Apparently under § 900.203 potential contractors are required to submit a contract proposal which includes the 

"Secretarial amount• Aa identified ~ ~ Secretary together with 

the identified amount of contract support costs. 
144 

Ms. Betty J. Penn 

July 29, 1994 

?age 22 

The proposed regulations ~ that contractors must request 

UQ = .th.ru1 the • Secretarial aJnount." The regulations should 

make clear that a tribe is not required to accept the amount 

identified by the Secretary and may submit a proposal based on its 

own determination of the legally required funding level, subject 

to declination and appeal rights. 

The proposed section 900,203(a) (4) requires technical 

assistance from Interior to develop program requirements which 

differ from Subpart 0, but does not require such assistance from 

IHS to develop program requirements which differ from Subpart N. 

We cannot believe that the intent of the drafters is to 

distinguish between the obligations of the two agencies on this 

matter and assume that the omission of reference to Subpart N is 

inadvertent. 

Recommended Beyision• We recommend a new subparagraph (5) should be added to 

900.203(a) as follows: 

(5) To develop program requirements which differ from 

the Secretary • s requirements in Subpart N of this Part. 

An additional sentence should be added to 900.203(c) as 

follows: 

Tribes or tribal organizations which are not in 

agreement with the amount identified by the Secretary aa 

the Secretarial amount may proceed in accordance with 

900.109 including the exercise of appeal rights pursuant 

to Subpart H. 

Proposed section 900.204 is deficient in failing to require 

the disclosure of data on the amount of funds which would have 

been provided for the direct operation of the program for the 

proposed contract period (see 25 C.F.R. § 27l.l6 which requires 

such disclosure) and its failure to require disclosure of data on 

existing federal facilities used in the program, The disclosure 

of plans for future funding is essential to assure that reductions 

are not made in anticipation of •638• contracting. 

Becgmmepded Boyt«lonE 

We recommend that new subparagraphs be added as follows: 

(6) Data on the pl.anned amount of funds to be 

provided £or the direct operation o£ the specific 

program(&) or portions thereo£ to be contracted for the 

proposed contract period. 
145 

Ms. Betty J. Penn 

July 29, 1994 

Pa.Qe 23 

(7) Information on existing facilities and real and 

personal property used by the Depart-nt in the 

administration of the prograa. 

Initial Proposal Requirements -- 1900.205\ This section 

suggests that a tribal organization may develop the contract statement of work but, when this section is read together with 

Subpart N, it is clear that the present language of the 

regulations requires compliance by an IHS contractor with JCAHO or HCFA standards. See discussion below under Subpart N. The 

proposed regulation also includes a requirement for a statement on conflicts of interest. The conflict of interest language 

(900.205(u), p. 3188) should be removed except when the proposal 

relates to trust resource programs or services. This is an unnecessary provision for the vast majority of contractible 

programs under the Act. There is no statutory basis for such a requirement except when trust resources are involved and the 

requirement is an intrusion on tribal governmental authority in 

direct conflict with the purposes of the Act. 

Recqmmended ReySsiop: 

The first sentence of 900.205(u) should be revised to read: 

(u) In cases in which the prograa to be contracted 

involves the adm.inistration of, or otherwise involves, 

trust resources, in the event that there is a potential 

conflict of interest on the paZ"t of the contractor as an 

organization, a description of the potential conflict and 

deacZ"iption of the procedures to be employed to avoid an 

organizational conflict of interest. 

Review and Approyal of Contract Prpposals -- (900.2061 (3189) 

a. Failure to Act -- The proposed regulations provide that 

a proposal which has not been declined or approved by the 90th day 

after submittal {when the deadline has not been extended with the 

written consent of the applicant) will be deemed approved on such 

day at the funding level determined by the Secretary, provided 

that requested tribal resolutions have been filed and the program 

is •contractible.• The proposed regulations do not identify the 

procedures to be followed in the event of such approval. 

Clarification, as to such procedures, including the deadline for contract award, should be included in the regulations. The 

present language could serve as a basis for denying a tribe its 

appeal rights under Subpart H on the ground that its proposal has 

been •approved", not declined. Instead, failure to act should be 

construed as a declination. 

The proposed regulations delete language from the September 

1990 proposed draft which stated that if the contract is not 
146 

Ms Brtt. ty J. Penr: 

awarded within thi~·ty days of approval, the contractor need not 

exhaust appeal procedures under the regulations and may go 

directly to faderal court. Such language should be reinstated. 

It represents a compromise carefully negotiated between tribal 

representatives and the federal agencies. If the tribal 

that failure to award a co:1tract within 30 days will result an 

automatic contract is not accepted, then at least the negotiated 

compromise should be included in the re~~lations. 

Recommended Revision; 

We recommend that paragraph (d} be revised as follows: 

(d) If no action is taken to approve the contract 

proposal within 90 days, or for such longer time as 

extended pursuant to paragraph (c) of this section, and 

absent a timely finding as provided in paragraph (b) of 

this section, at the election of the applicant ( l) the 

contract proposal shall be deemed to have been declined on 

the 90th day or on the last day of any extension pursuant 

to paragraph (c) of this section and the applicant may 

exercise its rights under Subpart H or (2) the application 

shall be deemed approved a.t such funding level as the 

Secretary may have determined under S 900.108 or at the 

funding level stated in the application, whichever is 

less, subject, however, to any limitations imposed by 

express provisions of statutory law. The applicant m.ay 

exercise this election by notice in writing to the 

Secretary and it shall be effective on the date the 

Secretary receives such notice. 

We also recomrner~d inclusion of the following new paragraph 

(e): 

(e) If the Secretary fails to issue an award within 

30 days of approval, the applicant is entitled to go 

directly to Federal court for appropriate legal and 

equitable relief and shall not be required to exhaust 

appeal procedures eat forth in these regulations. 

b. Funding Leyel Disagreements -- ~vJe object to the 

distinction made in 900.206 between Mdeclination issuesy and a 

dispute over whether the proposed budget exceeds the funding 

amount identified by the agency for the program. This distinction 

is intended by the IHS to create a process under which tribes are 

deprived of statutorily-based "due process" hearings when a 

proposal is declined because the agencies disagree with the tribes 

analysis of the funding amount. Under the Act, the Secretary is 

required to •provide the tribal organization with a hearing on the 

record and the opportunity for appeal on the objections raised." 
147 

Ms. Bet.ty ,J. 

July 29, .__ 

See 25 U.S.C. 450f(b). Such objections clearly include an objection to the funding amount requested. This continued refue"l 

of federal officials to accept the plain language of the statute on this point is disheartening. See furth~r discussion under 

900.802 (a). 

Recommended Revision: 

We recommend that 900.206(a) (4) (iii) (3189) be deleted and 

that 900.206(a) (4) (iv) be revised to read: 

(iv) Whether declination issues exist, including 

whether the proposed budget exceeds the Secretarial amount 

identified in accordance with 900.203(c) for the functions 

or program or portion thereof to be contracted. 

We also recommend deletion of 900.206(a) (4) (iii). 

c. Divisibility Issues -- The proposed regulations would 

permit a declination to be based on "the effect that funding the 

proposed contract would have on Indian beneficiaries or trust resources of the portion of the program that would DQt be 

contracted." As noted above, such a provision focuses on the 

services provided by the Secretary to persons or entities not 

served under the proposed contract. Such an inquiry is dependent on potentially large volumes of information in the exclusive 

control of the Secretary. In addition, the Secretary's 

willingness or reluctance to restructure the program will weigh 

heavily in the making of any determination under § 900.206. The 

determination of whether a program can be contracted should focus on the ability of the contractor to execute the program given the 

funding level established under § 106 of the Act and whether the 

Secretary can continue to meet his responsibilities to other 

Indians. One alternative solution to this problem is discussed 

above under§ 900.107. 

d. Technical Assistance -- The proposed regulations are nc 

consistent with the language of the Act pertaining to technical 

assistance once the Secretary has declined a proposal. The Act 

provides that the Secretary "shall provide assistance to the 

tribal organization to overcome the stated objections." As 

proposed, the regulations state only that the Secretary's notice 

shall include •any available technical assistance.• The 

regulations should be consistent with the language of the Act. 

We recommend that the final sentence of §900.206(b) (3) be 

revised to read as follows: 

'l'he notice shall include, at a minimum: 
148 

( 1) Detailed axplana::ion of the reason for the 

decision not to contrl!ct; 

(2) A de3cription of all available appeal rights 

under subpart H; rtt~d. 

( 3) A da!lcription of the technical assistance which 

the Secretary will provide ;_n order to assist the tribe or 

tribal organization to overcome the stated objections. 

§9CQ.207 DECLINATION 

~clination {900.207) (3189) - - While § 900.207 maintains the 

standard that "the burden of proof is on the Secretary that one of 

the specific grounds for declination exists and that, therefore, 

the application must be declined .. •, the agencies have undercut 

the declination requirements of the statute by excluding the issue 

of the level of funding from the declination process. In 

addition, unlike current regulations of the BIA (25 CFR 271.15{a)! 

which clarify that the Secretary carries of the burden of proof to 

demonstrate, -through substantial evidence", that one of the three 

statutory grounds for declination exist, the NPRM fails to include 

the level of evidence required. We recommend incorporation of the 

phrase •substantial evidence• into this section. 

Section 900.207 is also deficient in that: 

a. Divisibility -- As noted previously, the proposed 

regulations provide that in considering whether to approve or 

decline an application, the Secretary may apply the declination 

criteria against the non-contracted portion of the program (the 

portion retained by the Secretary). For the reasons already 

explained, we think this provision is inconsistent with § 102 of 

the Act. 

b# Presumptions -- Proposed section 900.207 would make 

presumptions {contained in existing BIA and IHS regulations) in 

favor of substantive knowledge of the program, tribal community 

support, and adequacy of tribal personnel rebuttable. We think 

these presumptions should not be rebuttable when conditions 

specified in the regulations are met. Interior and HHS should not 

involve themselves in intra-tribal matters to resolve internal 

opposition to the position adopted by the tribal governing body. 

By this change, the agencies are, once again, using the 

opportunity to issue new regulations to narrow tribal rights and 

increase agency discretion (clearly not the intent of the 1988 

amendments under which the regulations are being issued) . 

c. Trust Programs - - The proposed regulations add special 

requiremencs for proposals involving a trust responsibility or 

trust resource which generally folJ.ow the existing provisions of 

2 5 C. F. R 271. 34. However, the present lang-uage in which it is 
149 

Ms. Betty J. Penn 

July 29, 1994 

Page 27 

made clear that a tribal proposal to raise performance standards 

in a trust-related program shall not be used as a reason for 

declination has been deleted. The deletion suggests a view on the 

part of the Bureau of Indian Affairs that trust programs can only 

be effectively operated in the way the Bureau operates them, a view extremely difficult to reconcile with the BIA record. This 

is contrary to the intent of the Act. Once again, the federal 

agency has come up with a change which is less favorable to tribal 

self-determination than the existing regulations. 

Reqomgend•d Reyicion: 

We recommend deletion of subparagraph 900.207(c), and the 

deletion of the word •rebuttable" in paragraph (e) of 900.207 

(3189). 

Sll'BPAR'l' C CON'l'RAC'l' AWAlttl AHD MOD:II'I:CA'l':IOHS 

Renewal of Fixed Term Cgntracts (900.304) (3190) -- The 

proposed regulation (900.304(a) (2)) states that if a contractor fails to notify the Secretary of its intent not to renew the contract 120 days in advance of the contract expiration date, the 

Secretary may unilaterally renew the contract for up to one year or take other actions to reassume the contracted program. 

Paragraph (4) of this section, however, provides that the 

Secretary may only extend a fixed term contract for a limited time •as agreed to by the Indian tribe or tribal organization.• These 

provisions are clearly inconsistent. If it is the intent of the 

agencies to extend a term contract only with the consent of the 

tribal organization, the provision should be rewritten. We fail to see how the Secretary can lawfully renew or extend the contract without reaching a mutual agreement with the contractor. The 

imposition of contract obligations upon a tribal organization 

without any resolution from the governing body of the tribe or the 

signature of any official thereof can scarcely be regarded as consistent with tribal self-determination. The September, 1990 

draft regulations provided that if the contractor failed to notify 

the Secretary, the Secretary would notify the tribe(s) served by 

the contract and take such steps as were required to assume responsibility for the program upon its expiration or at a date 

mutually determined by the parties. 

Recommended B•yi«1ppt 

We recommend that 900.304(a) (2) be replaced with the 

following provision: 

(2} :r:f a renewal reque•t or a 8t&teJIUint of intent not 

to renew ia not received by the date specified in the 

Secretary• • notice, the Secretary ehall notify the 

contractor and the l:ndian tribe{a} aerved by the contract, 
150 

Ms. Betty J. Penn 

July 29, 1994 

Page 28 

if different, (by certified mail) that the contractor must 

make its intentions known to the Secretary within 30 days 

of receipt of such notice or the Secretary will take 

necessary action to assume responsibility for the program 

upon expiration of the contract or auoh other time aa may 

be lllUtually determined to be appropriate. 

We recommend also that 900.304(b) (3) (annual funding of 

contracts) be revised to read: 

(3) If auoh a budget ia not received within the 

specified 60 days, the Secretary shall notify the 

contractor and will, subject to the consent of the 

contractor extend the contract on a month-to-month baaia 

at the same level of funding as the previous year, aubject 

to the availability of appropriations. 

Contract Modifications (900.305) (3190) 

a. Be-budgeting -- It appears that under the proposed 

regulations re-budgeting (shifting of funds between contract lineitems) in the total award requires a bilateral modification except 

that a contractor would be permitted to shift up to 10% of funds 

allocated to a BIA tribal priority allocation program from another 

tribal priority allocation program under the contract without 

Secretarial approval. 

Under present IHS guidelines rebudgeting is permitted within 

the approved budget without Secretarial approval provided that the 

revisions do not significantly affect the level or nature of 

services. See IHS Policy Letter 90-9 at 1. Consistent with the 

intent of the 1988 Amendments, we recommend that the flexibility 

of the IHS interim guidelines be incorporated in the final 

regulations for both Interior and HHS. We note that under Title 

III substantial flexibility has been accorded to Indian tribes to restructure programs and reallocate funds. In the light of the 

goals of Title I, we see no rational basis for the much more restrictive approach in the proposed regulations. 

We question the agencies' legal basis for concluding that 

funds, once appropriated and obligated to a tribal contractor, are subject to the same statutory restrictions which govern federal 

appropriations in the hands of the federal agency. It should not matter that funds are rebudgeted by the contractor to meet unanticipated needs so long as the tribal contractor is •carrying out• the contracted programs and functions in compliance with contract terms. 

Beqoamap4a4 B•r!•49Pt 

We recommend revising 900.305(a) (6) to read: 
151 

Ms. Betty J. Penn 

July 29, 1994 

Page 29 

Rebudgeting as described in subsection 900.305(e) 

below. 

We recommend also that 900.305(b) be revised to read: 

(b) Within 30 calendar days after receipt of a 

request from a tribe or tribal organization to approve a 

contract modification, the Secretary shall review the 

proposed modification or amendment against the criteria 

for declination a at forth in §900. 207. At the completion 

of the review, the following action will be taken as 

appropriate: 

(1) J:f there are no declination issues, the 

contracting officer will notify the tribe or tribal 

organization in writing of this fact and revise or amend 

the contract within 30 days of issuing the notice. 

(2) J:f there are declination issues that lllU&t be 

resolved, the Secretary will notify the tribe or tribal 

organization of this fact and the extent of the iaauea, 

recommend a course of action to resolve the issues and 

offer technical assistance to resolve the issues within 30 

days after issuing the notice. 

(i) J:f the tribe or tribal organization accepts 

the technical assistance, it shall continue in accordance 

with their request. ·At such time as the issues are thus 

resolved the Secretary will ao advise the trib or tribal 

organization and revise or amend the contract within 15 

days of resolution or at their convenience. 

(ii) J:f within 30 days, the tribe or 

organization does not accept or respond to the 

offer of technical assistance and the matter ia 

otherwise resolved, the Secretary shall decline 

the contract in accordance with 5900.207. 

tribal 

Secretary's 

not 

to modify 

(iii) J:f the proposed contract modification 

the tribe or tribal organization may appeal to subpart B of this Part. 

is 

declined, 

pursuant 

We also recommend revision of 900.305(e) as follows: 

(e) Rebudgeting. (1) 'l'he contractor is expected 

carry out the contract within the amount of funds 

provided. Changes within the total amount provided may 

accomplished without approval of the Secretary, unless 

to 

be 
152 

Ms. Betty J, Penn 

July 29, 1994 

Page 

(i) The change results in a change in the total 

amount required for the contract; or 

( il) The change would result in a change in the scope 

of the services to be provided, or 

(iii) 

ability to 

level; or 

The change would impair the contractor's 

perform the contract at the current funding 

(iv) The change includes addition 

which would otherwise require approval 

or 

to an item of cost 

of the Secretary; 

(v) The change would require & reprogramming of funds 

by the Secretary from one lump aum appropriation to 

another. 

Such rebudgeting ahall be accomplished through 

bilateral modification in order to assure that the 

Secretary has the information necessary to enable the 

Secretary to comply with directly applicable 

appropriations laws. Secretarial approval of proposed 

rebudgeting under this subparagraph (5) shall only be 

withhel.d if the proposed rebudgeting would viol.ate one of 

the substantive criteria aet forth in subparagraphs (i)-

( iv) 

b. Procedure (900.305(c)) 13190) --The proposed re~Jlations 

do not make clear that the Secretary will apply the declination 

criteria in approving or disapproving a modification request 

Compare 900.305\c) (3191) with 25 C.F.R. § 271.62(bl and 42 C.F.R. 

§ 36.230. However, the cross-reference to 900.205 in 900.305(c) 

is apparently intended to have that effect. 

Recommended Revf«fop: 

The intent would be clarified by amending paragraph (c) of 

900.305 by adding after :§ 900.205" in the first sentence of this 

paragraph: 

which shall be considered in accordance with SS 900.206 

and 900. :Z07. 

~dation of mature contracts (900.306) (3191) n 

Consolidation of •mature• contracts should be at the option of the 

tribal contractor, not discretionary with the agency. 

Recommended Beyisiont 

In each case the •may• appears in 900.306(a) it should be 

replaced by •shall". 
153 

Ms. Betty J. Penn 

July 29, 1994 

Page 31 

Contents of Award Document (900.307) (3191) -- In general the 

content of the award document will look very similar to existing 

contracts. The proposed regulations, however, provide that in DOI 

contracts involving trust resources, the contract document must 

provide "for immediate suspension upon determination by the 

Secretary that the contractor's continued performance would impair 

the Secretary's ability to discharge his trust responsibility." 

This language permits the DOI to circumvent the statutory 

requirement that the Secretary may only immediately rescind a 

contract or grant and resume control or operation of a program or 

service by suspending work without a prior hearing on a finding 

that there is an "immediate threat to safety". Again, the new 

regulations are being used as a vehicle to narrow tribal rights in 

notwithstanding the obviously opposite intent of the 1988 

amendments. 

The proposed regulations also provide that the Secretary may 

require revision to the contract scopes of work for trust programs 

following an environmental impact statement, assessment or other 

determination which is adverse to the environment or endangered 

species. The environmental adequacy of a tribal proposal should 

be handled as a declination matter subject to the mandatory tribal 

appeal rights. This provision apparently is another attempt to 

avoid a challenge to its views in an administrative appeal. As a 

practical matter, tribes will undoubtedly seek to conform their 

proposals to such environmental determinations in order to assure 

approval or avoid reassumption. 

Recommended Rev1•1on: 

We recommend deletion of 900.307(c) (3191) (immediate 

suspension of trust resources contract) as it circumvents the 

requirements of section 109 of the Act. 

We also recommend that the matters covered by 900.307(d) 

(3191) be treated through a bilateral contract modification, that 

the paragraph be moved to 900.305, and revised to read: 

(d) The secretary may requeat auch reviaiona in the 

•tateme:a.t of work •• the Secretary c!etermi:a.e• to be 

neceaaary to avoid violationa of atatutory law involving 

jeopardy to an endangered or threatened apeciea1 

deatruction or adverae modification of the habitat of auch 

apeciea1 inconaiatency with an approved coaatal zone 

management plan1 or environmental conaequencea deemed 

unacceptable following review of an environmental 

••••••menta or environmental impact atatement. If the 

contractor and the Secretary cannot agree to appropriate 

modification• the contract may ba reevaluated purauant to 

11900.207, aubject to appeal rights under Subpart H. 
154 

Designation as a Mat-ure Con~ (90C.309) {3192) --We are 

concerned that the proposed regulations aL § 900.309 do not make 

clear that non-mature contracts may be for an indefinite period at 

the request of the tribe with the approval of the Secretary. 

There is no longer any statutory prohib~ticn on a tenn contract 

longer than three years. See 25 U.S.C. § 450j(cl, In addition. 

the definition of "mature contract" states that it may !.Je for a definite or indefinite term as requested by the tribe. 

Presumably, this means a mature contract. may have a fixed term of more than three In addition, a tribe which has achieved 

"rnature" status be able to add new activities to its 

"mature" contract, w1thout regard to the similarity of t.he program 

operation re~Jired. 

Recommended Rev~LiQP! 

We recormnend t:h~;.t ti":e ·,yord "may" i.n 900,309 (b) be changed to 

read as follows: 

A new activity shall be added to an existing mature 

contract at the request of the contractor upon approval of 

a contract modification for such activity under 900.305. 

SUBPART D FINANCIAL MANAGEMENT 

(900 402) (31921 -- Section 900.402(b) 

of provides that, "when there is other financial mismanagement or misappropriation 

place,~ the review a contractors' 

management system. ·rhe 1930 allowed such a review 

that the ,.reason Lo believe" ~ ~~. We do 

not. a docu.."TTentation requirement is onerous to the 

agencies, and recommend that the 1990 language be restored. 

Recommended Reyir~cn; 

900,402 (b) should be revised to r>;a<': 

At any time subsequent to the award, if warranted by 

unresolved findings in the Single Audit Act of 1984 audit 

report, or when there is another documented reason to 

believe that financial mismanagement or misappropriation 

of funds has taken place; or 

Matching and Cost Participat-ion (900,403) (3192i --The 

regulation drafters have taken a."'l affirmative statement in the 

September 1990 draft regarding the use of contract funds to meet 

matching or cost participation requirements (•a contractor may use 

the funds") and turned it into a negative statement ("nothing in 

this Subpart is intended to prohibit a contractor from using 
155 

Ms. 3ecty J. Pelli~ 

,July 29, 1994-

Page JJ 

contract funds to meet matching or cost participation requirements 

under other Federal, State or other programs"). The revised 

wording appears to insert a level of uncertainty for both 

contractors and contracting officers not present in the earlier 

version. 

Recommended Revision: 

We recommend that 900.403 read as follows: 

A contractor may use the funds of a contract 

matching or cost participation requirements under 

Federal, State and other. programs. 

to meet 

other 

Al lowable/Unallowable Costs (900.404) (3192) -- In the 1990 

draft regulations, the agencies and tribal representatives 

negotiated exceptions to general rules set forth in OMB Circulars 

A-87, A-122 or A-21 which would apply in the case of SelfDetermination Act contracts. Such exceptions were based on 

recognition of the principle that the Indian self-determination 

goals stated in the Act justify different treatment from that 

accorded state and local governments and non··profit organizations. 

In 1993 both agencies followed this approach in negotiating 

compacts under Title III of the Act. 

The proposed regulations abandon the principle that the 

implementing regulations would include such exceptions. Instead 

§ 900.404 leaves contractors to follow the OMB principles set forth in the •applicable circular.• We see no rational ground for 

distinguishing between Title I contracts and Title III compacts on this point. 

Beqommended Boyjsigp: 

We recommend revising 900.404(b) to read as follows 

'l'be Secretary of the Interior and Health and auman 

Se:rvicea within 6'0 days of promulgation of these 

regulations, shall convene a group of tribal and federal 

representatives to consider coat principles which would 

promote the goals of :Indian self-determination. Within 

six months, the group will issue a report containing its 

recommendations to Congress, the Secretaries, the Director 

of Office of Management and Budget, and all federally 

recognized Indian tribes. 'l'be goal of this process is the 

development of a set of special coat principles consistent 

with the purposes and goals of Indian self-determination 

which the Secretaries will promulgate for use by Indian 

tribes and tribal organizations in connection with selfdetermination contracts. 
156 

Betty ?enn 

29' :994 

34 

Waiver of Pr.ior Aoproyal_Becn.liremelll;ll. (900.4G5) (3192' The 

proposed regulations identify automatic data processing; building 

space and facilities; insurance and indemnification, management 

;;;t_udies, professional services and expenditures {exclt!sive 

of facilities) as allowable costs are not subject to approval of the contracting officer In the 1990 draft 

costs without approval" included, in addition, depreciation and 

use allowances authorized by law, publicat.ion and printing cost_s 

and supplemental funding costs. T!lese it:ems should be restored. 

Pursuant to OMB Circulars 1\·· 87 and A-122 printing, 

depreciation and use allowances are allowable costs without prior 

approval. OMB Circular A-21, however, does not specifically 

address printing costs. Since supplemental funding costs are not 

addressed in the proposed re~Jlations and are not specifically 

addressed in A-87, it is not clear whether such costs would now be 

allowable for contractors to whom A-87 applies. Contractors 

operating under A-122 and A-21 appear to be prohibited from 

including these as items of indirect cost. 

The complexity of determining '.'lhich circular applies and 

which costs would be allowed under each of the circulars, as well 

as the need -- in certain instances -- for departures from usual 

cost principles to further the goals of the Act, argue strongly in 

favor of having a unified set of cost principles for tribal selfdetermination contractors set forth in the proposed regulations. 

We urge that the agencies negotiate a set of tribal selfdetermination cost principles based on the provisions contained in 

the April 3, 1989 draft (the Yellow Draft). 

Indirect Cost;s (900. 406) ( 31921 -- 8y making the payment of 

indirect costs subject to the provisions of § 900.108, the 

proposed regulations incorporate the "process actually utilized by 

the secretary to allocate resources· so that those processes, and 

not the customary federal indirect cost procedures and the 

mandatory funding requirements of the Act, will control the 

determination of the funds to be provided to tribes as indirect 

costs. The agency processes should be subject to challenge if 

they fail to assure the level of fu_~ding required by the Act. 25 

U.S.C. § 450£. We concur with§ 900.406(c) which permits the use 

of temporary indirect cost rates but the agencies should be 

permitted to approve temporary rates in appropriate cases in 

advance of receiving indirect cost proposals. We recommend that 

the restriction ("Subseq~ent to the receipt of an indirect cost 

rate proposal') which allows such funds to he advanced only after 

receipt of an indirect cost proposal be deleted. 

The proposed regulations make the Secretary's obligation to 

provide technical assistance in the preparation of an indir~ct 

cost proposal "subject to the availability of resources." (This 
157 

Ms. Betty J, Penn 

July 29, 1994 

Page 35 

language has been added in Subpart D wherever there is a reference 

to technical assistance,) It appears expressly designed to 

provide a regulatory handle to justify the agency in failing to 

assist less affluent tribes in activities essential to selfdetermination and it should be removed. Obviously, all federal 

agency obligations are contingent on congressional appropriations. 

A new provision, which appears to be intended to prevent one 

agency from paying for another's shortfall, requires the 

negotiation of separate indirect cost rates from each Secretary if 

a contractor chooses to negotiate on a "fixed with carry~forward" 

basis. We are concerned that the negotiation of multiple rates 

may prove impractical and costly. In general, the proposed 

process for establishing contractors indirect cost rates are 

overly corr.plex. These provisions should be simplified based on 

further negotiations with tribal representatives. 

Indirect Cost Rate Shortfalls (900.406(d)) (3193) --The 

proposed regulations provide that the Secretary has no obligation 

to fund shortfalls resulting from statutory or regulatory 

limitations eyen if such funding is both authorized and 

appropriated by Cqngress. Instead~ such under-recoveries may be 

paid "only at the Secretary's option.• (Emphasis added 

§ 900.406(d) (4)). We cannot imagine a reason why the Secretary 

should (or could) be empowered in Departmental regulations to 

ignore the will of Congress. The proposed regulations should be 

revised to assure that 638 contractors can take full advantage of 

Congressional appropriations intended for their benefit. 

Recommended Rev~ 

Revise 900.406(d) (4) to read; 

( 4) Actual under-recoveries experienced by a 

contractor due to the failure of any Federal agency to pay 

the full negotiated indirect cost rata shall be paid by 

the Secretary to the contractor to the extent specifically 

authori:zed and funded by Appropriations Acta, or if 

otherwise available as a result of unexpended funds in the 

Secretary's contract support coats budget line item. 

Payment Provisions (900.408) (3193) 

a. 'Excess Funds' and 'Carryoyer• -- Section 900.40B(c) 

should be revised to make clear that it does not conflict with 

§ 900.111 with regard to tribal carryover rights. 

Recommended Revision: 

In 900.408(c) the phrase 'program requirements and" should be 

deleted and the following sentence should be added: 
158 

Ms. Betty J, Penn 

July 29, 1994 

Page 36 

'l'hia aection ia intended aolely to promote compliance 

with 'l'reaaury regulation• and ahall not in anyway affect a contractor• • entitle .. nt to carryover funding purauant to 900.111. 

b. Contract Conversions -- Section 900.408(dl allows the 

Secretary to convert an advance payment contract to a reimbursement payment method based on deficiencies in financial 

manaqement or administration without any notice to the cgntractor 

and with no explicit statement of appea l rights. Obviously, such 

action can create enormous practical and financial problems for a tribal contractor. It could be tantamount to a contract termination, which by law the agency cannot accomplish without an appeal and a hearing. This attempt to circumvent the statutory 

reassumption requirements of the Act must be eliminated. 

c. Witbholdinq Payment -- Section 900.408(e) would enable 

the Secretary to withhold funds related to non-compliance with the contract or with regulations. The withholding would be in •an amount of funds which he (the Secretary] estimates to be 

associated with the area of non-compliance.• Such withholding may 

be tantamount to contract termination for many tribes. The 

potential breadth of this provision is alarming. There is no express requirement that the agency must notify the contractor that it will withhold the funds. Funds withheld would not be 

released until 'subsequent compliance.· Such compliance may be 

extremely difficult when the agency is withholding the funds 

necessary to perform the contract. The only procedural protection 

provided to the contractor for the holding back of funds is an · appeal pursuant to § 900.805. Funding may, of course, not be 

available to cover the costs of such an appeal. FUnds needed by 

tribal organizations to perform self-determination contracts should not be withheld except in accordance with the reassurnption 

procedures. This provision is another clear example of an agency 

attempt to circumvent the statutory reassumption requirements and 

violates section 109 of the Act. 

R•comm«D4•4 ••Yi•icnt 

We recommend that 900.408(dl and (e) be consolidated to read as follows: 

1then a contractor is de~icient with reapect to its 

administration o~ a4v&.rlce payaenta or fail• to •w-it a quarts:rly f:l.nLrlcial :rsport within 30 day• ~:roa the date 

such :report is due, or any extea.sion the:reo~ granted by 

the S•cretary, or ha• fail•d to correct &.rl inco.plet• 

quart•:rly r•port pursu&Dt to a writtea. :r•quest from the 

Secretary, the Secretary shall provi4e the contractor with 

technical &ssist&Dce to correct such deficiency. 'l'he 
159 

Ms. Betty J. Penn 

July 29, 1994 

Page 37 

contractor has 30 days from receipt of such notice within 

which to remedy the deficiency. When " contractor fails 

to correct such deficiency within 60 days from receipt of 

11uch notice, the Secretary, upon written notice to the 

contractor, may convert the contract ( s) to a reimbur11ement 

payment method or withhold funds from advauces or 

reimbursementll, provided, however, that 11uch notice 11hall 

advise the contr10ctor that it has 30 days within which to 

appeal the notice under Section 900.805. If an appeal is 

filed within 30 days, the Secretary shall take no action 

to convert the contract to a reimbursement payment method 

until the appeal is re11olved. 

Program Income (900.409) (3194) -- We are pleased that the 

proposed regulations define "program income" more comprehensively 

than in present IHS guidelines and allow its retention by the 

contractor and expenditure for the general purposes of the 

contract and that •program income" may not be used as an offset or 

limitation on funding provided to the contractor by the Secretary. 

However, a statement included in the 1990 draft which made clear 

that there 'are no federal requirements governing the disposition 

of program income earned after the end of the contract period' has 

been eliminated. There is no explanation of this change. We do 

not think that this question should be left in doubt. 

Recommended Revision: 

Add the following sentence at the end of 900.409 (d): 

There are no federal requirements governing the 

disposition of program income earned after the end of the 

contract period. 

Reporting (900.410) (3194) -- Major changes h·om the 1990 

draft have been made with regard to reporting requirements. One 

of the most significant changes is the inclusion of a provision 

requiring the submission of program data in accordance with 

Subpart N (see discussion below) by IHS contractors. Other 

changes require contractors to supply detailed, categorical cost 

data on a quarterly basis. The financial reporting required undec 

§ 900.410 of the NPRM would be substantially more detailed than is 

required at present. Apparently, it is based on the view that the 

agencies must report to Congress by budget sub-sub- activities on 

tribal expenditures. We think the agencies need only report on 

their contract awards by budget category and are not required to 

oversee tribal expenditures like a 'nanny• provided tribes perform 

their contract obligations. See IHS Policy Letter 90-9. 

Recommended Rey!sipnt 

We recommend deletion of subparagraphs 900.4l0(a) and (c). 
160 

Ms. Betty J. Penn 

July 29, 1994 

Page 38 

~ (900.411) (3194) -- Language from the 1990 draft under 

which an audit report is deemed accepted after the passage of 60 

days unless the Secretary provides notice of rejection has been 

eliminated. Also, a new subsection providing that 'Resolution of 

the audit report's findings and recommendations is the 

responsibility of the contractor and the audit resolution agency,• 

has been substituted for a statement included in the 1990 draft 

that such resolution is the Secretary's responsibility. 

We object to these changes, especially the elimination of the 

60-day deadline for agency action. 

Becoapen4e4 Beyj1igg: 

At the end of 900.4ll(cl add: 

A report not ~:ejected within 60 c!aya ahell be de,_d 

accepted. 

We alto ~:ecommend 

~:etolut:l.on agency• and 

in 900.U1(d) and (e) 

te:r1IUI are not defined 

replacing the word• •audit 

•aud:l.t reaolution off:l.c:l.al• found 

(3194) with •secretary. • 'l'heae 

or uaed eltewhere :l.n the HPRJII. 

Close-out (900.412) (3194) -- The manner in which the 

proposed close-out requirements will apply in the case of 'mature contracts• for an indefinite term is puzzling and should be 

clarified. The proposed provisions suggest that the status of 

'mature contracts• has not been addressed in the context of close- out. If a procedure analogous to close-out is to be applicable in 

the case of •mature contracts', which have an expiration date, it 

should be described carefully in the regulations. 

Collection of AmoUnts pue (900.413) (3195) -- This provision 

would allow the federal government to make an offset or withhold 

advances against other funds, when it is 'finally determined' that a contractor has received excess payments under a closed-out contract. Even if the contractor disputes the federal 

government's conclusion that there have been excess payments, the 

offset or withholding provisions are operative and interest would run on the debt despite the pendency of an appeal or other 

litigation. We recommend that, in case of a dispute, the 

determination of whether a debt to the federal government exists 

be made at a higher level than the contracting officer, prior to the federal government being able to use the offset remedy or charge interest on the debt. The offset remedy should be subject to resolution under the Contract Disputes Act. 

Bacompapde4 Bayi•lgpt 

The first phrase of the second sentence of 900.413(a) (3195) 

be revised to read: 
161 

Ms. Betty J. Penn 

July 29, 1994 

Page 39 

Unless a dispute pursuant to 900.407 has been 

commenced by the contractor regarding the amount due 

hereunder, the Federal agency may, 90 days after making a 

written demand for payment of the contractor, reduce the 

debt by: 

StniPAl!.T E PROPERTY MANAGEMENT 

Federally-owned Personal Prqperty (900.502) (3195) 

A clarification is needed in Sec. 900.502(c) which, by 

its own terms, refers to the use of federally-owned personal 

property. Paragraph (2) sets out procedures for management 

of certain personal property •whether or not acquired in 

whole or in part with contract funds•. If the Secretary 

takes title to property purchased with contract funds, then 

it is federal property and those procedures should be 

followed. If, however, the contractor takes title, it is not federally- owned, and subsection {c) does not apply. 

Recommended Beyision 

900.502(c) (2) Procedures for managing personal 

property with an acquisition value of $1,000 

(including replacement property), including such 

property acquired in whole or in part with contract 

funds to which the Secretarv holds title, until 

disposition takes place will, as a minimum, meet the 

following requirements: *** 

Property pyrchased with Contract Funds (900.503(a)) (3196) --

We are pleased that the agencies have reversed their prier 

position and now agree that contractors may take title to personal 

property purchased with contract funds. But the proposed 

regulation does not allow contractors the ~ of whether to 

take title or not. The proposed regulations now read that the contractor "will take title to all personal property purchased 

under the contract.' Providing the option for the contractor to choose is consistent with the concept that donation should be 

acceptable to the ~' as reflected in rules issued under the 

Act. See IHS Memorandum No. 90-12, September 6, 1990. 

Becgmmandad Boy1sion 

900.503 (a) Title to personal property 

purchased with contract funds. The contractor .l.hll.l 

have the option to elect to take title to or haye the 
162 

Secretary take title to all personal property 

purchaaed under the contract. 

Ms. Betty J. Penn 

July 29, 1994 

Page 40 

Note that the minimum requirements for managing contractor 

acquired personal property are set out in 900.503{d). There is no 

reason why the contractor should have to maintain two sets of 

records on the same property. 

We object to the uneven manner in which contractor acquired 

personal property is treated regarding funds for replacement as well as maintenance and repair. We concur with the 900.503(e) (21 

provision that contractor property will be eligible for 

replacement funding on the same basis as federally-owned property. 

But the same treatment is not afforded to contractor acquired 

property in (e) {3) with regard to maintenance and repair funds. 

Section 811 of the Indian Health Care Improvement Act, 25 USC 

§1680a, requires equal funding treatment for tribally-operated and 

IHS-operated health care programs. This policy extends to 'any ... expenses relating to the provision of health services•, 

which, in our view, includes equipment maintenance and repair 

funding. 

Section 900.503(£) regarding disposition of contractor acquired personal property is especially onerous. Paragraph {2) 

says that when such property with a value in excess of $5,000 is 

sold, 'the awarding agency• is to share in the proceeds of sale in a percentage that represents the agency's contribution. If the contractor elected to take title to such property when acquired, 

why would the •awarding agency' be considered to have an interest 

in that property? If the property was purchased totally with contract funds, is the 'awarding agency's' interest considered to be 100%? If yes, the whole concept of vesting title in the contractor is rendered meaningless. This appro~~h would deprive the contractor of the ability to utilize the pro,.::eds of the sale 

of used equipment to expedite replacement. 

After •replacement• in (e) (2), insert 'and maintenance and 

repair. • 

Paragraph (f) (2) should be deleted and {f) (1) revised 

accordingly. 

Prooerty Donation Policy l'hil.504 -- personal property (3196) 

900.511 --real property (3198)) --The proposed regulations 

define •excess• property (both personal and real) as property 

under control of IHS or BIA 'that is not required for its needs 

and the discharge of its responsibilities.• But the proposal 
163 

Ms. Betty J. ?enn 

,July 29. l994 

Page 41 

places a significant limitation on donation by asserting that 

~property will not be considered as excess to the BIA or IHS bY 

v:l:rtue of the execution of a contract which calls for performance 

by the contractor of the activities in which the [personal or 

property was previously used." (emphasis added) 

.504(a) (1); 900.5ll(a) \1). 

Tribal representatives had encouraged the agencies to 

establish a pro-tribal property donation policy as the approach 

mere in keeping with the spirit of Sec. 105(f) of the Act, but the 

were concerned about donating property that might later 

needed for program operations in che event of rescission or 

recrocession. To answer this concern, tribal representatives 

urged the policy chat is now set out in 900.512; this allows the 

Secretary to re-acquire previously donated property used in a 

contracted progrrun if the Secretary must resume direct program 

operation. 

We do note that the limiting language quoted above is 

carefully crafted to convey the idea that just because property is 

to be used in a contracted program, it does not automatically 

follow that the property is excess to the Secretary's needs. Ey 

the same token, such property is not automatically excluded from 

the category of potentially donable property. It sounds as though 

the drafters desired to leave some room for the donation of 

property used in a contracted program. 

Frankly, we do not believe the limiting language is needed to 

protect the Secretary in the event of rescission or reassumption, 

and recommend that it be deleted. The regulation should make 

clear that such property can be considered for donation and 

describe what justification the requesting contractor would be 

req~ired to proffer. If history is any guide, the language, as 

written, will be "over-interpreted" by federal personnel as 

totally prohibiting the donation of property used in the 

contracted program, and contractors will not even be given the 

opportunity to make a persuasive case. 

Becqmmended Bayisiqn 

Delete second sentence of 900.504(al (1) and 

900.511(a) (1). Or amend both provisions to provide guidance 

on when property used in a contracted program will be 

considered "excess" and eligible for donation. 

In three places, the regulations wisely require the Secretary 

to periodically provide contractors with lists of excess property. 

~ 900.504(a) (2) regarding reporting excess IHS and BIA personal 

property; 900.511(a) (2) regarding notification of excess and 

surplus IHS and BIA real property; 900.5ll(b) 12) regarding reports 
164 

Ms. Batty J. Penn 

July 29, 1994 

Page 42 

on other Federal excess and surplus real property. With regard to a list of other Federal excess or surplus personal property, 

however. the regulations would require the contractor to ask. It 

would seem more efficient from all perspectives if the agencies 

routinely supplied lists to all contractors instead of having to respond to individual inquiries filed throughout the year. 

Becgmmended Revi1ion 

900.504.(b) (1). n.._ Secretary ehdl periodically 

furnieh to contractor• lilting• of axe••• Uld 1urplue 

per1onal property from all Federal aganci•• to the 

extant available. 

Contractor provided real property (900.510) (3198) -- We 

object to the continued position of the agencies that the 

Secretary will not negotiate a separate lease with a tribe which owns a facility in which it operates a contracted program. The 

Secretary of HHS has express statutory authority to lease space 

from a tribe for a program either the Secretary or the tribe will 

operate. 25 USC §1674. IHS exercises this authority, but only 

when the Secretary will directly operate the program performed in 

the facility leased from the tribe. This disparate treatment produces an obvious chilling effect on contracting. The more logical action for implementation of a rational Indian selfdetermination policy would be to enable the same activity to occur under tribal operation of the program. 

Neither agency has ever expressly described the basis for its 

policy against leasing space from the tribe for tribal operation 

of the program. To the extent the agencies believe the standard cost principles in OMB Circulars A-87, A-122 or A-21 preclude even arms-length leases with tribes for tribally-operated programs, the 

need to reinstate the ISDA-specific cost principles advocated by 

tribes is underscored. (~ commentary on Subpart D, above.) The 

earlier draft regulations negotiated with tribal participation set out several Indian tribal-specific cost principles, including one on leasing of tribally-owned facilities, that tribes believe are needed to properly implement the objectives of the ISOA. 

This issue directly impacts the ability of many tribal contractors to deliver services to Indian beneficiaries. The 

agencies must cease their unexplained and unyielding posture of 

refusal to work with tribes on this issue. If the agencies 

believe there are statutory or regulatory impediments to agency 

leasing of tribal facilities where the tribe operates the program, an analysis should be supplied to tribes and to Congress so that 

orderly examination, and possibly revision, can be considered. 
165 

Ms. Setty .J. Penn 

July 29, 1994 

Page 43 

Lease qf real property with contract f:.~~ (900.510(c)) --

The regulations provide different leasing policies for the two 

agencies. BIA contractors would be permitted to lease real 

property as they deem necessary for contract operations. IRS 

contractors, however, would have to apply for approval of leases 

under the IHS Lease Priority System. IHS, under this system, as a matter of policy, will not lease a tribally-owned facility when 

the tribe operates the program itself, as noted above. 

Presumably the more limited IHS policy was based on the 

language previously included in the IHS section of the 

appropriations act which required IHS to file quarterly reports 

with the Appropriations Committees regarding proposed leases of 

additional space for Indian health care delivery. See. e.g., P.L. 

102-154. 105 Stat. 1027 (FY92 Interior and Related Agencies 

Appropriations Act, Administrative Provisions for Indian Health 

Service) . This provision has been removed. The FY94 

Appropriations Act does not contain a requirement that IHS report to Congress on any proposed new leasing. ~ P.L. 103-128, 107 

Stat. 1409 (FY94 Appropriations Act, Administrative Provisions for 

Indian Health Service). Thus, the need for advance reporting of new leases no longer exists. 

The problems faced by tribal contractors are not cured by the recent change in IHS policy regarding the provision of funds to contractors in the form of •space allowancesn or •use allowancesM 

for tribally-owned facilities. Even though these 'allowances• are 

no longer limited to the square footage utilized only by primary care providers (the previous IHS policy), tribal contractors 

report they are still inadequate to meet operation and maintenance costs. This underscores the need for a more appropriate leasing 

policy. 

Recommended Revision 

Delete paragraph {2) of §900.510(c), and amend paragraph 

(1) thereof to include coverage for IHS contractors. 

Use of Medicare/Medicaid Funds {900.510(d)) (3198) -- This 

provision prohibits contractors from using M+M collections for 

facilities renovation, lease or purchase without prior approval of 

the Secretary of HHS. We presume this policy is based on the 

agency's belief that it must oversee use of M+M funds to assure they are used for the statutorily-established purpose: to attain or maintain JCAHO accreditation. 

We believe the spirit and objectives of both the Indian 

Health Care Improvement Act, which contains the restrictions on use, and the Indian Self-Determination Act are best served by 

allowing Indian tribal contractors maximum autonomy to carry out the purposes for which the M+M funds are made available. We 
166 

Ms. Betty J. Penn 

July 29, 1994 

Page 44 

propose that a tribal contractor which desires to use its M+M 

funds submit a proposal to the Secretary. If the Secretary does not disapprove the proposal within a specified period (perhaps 30 

days) , the project would be deemed an approved use for M+M funds, 

and the contractor could go forward to carry out the proposed 

action. This procedure could greatly facilitate the use of M+M 

funds for the purposes intended by Congress. 

Operation + Maintenance Funding for Donated Real Property 

(900.5ll(a) (8) (ii) (3198); 900.5ll(b) (4) (3199) --These sections state that upon acceptance of title to donated real estate from 

BIA, IHS or other agencies of the federal government, the contractor shall be solely responsible for the operation and 

maintenance of that property from within •available contract funds•. Presumably, this means from within •existing contract funds• and that the contractor will not be eligible for additional 

O+M funding. 

We object to this policy. By its own terms, the regulation 

requires that any donated property must be used in a selfdetermination contracted program. Yet the contractor would not be 

supplied with additional contract funds for the operation and 

maintenance of that building, funds that are necessary to enable 

the building to be used for the program and to carry out the contract. This appears designed to discourage the exercise of 

this option. More significantly, it violates the express 

requirement of section 811(1) of the Indian Health Care 

Improvement Act that funds for the maintenance and repair of 

clinics owned or leased by tribes or tribal organizations •on the same basis as such funds are provided to programs and facilities 

operated directly by the Service.• 

Recqmmendtd Reyilipu 

900.511(e)(8)(i1) 

lhell be eligible for 

to the ..... extent •• property. 

The donated. real property 

operation and meintenance fund.• 

if the Secretary OWJ:>e4 the 

900.511(b) l') [la•t: 1entence] 'l.'he dou.et:ed 

property 1hell be eligible for operation and 

-intenance fund• to the ,._ extent aa if the 

Secretary owned the property. 

Staff Quarters Construction (900. 513 (c) {2) (iii)) (3199) --

The proposed regulations provide that the contractor submit to the 

Secretary any request for major renovation, expansion, replacement or new quarters construction •for legislative review and 

approval.• We, of course, do not object to the review of such 

requests by Congress. We do believe, however, that the 
167 

Ms. Betty J. Penn 

July 29, 1994 

Page 45 

regulations should also require that the evaluation of such 

requests by the Secretary, in the first instance, should be based on the needs of the contractor in carrying out the contract and 

priorities established by the recognized tribal governing body or bodies and evaluated against federal criteria applicable in the case of construction projects administered directly by the 

Secretary. 

Recommended Revision 

Add as a final sentence to Sec.900.513{c) (2) (D) (iii) 

The Secretary shall evaluate such requests on the same 

basis and pursuant to the same criteria as if the quarters 

were operated by the Secretary. 

S'O'BPAR'l' F PROC'O'BEMEN'!' MANAGEMEN'!' 

Procurement System Standards (900.602) (3200) -- While the 

proposed regulations permit tribal contractors to develop their own procurement system subject to federal approval, formal 

procedures assuring federal action when procurement procedures are submitted for review within sixty days contained in earlier drafts 

have been removed. These provisions should be restored and appeal 

rights consistent with the declination criteria should be assured. 

The paternalistic involvement of the federal government in 

overseeing tribal procurement systems, which is inimical to tribal 

sovereignty, should be eliminated. 

Recommended Reyisiop; 

We recommend deleting the existing 900.602(c) regarding a contractor's right to opt for an alternative procurement system 

and replacing it with the following: 

{1) A contractor may, at any time, elect to procure 

property pursuant to its own procurement procedures. rf 

the contractor elects to use its own procurement 

procedures, it shall notify the Contracting Officer and 

provide a copy of its procurement procedures to the 

Contracting Officer. 

{2) Xf the Contracting Officer believes that the 

contractor' a procurement procedures do not meet the 

requirements of this Subpart Jf, the Contracting Officer 

may request appropriate changes and shall offer technical 

assistance to the contractor. Disputes which ariae 

regarding the adequacy of a contractor's procurement 

procedures which cannot be reaolved shall be resolved in 

accor4ance with the appeal procedures set forth at 

1900.805. 
168 

Ms. Betty J, Penn 

July 29, 1994 

Page 46 

Procurement from Indian Organizations - (900.605} (3201) --

It should be made clear in this section that a •tribal preference• 

is allowable as long as "Indian preference• is required before an award is made to a non-Indian business. See discussion under 

§ 900.115. The provisions requiring burdensome compliance with 

small or minority-owned or labor-surplus area preferences (see 

§ 900.605(b) and {c)) should be eliminated. These requirements 

have not been previously imposed on "638" contractors and the 

agencies should not use this opportunity to limit tribal autonomy 

in such matters. While the goals of these FAR requirements may be 

commendable, it is inappropriate for the federal government to impose its priorities in these matters on tribal governments which are entitled to develop their own policies, as sovereign 

governments, on preference for small firms, minority firms and 

women-owned firms. 

Becpmmeaded Beyisionr 

Insert after "Indian preference requirements• in 900.605(a): 

Delete paragraph 900.605(b) 

Procurement AWard Provisions {900.608) (3201) --Contrary to 

the long-standing rule of the Bureau of Indian Affairs which has 

exempted Indian tribes acting as subcontractors under a contract from the provisions of the Davis-Bacon Act, the proposed 

regulations appear to make no such exception as to the 

applicability of the Davis-Bacon Act. See 25 C.F.R. 271.43. The 

proposed regulations require that laborers and mechanics employed 

by subcontractors be paid prevailing wages •as determined by the 

Secretary of Labor in accordance with the Davis-Bacon Act.• No 

mention i6 -~de ~f the 1972 opinion of the Solicitor for the 

Department of Labor which concluded that Indian tribes and tribal 

governmental entities are exempt from Davis-Bacon. The September 

1990 Joint Draft made clear that Davis-Bacon applies to all 

procurements "wi.th g1Jlc.r;: .tb.i:t.n Wl:!Al. graanizations• which exceeded 

$2,000. This language should be restored. See below for 

discussion of Davis-Bacon provision in Subpart J. 

B«qQPM4a4e4 B•yi•1Qpl 

Insert after •subcontractors• in paragraph (k) the words 

(other thaD. l:D4i&D. tribes aD4 their inatrwuntalitias). 
169 

Ms. Betty J. Penn 

July 29, 1994 

Page 47 

IHS Appeals on Funding Allocations (900.802) (3202) --

Despite the objections of tribal representatives, the IHS has 

distinguished funding appeals from other appealable matters. Under the proposed regulation, the IHS limits the issue to whether 

the Secretary's funding allocation for the contract was properly 

reached using existing IHS 'allocation processes.• If a tribe 

requests more funds than the Secretary determines are available, 

it may request an informal hearing (discussed below) or file an 

appeal to the Contract Funding Appeals Board (FAB). The FAB is 

composed of five members, all of whom are appointed by the IHS 

Director. The proposed regulations are silent on the 

qualifications of the FAB members, whether they are selected at the Area or Central Office level, whether they are to be a permanently standing board and whether they must be wholly 

disinterested parties who have had no prior dealings with the 

appellant. 

The FAB will consider the appeal, conduct a hearing, if 

requested, and recommend a decision to the IHS Director or his 

representative, whose decision shall be final. The regulations do not require an •on the record' hearing under the Administrative 

Procedures Act although section 102 of the Act clearly requires 

such a hearing when a contract proposal is not approved (i.e., 

when it is 'declined"). 

We strongly object to the fact that the Director has the 

final say in this matter, rather than a DHHS official with less of an apparent·conflict of interest. The IHS Director or his 

immediate staff are usually consulted before any Area Office 

declination decision, including those based on funding. The IHS 

procedures now proposed deprive Indian tribes of the meaningful 

appeal and hearing rights mandated by section 102 of the Act. In 

failing to treat a dispute over funding as a declination, they 

conflict with the existing regulations (42 C.F.R. § 36.212). 

Appeals on the following matters are all made subject to the 

"due process• procedure mandated by the Administrative Procedures 

Act. 

1. Declination to make, amend or modify an award; 

2. Rescission of the award and reassumption of the 

program; 

3. Denial of mature contract status; 

4. Whether all required the resolutions are present; 

5. Whether the activity is contractible; 
170 

6~ Declination of construction con tracts. 

Ms. Betty J. ?enn 

July 29, 1994 

Page 48 

There is no legal basis for handling funding appeals 

differently, and we u rge that IHS accept the plain mandate of 

section 102 u nder which a "due process" hearing must be provided 

on any objection raised to a self-determination proposal submitted 

at the request of an Indian tribe. The legislative history is 

very clear on this matter: 

The burden of proof for declination is on the 

Secretary to clearly demonstrate that a tribe is unable 

to operate the proposed program or function. The intent 

of the Committee in retaining the declination criteria 

and the declination process is to insure that denials of 

requests for self- determination contracts are handled 

Qllly through the declination process. 

Sen. Rep. No. 100-274, 24 (1987). 

Recommended Revision: 

\'le recommend deletion of 900. 802 (a I in its entirety. 

Conforming amendments should be made throughout the NPRM. 

We also recommend that subparagraph (f) of 900.802 pertain ing 

t o the initial determination by the Board be revised to read as 

follow: 

(f) Initial determination by the Board. 

( 1) Within five Clays of its receipt of the 

t:r:iba1 c:r:gani.zation• • notice or appeal, the Board will 

determine whether the appeal is within the scope of 

paragraph (b) of this section and so notify the parties 

provided that, if the Board is unable to make a 

determination from the information included in the notice 

of appeal, the Board may request additional statements 

from the tribe or tribal organizations and IRS. If 

additional statements are required, the Board will make a 

determination within five days of its receipt of the 

statements in accordance with paragraph {g) of this 

section. 

We also note a curious difference in the appellate procedure 

for emergency and non-emergency reassumptions. Under 900.802(i) 

in the case of a non-emergency reassumption, exceptions to an 

Administrative Law Judge's decision go straight to the Assistant 

Secretary for Health, as it should, to avoid involving the IHS 

Director in a possible conflict of interest. In the case of 
171 

Ms. Betty J. Penn 

July Z9, 1994 

Page 49 

emergency reassumptions, under 900.802(j), such exceptions are filed with the IHS Director. Paragraph (j) should be revised to conform to paragraph (i) on this point. 

Interior Appeals Process (900.803) (3204) --Unlike the IHS, 

Interior is willing to grant a •due process hearing• on funding 

matters, although its representatives have denied that the law 

requires that result. See§ 900.803(a) (2) and (f) (p. 3204-05). 

The inconsistency between the IHS and Interior positions is 

puzzling. However, the Interior appeal provisions are extremely 

complex and, as presently written, contain many pitfalls for the 

unwary tribe. 

If the tribe fails to request a hearing on the record when it 

files its notice of appeal, it loses its right to appeal. In the case of appeals from decisions by Interior agencies other than the 

BIA, appeals go, not to the Board of Indian Appeals (which 

presumably has expertise in '638' matters), but to an 'Ad Hoc' 

board appointed by the Director, Office of Hearings and Appeals. 

The •waiver' language should be eliminated and all appeals should 

go to the Board of Indian Appeals which clearly has the most expertise in matters involving the Indian Self-Determination Act 

and other laws relating to Indian tribes. It makes sense to have one administrative body be the repository of expertise in disputes 

involving self-determination contracts. 

The regulations should make clear that a tribe which requests an 'on the record' hearing will get one. A decision not to hold a hearing should only occur if neither the statute nor the 

regulations authorize a 'due process' hearing and the regulations 

should make clear that a hearing will be held, if requested, and 

the subject matter is not plainly outside the scope of § 900.803. 

We recommend that Interior meet with tribal representatives to simplify the appeal procedures as much as possible without 

sacrificing tribal rights. 

Reqompep4e4 Beyi«1qp: 

Section 900.803(6) should be revised to read: 

Whether the tribal or tribal organization haa the 

requi:l:-ed. reaolution• o~ appro<tral ~rom the trib.a it 

propoaaa to aarra und.ar aection 4.(a) of the Act and 

900.202 of theaa regulationa. 

Equal A9cess to Justice A&t (900.804) --Onder § 900.804 the 

Equal Access to Justice Act applies to administrative appeals 

involving non-discretionary awards under the Act. This implements 

section llO(c) of the Act. As noted previously, Subpart D should 

be revised to clarify that contract funds may be used for legal 
172 

Ms. Betty J. Penn 

July 29, 1994 

Page 50 

advice in prosecuting such administrative appeals. We find no 

inconsistency in the statutory right of a tribe to obtain EAJA 

reimbursement for legal costs of administrative appeals if the 

EAJA conditions are met but, in any event, being able initially to 

utilize contract support funds for legal advice in connection with 

such appeals up to a final departmental decision. The agencies 

have adopted this principle in self-governance compacts negotiated 

under Title III and so should have no objection to applying it in 

the case of Title I contracts. 

In addition, the EAJA does not allow recoupment of fees in 

excess of $75 an hour in a Board of Contract Appeals award absent 

express authorization in agency regulations. Since tribes are 

unlikely to be able to obtain adequate counsel at this rate, we 

recommend that such authorization be included in the regulations 

for both Departments. 

Recommended Revision: 

We recommend that 900.804(b) read as follows: 

(b) The EAJA claims for DOI will be handled under 

regulations at 45 C.F.R. part 13, provided that attorney 

fees in excess of $75 per hour may be awarded if an 

increase in the cost of living or a special factor, such 

as the limited availability of qualified attorneys for the 

proceedings involved, justifies a higher fee. 

Post-Award Contract Disputes (900.805) (3206) --This 

provision is acceptable. We are pleased that it provides that the 

Contract Appeals Board must give consideration to the factual 

circumstances Rwithout rigid adherence to strict accounting 

principles." 

SUBPART I LIABILITY INSURANCE AND FEDERAL TORT CLAIMS 

ACT COVERAGE 

We urge the agencies to revise these regulations to precisely 

inform tribal contractors on the scope of Federal Tort Claims Act 

coverage, including the limits of that coverage, presently made 

available to contractors under Pub.L. 93-638. This is essential 

so that contractors may make informed decisions as to additional 

insurance protection required. This should be relatively easy 

since both the IHS and BIA have, in other memoranda referenced 

below, provided greater clarity on the scope of coverage available 

to P.L. 93-638 contractors. 

Liability Insurance and FTCA Coverage (900.901) (3207) --

This section restates the language in the Act which required the 

Secretaries, beginning in 1990, to be "responsible for obtaining 
173 

Ms. Betty J. Penn 

July 29, 1994 

PAge 51 

or providing [general] liability insurance or equivalent coverage, on the most cost-effective coverage for Indian tribes, tribal 

organizations, and tribal contractors carrying out contracts,• 

under the Act. To date, the Secretaries ha not obtained 

national insurance coverage for P.L. 93-638 contractors. 

Unlike current regulations, the proposed regulations 

(900.90l(f)) state that the cost of insurance 'beyond that 

provided by any national insurance plan or for the responsible or businesslike operation of a contract •.. shall be a valid cost 

to the contract.• 

Because of the failure of the Secretary of the Interior to 

comply with the statutory requirement to obtain general liability 

insurance coverage for 638 contractors, Congress has permanently 

extended the protections of the Federal Tort Claims Act (FTCA) to 

P.L. 93-638 contracts, and their employees when acting within the 

scope of their employment in •carrying out• the P.L. 93-638 

contract. FTCA coverage for m«dical-related claims was extended 

to 638 contractors and their employees in December, 1987. 

Bego ... nded Beri•ioa: 

The reference to the term 'State• in 900.90l(d) (1) should be 

changed to •jurisdiction.• 

Medical-related FTCA proyisigns (900.902) (3208) --

Paragraphs (a) and (b) of this section set out the scope of FTCA 

coverage provided under Section 102(d) of the Act reqarding 

medical-related claims. Paragraph (c) elaborates, with a non- exhaustive list, upon the meaning of the phrase 'medical, 

surgical, dental or related functions• included in Act. 

Paragraphs (d) and (e) explain: (1) who may bring a claim; (2) 

how such claim must be filed, and (3) what a contractor or employee should do upon receiving·& complaint or claim. 

Paragraphs (f), (g) and (h) of this section elaborate upon the 

scope of FTCA coverage to tribal employees when: (1) treating 

non-beneficiaries at a non-contract facility (reciprocal medical 

services); (2) providing health services funded from sources other 

than under a 638 contract, and (3) treating non-beneficiaries at 

the contract site. 

Beqomm•nda4 B•?i•iqDI 

1fa rac~ll4•4 that: t:hraa apaci~ic alauaaa, 4aaignad ~or incluaioa. in a •f38• coa.t:ract: and aat out in XIIS XS:DII 

92-1, ahov.14 ba inco~orata4 into t:hia aubpart. 'l'hay at:ata in plain 1angv.aga the acopa o~ rr<:A covaraga. 

Non-Me4ical Related FTCA Provisions (900.903) (3209) -- This 

section deals with non-medical related FTCA coverage and is not as detailed or informative as the medical related coverage section. 
174 

Ms. Betty J. f'enn 

July 29, 1994 

Page 52 

We do not believe the st.at:ernent chat non-medical FTCA coverage 

"varies from ti:ne-t·"J"-time," wi~hout more, 

If as stated in Section 900.904 (which 

non-medical related FTCA coverage sections), 

''shall provide a statement verifying any coverage by ::he FTC2\'' tv 

each tribal contractor, and where evidence of insurance is 

required by law and whe"e the FTCA applies, the Secretaries "shall 

p::-ovide an appropriate certificate or statement as required by 

such law," the agencies should include such statements in the 

regulations. To the extent possible, the agencies should spell 

out in the what is and what is not covered by the FTCA 

to the regulations (59 Fed. Reg. 317J;., 

the agencies note that: workmen's compensation and fire and 

casualty are twc insurance requirements ru& covered by the FTC!'.). 

Notification to Government of~~ Filed Against Re~~ 

(900. 905) (3209) -- This section sets out additional procedurec 

with which a contractor ::nust comply {i e., notification to 

goverrll~ent of a claim} ensure the FTCA coverage is not lost. 

The agencies r::ust do :nore to greatest extent 

feasible, the extent and limitations coverage made 

available to P.L. 93-638 contractors as presently exists under 

law. As early as ,July 30, 1990, Eddie BrowT,, then Assistant 

Secretary, Indian Affairs, issued a memorandum to Area Directors 

on FTCA coverage provided under Pub.L. 93-638 to provide guidance 

on the scope of FTCA coverage and to assist tribal contractors in 

negotiating lower general liability premiums (to cover those 

incidents which may fall outside the scope of FTCA) with private 

insurance carriers in light of the coverage provided by the FTCA. 

The memorandum made clear that punitive damages, 

subcontractors, damages to buildings, on-the-job injuries to FTCAcovered employees (covered by workmen's compensation), libel and 

slander~ statutory exemptions, and constitutional torts, were ~ 

covered by the FTCA. We believe that provisions with the clarity 

and specificity of this memorandum and IHS ISDM 92-1 should be 

incorporated into these regulations. 

SUBPART J CONSTRUCTION CONTRACTS 

Subpart J is clearly designed to enable the federal 

construction bureaucracy to retain control over the manner in 

which federally-funded constr~ction projects for the benefit of 

Indians are administered, We doubt whether allowing tribes a 

right of first refusal to design and build facilities in 

accordance with the usual FAR-controlled procedure employed by the 

federal government for in-house construction is what Congress 

intended when it made crystal clear that P.L. 93-638 extends to 
175 

Ms. Betty J. Penn 

July 29, 1994 

Page 53 

•construction•. The Act charges the Secretaries with the 

responsibility to tailor the Self-Determination construction 

regulations to achieve the goals of the Act. They have failed to 

do so, and Subpart J needs to be completely revamped. 

It is well known in Indian country that the cumbersome and 

bureaucratic federal construction procedure is failing to meet the 

need for new educational and health facility construction and for 

renovation and repair. Delays and bad planning (for example, flat 

roofs on hospitals in regions with heavy snowfalls) enforced by 

federal procedures impair the ability of the federal government to 

assist tribes in meeting their tribal facility construction needs. even when funds become available from Congress . We urge that 

federal representatives (independent of the federal construction 

bureaucracy which has its own interests to protect) sit down with 

tribal officials and staff with construction experience and re- invent Subpart J. 

OUr comments below address specific objections even if it is 

assumed that the fundamental concept of a tribe's right of first 

refusal is all that -s intended. 

pyrpose and Scope {900.1001) (3209) -- The third sentence of 

this se~tion states that Architect/Engineer (A/E) services, as defined in FAR 36.102, may be included as construction projects 

subject to the requirements of subpart J. A/E services which do 

not involve substantial construction activities should not be 

subjected to burdensome FAR requirements. See also comments below 

to § 900.1011. 

R•camm•u4•4 B•ri«iopr 

We recommend revising 900.100l(a) to read as follows: 

(a) 'l'his su!:lpu:t astablishas raqu.ir~t• for tha 

dasip, col7.structioll, repair, 1-.prov-nt, axp&llsion, or 

4-lition of one or -a:-• l'a<laral faailitiae. :D1 

a441tloll, lt ehall applr to trihal facil.itlaa whara the 

Sacrat&&'J' ia authorlaad bJr law to d&aip, collstrv.ct and/or r-o..-ata suab. tribal. f!aall.itd.a•. 'li'b.asa o:-aquir-llt• 

il7.Clv.4a architaat-angi-ar aarYicaa when randara4 in 

collllactioa with an actual facil.itias conatruct:Loa. project 

whaz:oa the val.ua of such sarYioaa :La ia -c••• of $25,000 

&114 4is.uot:l.illQ'/da.ol.:Lt:Lon sarYicaa a• 4"'filla4 ill '' CI'R. 

37.300. 

Second, the last sentence in this section gives the Secretary 

the discretion to include in construction contracts procurement of 

moveable equipment, furnishings including works of art and special 

purpose aqu.ipnent, whsn such procurements are part of the 

undarlyinq construction contract. This provision contains no 
176 

Ms. Betty J. Penn 

July 29, 1994 

Page 54 

guidelines for the Secretary's exercise of discretion and does not 

explain whether or how a contractor can request or object to the 

inclusion of such provisions in the contract. 

Finally, under the proposed language it is unclear whether 

Housing Improvement Program (HIP) contracts and road maintenance 

contracts would be subject to subpart J's provisions. Language 

specifying that HIP contracts and road maintenance contracts are 

~ construction contracts within the meaning of subpart J and are 

not subject to any federal acquisition regulations should be added 

either in Subpart J or in the definition of "construction". The 

effectiveness of the streamlined program to assist in the 

rehabilitation of Indian housing would be severely impaired by the 

imposition of the FARs. We are informed that agency staff have 

assured tribal representatives that this change will be made but 

we have seen nothing in writing. 

~ (900.1002) (3209) -- This section states that 

construction contracts, unlike other self-determination contracts, 

are procurement contracts which, pursuant to§ 105(a) of the SelfDetermination Act, as amended, are subject to the FAR and agency 

supplemental acquisition regulations, including amendments, unless 

waived by the Secretary. 

Section 105(a) of the Self-Determination Act does not provide 

that construction contracts are procurement contracts. It simply 

provides that they are not exempt from the FAR provisions. The 

legislative history of the Act clarifies Congress' intent because 

it provides that construction contracts are akin to procurement 

contracts, UQt that they are procurement contracts. Thus, 

referring to construction contracts as procurement contracts and 

making all the FARs applicable, unless waived by the Secretary, is 

inconsistent with the Act and its legislative history. 

A long matrix of FAR clauses, Exhibit I, is included in the 

proposed regulations t.o identify applicable FAR solicitation 

provisions and contract clauses. Since preceding language states 

that all FAR and supplemental regulations are applicable unless 

waived, we are concerned that contracting officers may be confused 

regarding the applicability of FAR and other regulations not 

specifically mentioned in Exhibit I. 

We have reviewed the FAR clauses included in the matrix. 

Groups of these clauses relate to subject matters which should be 

left to the decision-making of Indian tribes, rather than being 

governed by federal mandates. For example, some thirty-three 

required clauses establish various types of preferences with which 

Indian tribes would be required to comply, such as affirmative 

action for Viet Narn veterans and handicapped or disabled persons, 

preferences for small and disadvantages businesses, labor surplus 
177 

Ms. Betty J. Penn 

July 29, 1994 

Page 55 

areas, women-owned businesses, and equal employment opportunity 

requirements. While these public policies may all be commendable, 

the issue is whether these are matters which Indian tribes should 

be able to decide for themselves or whether they should be decided 

for them by the federal government. 

Other clauses impose complex and burdensome financial recordkeeping and cost-accounting standards; highly elaborate 

competitive bidding procedures; change provisions, including 

termination for convenience of the government clauses, which are in flat contradiction to the provisions of the Act prohibiting 

unilateral modification and requiring due-process when a '638' 

program is re-assumed; damages clauses which violate tribal 

sovereign immunity and provisions allowing the federal government 

to cut off funding without complying with the re-assumption 

provisions of the statute. 

On the other hand, many of the FAR clauses provide useful 

guidance, and tribal organizations engaging in construction would 

probably have no problem with voluntarily agreeing to include 

them. The FAR clauses need a thorough review to eliminate those 

which are either inconsistent with the statutory provisions, with 

the tribal sovereign status and the government-to-government 

relationship, or are unnecessary to assure protection of the 

federal government's obligations to the Indian beneficiaries of 

self-determination construction projects. 

Beqpmmended B•ri•!qn: 

This section should be revised to read: 

tn accordance with 1 105 (a) of Public Law 93-638, as 

amended, aelf•deteraination construction contract• are not 

proou.r-nt contract• and are not aub:fec::t to Federal 

Acquiaition Regulation• or AgeACy Supplemental Acquiaition 

Regulationa, exc::ept aa otherwiaa expl:'aaaly provided 

hare in. 

In addition, the matrix needs stringent review and revision as recommended above~ 

Section 900.1002(b) -- This sub-section lists the provisions 

of other sections that are applicable to construction contracts. 

The regulation erroneously refers to subsections 900.802(b) (6) and 

900.802(c)-(j) of subpart Has 900.801(b) (6) and 900.801(c)-(j), 

and should be corrected. 

Consultation on Facilities (900.1003) (3210) -- This 

provision requires the Secretary to consult with affected tribes 

prior to entering into construction contracts for design, 

construction or renovation of facilities. This language omits the 
178 

Ms. Betty J. Penn 

July 29, 1994 

Page 56 

requirement that the Secretary consult with affected tribes prior 

to entering into contracts for ~planning• purposes. Consultation 

prior to planning a project should be required. The involvement 

of tribes in the planning of schools, health facilities and other 

federally- funded constructions on their reservations is absolutely 

essential if the federal Indian self-determination policy is 

really applicable to construction. 

Contract Process (900.1004) (3210) - -This section 

establishes a tribal right of first refusal and requires that, if 

a project benefits more than one tribe, a notice of intent to 

contract must include authorizing resolutions from all tribes 

benefitted. This requirement may create significant problems for 

tribal organizations sanctioned by a n~~er of tribes which seek 

to contract construction of multi - tribe facilities as, for 

example, in Alaska. 

Section 900.1004(c) sets forth two alternative procedures 

which are to be followed by Interior and IHS when a notice of 

intent to contract has been received. Both procedures are in need 

of revision. 

This section to some extent reflects compromises worked out 

with tribal representatives as to the manner in which "638" 

proposals for construction will be handled. The provision to give 

benefitting tribes a right of first refusal is to assure that the 

requirements of the Act are met in the event a benefitting tribe 

elects to exercise its right to contract under section 102. If a 

tribe does not provide a notice of intent supported by resolutions 

from all benefitting tribes within thirty days, it loses its "638" 

rights. We think thirty days is too short. We also think that, 

in the case of a construction project benefitting multiple tribes, 

a negotiation or competitive process among those tribes electing 

to contract is more consistent with the Act than barring any "638" 

contract unless all tribes support it. 

In addition, the award and declinaLiun procedures as 

described in § 900.1004 are confusing and their relationship to 

§ 900.207 and subpart H is impossible to determine. We assume 

that {c) (2) governs IHS procedures (as (c) (1) governs DOI 

procedures), but it does not say so. Under DOI procedures, a 

proposal may be declined if it fails to meet "the requirements of 

the government.• Under IHS procedures a declination appeal is 

"confined to the issue of whether the proposal meets the 

requirements of the RFP." This is better, but we fail to see how 

either the DOI or the IHS procedure is consistent with the plain 

language of section 102 of the Act. We think this provision needs 

further careful negotiation to assure that the statutory 

declination standards are applied to construction proposals and 

that tribes are clearly put on notice in the regulations as to 
179 

Ms. Betty J. Penn 

July 29, 1994 

Page 57 

their appeal rights. The Secretaries should be required to respond to requests for technical assistance. 

Recommended Rav1•1qn: 

We recommend amending 900.1004(a) to change 30 days to 45 

days. We also recommend that the phrase 'as expressed in the POR" 

be added to the last sentence of 900.1004(c) (1) (3210). 

~ (900.1006) (3210) -- This paragraph describes what 

types of contracts may be awarded, without specifying who has the 

right to decide what type of contract should be awarded and on what basis such a decision should be made. Criteria similar to those contained in § 900.1004(c) (2) (ii) should be employed in 

determining the type of contract awarded and should be included in 

this provision. 

Section 900.1006(c) states that the type of award document 

which is appropriate is prescribed in the 'FAR'. This appears to be inconsistent with §§ 900.1006(b) and 900.1004(c) (2) which 

authorize the Secretary to make this determination and provide 

that the Secretary and the tribal organization may mutually agree on the type of award document. We think the regulations should 

authorize the Secretary and the tribal contractor to mutually 

agree on the appropriate award document. 

Section 900.1006(f) describes requirements applicable to letter contracts. Letter contracts are subject to internal agency 

approval. The provision does not explain what type of internal 

agency approval process is contemplated. The process should be 

described more specifically in order to be in compliance with the 

Act. 

Bonds and warronties (900.1007) (3211) -- This prOV1S10n 

requires that fixed-price contracts include a provision which 

requires the bonding company to complete the contract if the contractor 'defaults.• We are not clear as to what 'default' means in this context. The statutory and regulatory requirements 

with respect to retrocession and reassumption apply to 

construction contracts. We assume that it is the intent of this 

section that the bonding company be required to complete the 

project in the event retrocession or reaasumption occurs in 

accordance with the provisions of subpart K. This section should 

provide that the bonding company complete the contract in the event of retrocession or reassumption. 

Begqmmend•d Bey1•1qn: 

We recommend that the second sentence of 900.1007(a) be 

revised to read: 
180 

Ms. Betty J. Penn 

July 29, 1994 

Page 58 

Bonding agreements for fixed-price contracts shall 

also contain a provision which requires the bonding 

company or its designee to complete the contract if the 

contract is retroceded or reassumed pursuant to Subpart K 

of these regulations. 

Davis-Bacon Wage and Labor Standards (900.1009) (3211) --

This section correctly exempts employees of t:::-ibes and public nonprofit tribal instrumentalities employed by contractors Q£ 

subcontractors from the Davis-Bacon Act in accordance with the 

legal position of the Department of Labor, stated in a 1972 

opinion of the Solicitor of Labor. However, § 900.608 contains 

language inconsistent with this rule as to subcontractors and, as 

noted above, § 900.608 should be revised ~:c be consis':ent with 

§ 900.1008. 

Inspection and Acceptance ( 900.1010) ( 3211) -- This provision 

states that the Secretary ~shall have access to work in 

preparation or progress 2:..t. 2J1Y .t...i.In.§. n for inspection p11rposes. The 

granting of access for inspection is unnecessary and could 

interfere with completion of the work. The provision should 

provide that the Secretary must provide notice of any inspection 

~~d that the inspection will be conducted £t ~ reasonable ~. 

The last sentence of the provision requires the Secretary to 

"generally" complete the final inspection within thirty days. 

This language is ambiguous -- it can be interpreted to mean that 

there are exceptions to the rule that the Secretary must conduct a 

final inspection or that a final inspection need not be made under 

certain circumstances. This language was not included in earlier 

drafts of Subpart J and should be deleted. 

Recommended Rayision: 

We recommend revising 900.1010(a) as follows: 

(a) The Secretary ehall have reasonable access to 

work in preparation or progress at regular intervals as 

agreed to by the Contractor, and the contractor and ita 

subcontractors shall provide access for inspection. Final 

payment for work performed will not be made until the 

Secretary conducts a final inspection and determines that 

the work complies with all material contract requirements. 

The Secretary shall complete the final inspection within 

thirty calendar days of receipt of written notice from the 

contractor of completion of the work. 

Architect/Engineer !A/El Services (900.1011) --The procedure 

for selecting qualified architects and engineers (A/E) contained 

in § 900.1011 is "designed to meet the requirements of the Brooks 

Act as codified in the FAR." We strongly object to the general 
181 

Ms. Betty J. Penn 

July 29, 1994 

Page 59 

application of the FARs and the burdensome Brooks Act requirements to tribal A/E contracts. Brooks Act compliance can be extremely 

difficult for tribes in remote, rural locations and can result in 

the selection of architects from geographic regions far from the 

construction site and disastrously inappropriate designs. Certain contracts for A/E services are not construction contracts and 

should, therefore, be exempt from FAR coverage in accordance with 

§ 105(a) of the Self-Determination Act, as amended. In 

particular, we recommend the deletion of § 900.1011(b) requiring a tribal evaluation board for the selection of A/E services. If 

such a board is required, then we recommend the following 

revisions. 

Recommended Revisipn; 

Insert at the beginning of 900.10ll(a) 

Except as provided in aubaection 900.101l(e) below, 

(b) Except aa described in aubparagraph (e) below, 

the evaluation of a potential A/E aubcontractor shall be 

undertaken by an evaluation board established by the 

contractor and composed of 11118211bers who, collectively, have 

experience in architecture, engineering, construction or 

related pro:fesaions, or administration o:f programs to be 

per:formed in the facility to being designed. Each board 

will consist of at least 3 .ambers. li'o fira shall be 

eligible for award of an A/11: services subcontract by the 

contractor while any of ita principals, aaaociatea, or 

employees are participating aa members of the evaluation 

board or participated aa memhera of the evaluation board 

when the firm was evaluated. 

Revise 900.10ll(c) as follows: 

(c) 'l'he evaluation board shall; 

(1) Review current data files on eligible firms and their reapoDaea to a public notice coDcerDing the 

particular project; 

(:Z) Evaluate the firma in accordance with (f) 

belOW I 

(3) Co10duct fo:rmal interviews, obtaiD additional 

data, &Dd verify references with the moat highly qualified 

firma regarding concepts aDd the relative utility of 

alte:r:Dative .,..thods of furDiahing the required services iD 

the particular pro:lect, when the prospeetive A/B contract 

ia estimated to exceed the smal1 purchases limitatioD. 

Architect-engineer fees shall not be considered in these 

diseuaaioDB7 aDd 
182 

Ms, Betty J. Penn 

July 29, 1994 

Page 60 

(4) Prepare a final selection list recommending 

the firm and alternates, if any, considered to be the most 

highly qualified to perform the required services. The 

list shall include a description of the considerations 

upon which the reco...,.endations are based. 

Section 900.10ll(d) states that the final selection of A/E 

sub-contractors must be submitted to the Secretary for concurrence before negotiations can begin. No time-frame is provided for the 

Secretary to make a determination. A 20-day deadline for 

concurrence is reasonable and should be included in the 

regulations. 

Recommended Royi•1on: 

Insert the following sentence at the end of the second sentence in§ 900.1011(d): 

The Secretary shall concur in or reject the proposed 

final selection within 20 days of recsipt of notification 

of that selection. 

Paragraph (e) should be revised to read: 

(e) If a tribe authorizing contracting of the 

construction pro:Jact -intains an in-house A/E department 

the contractor -y usa A/B services provided by that 

depart-nt without participating in the procedure set out 

in 1900.1011(&)-(d) above. 

Payments (900.1012) (3212) -- The last sentence in this 

provision gives the Secretary the authority to withhold 

indefinitely payments scheduled under the terms of a contract if 

the Secretary determines that the contractor has failed to comply 

with the material terms and conditions of the contract. 

Section 105(b) of the Self-Determination Act, as amended, is 

cited as the source of this authority. Section 105(b) only gives 

the Secretary the authority to impose such conditions on payments as the Secretary deems necessary to carry out the purposes of the 

Act. Section llO(b) of the Act does not permit the Secretary to revise or amend the terms of a contract without the consent of the 

tribal contractor and the Secretary is not permitted to terminate a contract without complying with the reassumption provisions of 

section 109 of the Act, including the right to a hearing, Action 

to withhold payment may be a de facto termination, This sentence is inconsistent with the Act and should be deleted. Funds should not be withheld unless the contractor has been provided with an appeal and a hearing. 
183 

Recommended Bey!s!on: 

Revise the final sentence to read as follows: 

Ms. Betty J. Penn 

July 29, 1994 

Page 61 

(e) If the contractor faila to comply with the 

material te:r:ma and condition• of ita contract ae 

dete:r:mined by the Secretary, the Secretary may, if 

neceaeary, exerciae hie/her right• under 900.1106 hereof. 

Sayings on Construction Proiects (900.1013) (3212)-- This 

section requires that savings in a cost-reimbursement contract be 

returned to the Secretary, unless the savings result from a value 

engineering proposal initiated by the tribe or tribal organization 

and accepted by the Secretary, in which case the savings would 

remain obligated to the contractor for project enhancements or additional benefits under the contract. This language is not consistent with § 106(a) (3) of the Self-Determination Act, as amended, which provides, in part, that •savings in operation under a Self-Determination contract shall be utilized to provide 

additional services or benefits under the contract .. . We do not see how a regulatory provision in flat contradiction to the statute can be justified. 

Recommended Beyi«ippt 

This section's title should be revised to read: "§ 900.1013 

Savings and Profits on Construction Contracts.• The section 

should be revised to read: 

The negotiated price of a fixed-price cuntract may 

include a reaaoll&ble profit. Funda obligated to a costreimburaement construction contract rsmaining after the 

completion of the project (including reimburs-ent of the 

contractor for all authorized expenditures) ehall remain 

obligated to the contractor to provide additional aervices 

or benefits under the contract. 

See discussion below on fixed-price contracts under 

§ 900.1014. 

~ (900.1016) (3212) --Relying on the authority in 

section 105(a) of the Self-Determination Act, as amended, this 

provision describes a procedure for a contractor to request 

waivers of specific statutes or regulations. The procedure does not include a time-limit within which the Secretary must issue a response to a waiver request and it does not provide a contractor the right to appeal a denial of a waiver request. We recommend 

that this section provide for a 30-day deadline for action on a waiver request. 

The sentence stating that the declination criteria do not apply to waiver requests should be deleted. A request to waive a 
184 

Ms. Betty J. Penn 

July 29, 1994 

Page 62 

contracting law or regulation should be granted unless it can be 

declined based on the declination criteria. As to regulatory 

provisions we think evaluation of waiver requests against 

declination criteria is clearly required by the Act. With respect to statutory provisions of contracting laws the Secretary should 

exercise his waiver authority consistent with the goals of the Act 

and approve waivers unless such approval would cause services to Indians to be unsatisfactory, adequate protection of trust resources would not be assured, or the project cannot be properly 

completed or maintained. The Act requires that the provisions of 

contracting laws and regulations be evaluated against the specific 

criteria, In other words the Secretary should be required to justify a statutory provision in light of the declination 

criteria, not simply to cite it. If the FAR matrix continues to include clauses entirely inappropriate for the Indian selfdetermination programs, then at least there should be a meaningful 

administrative appeal to review whether such clauses are necessary 

and supportable under the declination criteria. 

SUBPART lC RETROCESSION, RESCISS:ION AND REASStlMPT:ION 

Retrocession (900.1101) (3240) -- The proposed regulations 

include DOI draft language making a tribe's request to retrocede a portion of a contracted program subject to the discretion of the 

Secretary. This rest:ciction is inconsistent with section 105(e) 

of the Act, which provides simply that a retrocession shall become 

effective within one year of a request. The statute contains no requirement that a tribe must retrocede ~ activities performed 

under a contract or lose its retrocession rights. When a tribal 

organization administers a program for several tribes, 

retrocession of the portion of the contract serving one tribe (or 

tribes other than all of the supporting tribes) should involve 

consultation with the tribal organization. 

Racqmm•nded R•yl•1ppt 

The last sentence of 900.110l(a) should be revised to read: 

(a) Prior to the expiration date of the contract, a 

tribe has a right to return responsibility for the 

operation of a contract to the Secretary. A tribe, after 

consultation with the tribal organization in the case of a contract a4111!nistered by a tribal organization, may elect 

to retrocede a portion of the operation of a contract. 

Proce4ure in the event of breach of contract by a tribal 

organization (900.1103) (3241) -- The proposed regulations make 

retrocession procedures applicable when a tribal contractor (other 

than the tribe) •breaches• a contract and provides for tribal 
185 

Ms. Batty J, Penn 

July 29, 1994 

Page 63 

action in the event the tribal organization fails to comply with a contract. There is no statutory basis for this specia'. procedure. 

Tribal retrocession rights exist whether or not a tribal 

organization has breached the contract and are entirely 

discretionary with the tribe. The Secretary's interest in such cases is limited to the circumstances in which he or she can cancel the contract and reassume the contracted program. These 

extra-statutory procedures should be eliminated from the 

regulations. Cancellation of a contract in case of the violation 

of its terms is provided for in the re-assumption provisions under 

§ 109 of the Act and conditioned upon the circumstances specified 

therein. 

Recommended Bev1•ion: 

We recommend that 900.1103 be deleted in its entirety. 

Effect of Retrocession (900.1105) (3241) -- The proposed 

regulations provide that the Secretary shall •endeavor to provide" 

the same level of funding and quality of services that were provided prior to retrocession of the program to the Secretary by 

the tribal organization. Tribal representatives have argued that 

the Secretary provide no less than the same level of funds and 

quality of services as were provided prior to retrocession of the contract. In effect, the proposed regulations require no more than a "best efforts• commitment. Since the agencies now have one year to prepare for operating a retroceded program they should be 

able to provide at least the level of services and funding as had 

been available when notice of retrocession was received, subject to no adjustment other than those authorized by section 106(b) of 

the Act. 

Becgmmended Reyf«fon: 

We recommend deletion of the words •endeavor to• in this 

sectionNon-emergency &eassumption (900.1106) (3242) -- T~e proposed 

regulations create an additional criterion (which has no statutory basis) for reassuming a contracted program. Under section 109 of 

the Act, the Secretary may reassume a contracted program on a 

finding of either the violation of the rights or endangerment of 

the health, safety or welfare of any person, or gross negligence or mismanagement in the handling or use of funds provided to the 

tribal organization under the contract. The proposed regulations 

add a third non-statutory criterion - •endangerment of trust resources.• While in some circumstances such endangerment could 

constitute a violation of rights or endangerment of welfare, we are concerned that this additional criterion could provide a basis 

for the Interior to reassume a program because it disagrees with a tribe's view of how to best manage tribal resources. If this new 
186 

Ms. Betty J. Penn 

July 29, 1994 

Page 64 

reassumption criterion needs to be added, it should be done by 

Congress, not by an agency attempt to amend the statute. 

Recommended Bevi1ion: 

We recommend deletion of this phrase. 

Smerqeocv Reassumption (900.1106{b)l (3242) --While the 

proposed regulations retain language clearly setting out the 

standard which the Secretary must use when deciding to reassume a contract (contractor's performance poses an 'immediate threat of 

imminent harm'), they omit a sentence included in the September 

1990 draft requiring that •such a determination shall be based on an evaluation of the contractor's performance against the 

requirements of its contract•. This proposed language grew out of a successful challenge by the Tohono O'odham Nation to an attempt 

by the IHS to reassume a component of its IHS contract for failure 

of the Tribe to perform activities beyond its contract obligations. The agencies should only be able to reassume a contract based on the failure of a contractor to perform 

activities which it has a contractual obligation to perform. 

Deficiencies in the contract language, itself, should not be 

addressed through the reassumption procedures. The deleted 

language should be restored and made applicable to emergency 

reassumptions and, as well, to non-emergency reassumptions under 

900.1106. 

Sll'liPAJ!.T L tl:ISCU'l'IOHAltY Gll.lUJr'l'S 

Applicability (900.1201) (3242) -- Like prior draft 

regulations, the proposed discretionary grant subpart incorporates 

various provisions of the regulations and makes them applicable to discretionary grants. However, unlike the earlier drafts, the 

provisions requiring the Secretaries to consult with tribes before 

amending the regulations are not applicable to Subpart L. The 

waiver provisions, however, are applicable to these grants. Like 

the September 1990 draft, the proposed regulations provide that contract support funds are not applicable to discretionary grants. 

Furthermore, the proposed regulations state that 'all applicable 

direct and indirect costs will be included in the award amount.• We take this to mean that an Indian tribe {usually a smaller 

tribe) with a high indirect cost rate will have less direct 

program dollars to utilize than a tribe with a lower indirect cost rate since such costs are 'included' in or taken off the top of 

the award. We see no justification in this discriminatory 

provision. 

Recommended Rey!«!on: 

We recommend the deletion of subparagraph 900.120l{c) (6). 
187 

M.s Betty J , Penn 

July 29, 1994 

Page 65 

Facilities Construction (900.1207) (3244) -- Facilities 

constructed under construction grants may not •in any manner' be 

leased back to the Secretary. This provision reflects an existing 

IHS policy and obviously creates serious obstacles to the use of 

such grant funds to address the need for health facilities in the 

Indian Country. Congress has expressly authorized such leasing 

arrangements in the Indian Health Care Improvement Act. 

Recommended Revision: 

We recommend the removal of this restriction by deleting 

subparagraph (d) . 

SUBPART M SECRETARIAL REPORTS AND CONSULTATION 

REQ'O'IREMBNTS 

Secretary's Annual Report to Congre~~ (900.1301) (3245) --

The proposed regulations delete language from this section in the 

September 1990 Joint Draft which required that the Secretary 

consult with tribes concerning the formulation of the annual 

budget. However, such consultation is provided for in 

§ 900.103(b) (6). For clarity this obligation should be cross- referenced in § 900.1301. The proposed regulations also delete 

language which required the Secretary to develop within a year of 

implementation of the regulations, with full participation of 

tribes, a budget planning process which afforded tribes maximum 

participation in the development of annual budget estimates for 

the BIA and the IHS. These modifications are distressing in the 

degree that they de-emphasize tribal participation in budget 

planning. 

The proposed regulations should be revised to make clear that 

the report to Congress should include an estimate of the •contract support• needs for the succeeding fiscal year since that 

information will assist the Congress in providing sufficient funds 

in such succeeding year to comply with section l06(a) (2) of the 

Act. 

Recompended Reyi•iont 

Section 900.130l(b) should be revised to specifically 

reference •direct contract support• as well as indirect costs. 

We further recommend that a new paragraph (g) be added which 

provides that the Secretary's report to Congress include: 

An estimate of the total funds required in the next 

fiscal year to fully fund the contract support coat needa 

of contractors in accordance with I 106 (a) {2) of the Act. 
188 

Ms. Betty J. Penn 

July 29, 1994 

Page 66 

Secretary's bnnual Report to Indian Tribes (900.1302) (3245) 

In view of agency reliance on the "processes actually utilized" 

for allocate resources, the Secretary's annual report to Indian 

tribes should include an explanation of these processes. 

Recommepded Bey!s!on; 

We recommend that a new paragraph (e) be added at the end of 

the section. 

(e) The report shall detail the processes 

utilized by the Secretary to allocate resources 

program activities. 

actually 

among 

SUBPA:R'I' N PROGRAM STANDA:RPS, PEPA.RTMENT OF HEALTli 

AND HUMAN SERVICES 

Assurance on nroaram standards (900.1401-1402) (3245, 3246) -

- This Subpart has undergone revis1ons which raise a number of 

questions concerning the degree of flexibility afforded tribal 

contractors in designing their own program standards. Like 

earlier regulation drafts, the current proposed regulations 

acknowledge that program standards, data collection and reporting 

and quality assurance •are necessary, interrelated, and essential 

parts of a satisfactory health program.• The Secretary is 

required under the proposed regulations to establish joint 

tribal/Federal participation processes to •review and advise on 

departmental program standards, quality assurance programs, and 

Core Data Set Requirements (CDSR) . " 

The proposed regulations recognize, however, that 

responsibility for the day- to-day operation of a contracted 

program rests with the contracting tribe or tribal organization. 

The proposed regulations retain the sentence which states that: 

'Nothing in this Subpart is intended to create any additional 

declination or reassumption criteria.' Nevertheless, 900.1402 

requires that all applications and contracts contain an assurance 

of compliance with any 'applicable' JCAHO or HCFA standard. 

Earlier drafts regarding applicable standards allowed more 

latitude in the development of such standards. The 1989 "Yellow 

Draft" stated the following: 

'Although for purposes of uniformity and consistency, it 

is the preference of t:;ese Departments [BIA and IHS) 

that self-determination contracts include the same 

standards and data requirements [as the BIA and IHS], it 

is recognized that Congress intended that tribal 

contractors have the option of presenting and 

negotiating alternative standards and data requirements. 
189 

Ms. Betty J. P~n.n 

July 29, 1994 

Page 67 

'Standards must be well-known, commonly used and 

accepted, and measure qualitative and quantitative 

values. JCAHO and HCFA standards, where applicable, are 

specification 

considered acceptable 

in~ contract 

standards 

proposal. 

~ 

Where 

~ 

JCAHO and 

HCFA standards are not applicable, tribal contractors may choose among national, state, professional or department standards, or develop equivalent triballyaccepted standards.• [Emphasis added.] 

The 'Yellow Draft• set out the process a tribe was to follow to establish acceptable standards and data requirements. Having 

been participants in the discussions resulting in the Yellow 

Draft, we are well aware that the intention was to permit the use 

of JCAHO or HCFA standards ~ Jl contracted prmx:am li'lllJi in 

compliance ~ ~ ~. but not to bar contracting under the 

Act if a program was not in compliance with such standards because 

available resources were insufficient or the tribal contractor chose to propose alternative standards. 

Alternative standards were appropriate (1) where the 

Departmental requirements were considered to be unduly burdensome; 

(2) where the information was not readily available to the tribal 

contractor; and (3) where the tribal contractor did not consider 

the Departmental data requirements essential. The Department 

would then advise the tribal contractor on the acceptability of 

the proposed standards and data requirements. 

In the September 1990 Joint Draft this section read: 'The 

following assurance~ be included in the proposals. contracts 

and contract modifications: The contract proposal abAll include 

an assurance that the contractor will comply with appropriate 

national, State, professional, agency or tribal standards ..•. {JCAHO or HCFAJ accreditation or conditions of participation are applicable.• The procedures allowing the establishment of 

alternate standards had been deleted. 

Under the present proposed regulations, the provision on Program Standards, Data and Quality Assurance now reads: 'The 

following assurances ~ be included in the proposals, contracts, 

and contract modifications: An assurance that the contractor will comply with applicable [JCAHO or HCFA] accreditation 

standards or conditions of participation.• Only where such 

standards are ~ applicable do tribal contractors have the option 

of identifying a national, state, professional, agency or tribal 

standard which the health program would use. No procedures are set out for contractors to follow to establish their own standards or the basis upon which such standards will be evaluated by the 
190 

Ms. Betty J. Penn 

July 29, 1994 

?age 68 

Department in cases in which a program or facility does not meet JChHO or HCFA standards. 

In the 1989-90 consultations, neither tribal or agency 

representatives intended to require compliance with JCAHO or HCFA 

standards for All "638" contractors. The intent was simply to 

provide 

contract 

that 

requirements 

compliance 

liJO 

therewith 

J;.Q ~ ~ 

was sufficient 

Qf ll. ~-

~ 

If 

~ 

a program to be contracted could not meet such standards, then the 

tribal contractor could propose and negotiate alternative 

standards with the agency being entitled to decline to accept the 

proposed standards if it disagreed with them based on the 

statutory declination criteria. 

Under the proposed regulations, current contracts which do not meet the requirements of this Subpart or which are silent on program standards, program data or quality assurances, must meet the requirements of the program standards, data and quality assurances sections •in the first request for continuation or annual funding made subsequent to the effective date of these 

regulations.• On the face of the proposed regulations it appears 

that IHS would decline the renewal or extension of such contracts if the standards are not met. Requiring compliance with JCAHO and 

HCFA standards would be unfair to contractors unable to comply 

with such standards due to lack of funds and could deprive Indian 

people of medical services. The alternatives set forth in earlier 

drafts of the "638" regulations should be restored. we have been 

assured by IHS staff that the new language in sections 1401-1402 

is not intended to require compliance with the standards. If so, 

appropriate changes need to be made to clarify the intention. 

Assurance on data Collection and Reporting (900.1402(b)) 

(3246) -- Like earlier drafts, the proposed regulations require 

that a contract proposal to IHS must include an assurance that the contractor will maintain a data collection and reporting system 

which is •compatible" with the Core Data Set Requirements (CDSR) 

applicable to the program. Under the proposed regulations, a contractor is not required to use the IHS data collection and 

reporting system, provided that the system used •provides for the 

transmission of accurate and complete data •.. as otherwise 

required to meet the CDSR of the applicable IHS information 

systems,• as well as requirements of the Computer Security Act of 

1987, if the data collection and reporting system is automated. 

However, IHS plans no special financial assistance to tribal contractors to meet such requirements. An IHS representative has 

explained this by stating that Congress lays additional reporting 

requirements on IHS without providing additional resources. Of 

course, compliance with such additional requirements on an IRSwide basis may be much easier finance than in the case of a small 

program. 
191 

Hs. Betty J. Penn 

July 29, 1994 

Page 69 

It appears that there is no incentive for tribal contractors to issue their own reporting requirements. It is our impression 

that the more the requirements differ from the CDSR, the more likely it will be that agency staff will find it difficult to match those requirements to agency reporting requirements. The 

easier it is for agency officials to understand the operations of a contracted program, the easier it will be for that agency to identify program needs, and perhaps remedy them. 

Changes to the CDSR are to be published as a general notice 

in the ~ Register. Regulatory changes to reporting 

requirements under the CDSR imposed on tribal contractors are an exception to (or a violation of) the statutory requirement 

prohibiting unilateral changes to self-determination contracts by 

the Secretary. 

Like earlier drafts the proposed regulations acknowledge that 

the cost of meeting the requirements of this subpart are an allowable cost under the contract. Unlike earlier drafts, 

however, the regulation drafters have deleted language which 

provided that if the costs for providing the data required by the 

CDSR was not included in the program covered by a contract, the 

Secretary was to •endeavor• to provide such funding to the contractor for these costs. The September 1990 Joint Draft had 

required that the Secretary reimburse contractors for any 

reasonable costs necessary to meet CDSR above and beyond those costs included in the contract award. This provision should be 

restored. 

Recommended Bevi•ion: 

At the end of 900.1402(b) the following sentence should be 

added: 

(f,) The Secretary ahall reimburae the contractor for 

any reaaonabla coate to comply with the CDSR beyond thoae 

coat& which were included in the program prior to the 

effective date of these J:ellUl&tiona. 

The proposed regulations require that the Secretary provide 

technical assistance to enable contractors to convert their data 

into the formats required by the IHS information systems. Earlier 

drafts had included provision for funding to assist the contractor in developing and implementing acceptable quality assurance programs. We recommend the restoration of this commitment which, 

while subject to the availability of appropriations, nevertheless 

reflects a good faith intent on the part of the Secretary to address data collection needs. 
192 

Ms, Setty J, Penn 

July 29, 1994 

Page 70 

Tribal representatives supported language which would have 

made the incorporation of program standards, data collection, 

reporting and quality assurances subject to negotiation based on local conditions, availability of funding, staffing and training 

capacity, data processing capabilities, and the availability of 

technical assistance. Tribal representatives pointed out that all 

too often the Department imposes greater reporting requirements 

without providing additional funds or assistance to aid tribes in 

integrating the additional requirements into their performance 

routine. This language should be included in § 900.1403. 

Recommended Rev1Mipn: 

Section 900.1402(b) should be revised to include a sentence which reads: 

(5) The Secretary ahall provide technical and 

financial assistance to Contractors to enable them to 

comply with the requirement a of thia aection. 

Fair and Qniform Provision of services {900.1404) (3246) 

We recommend that the complex and confusing language in the 

proposed regulations be deleted and the sta~utory requirement be 

stated in the simple form found in the present BIA regulations. 

Recommended Bey1•!0n: 

Replace 900.1404 with the following: 

The contractor agreea that any servicea or assistance 

to Indians under the contract shall be provided in a fair 

and uniform manner. 

See discussion below under § 900.1502 

SUBPART 0 DE1'AR'1'MEN'l' 01' TilE IN'l'ERIOR PROGRAM STANnARDS 

Under the new proposed regulations, ~ ~ ~ contractor 

~~A •variance• from existing Federal standards, 

'contractors shall adhere to all program standards to which the 

Federal agency is subject, ... including statutes, regulations, 

orders, policies, agency manuals, guidelines, industry standards 

and personnel qualifications,• to the extent that such standards are referenced or set out in the contract or these regulations 

•and have actually been observed by the government in its 

operation of the particular program.• How this last subjective 

criterion is to be determined and by whom is not specified. While 

the requirement is limited to requirements •referenced or set out• in the contract or regulations, this provision is an invitation to the Department to impose boilerplate requirements to which the 

agency, itself, is subject. 
193 

Ms. Betty J. Penn 

July 29, 1994 

Page 71 

This language apparently seeks to reverse the 'burden of 

proof' in a declination appeal which is placed on the government 

elsewhere in the regulations. This provision is also a dramatic 

reversal of existing regulatory language which makes clear that 

inconsistencies between a contract proposal and BIA policies and 

guidelines is not a basis for declination. See 25 C.F.R. 

§ 271.15(d). The proposed regulations limit, rather than enhance, 

the ability of tribes to re-design a contracted program. This is 

the exact opposite of What Congress intended. The Senate Select 

Committee on Indian Affairs in the Report accompanying the 1988 

Amendments said: 

'[T]he Committee intends for the amendment to prevent 

the Bureau of Indian Affairs from requiring tribal contractors to adhere to standards or procedures 

contained in the Bureau of Indian Affairs Manual. The 

Committee amendment also prevents the Bureau of Indian 

Affairs from requiring tribal contractors to utilize 

financial, procurement, travel, and personnel systems or 

procedures utilized by the Federal Government for the 

internal operation of Federal agencies. 

'It should be clear from the intent of the Indian SelfDetermination Act that the administrative procedures and 

methods used by Federal agencies for their own internal 

operations should not be imposed upon tribal 

contractors.' S. Rep. No. 274, 20 (1987). 

Rather than recognizing the individuality of Indian tribes 

and drafting regulations which would allow for more, not less, 

flexibility, the proposed regulations impose uniformity as the 

rule. A tribe will only be allowed the opportunity to do 

something different when it can carry the burden of justifying an exception. While such regulations would make the federal job of 

determining contractor compliance easier, they thwart Congress' 

goal of allowing Indian contractors to focus on better serving the 

needs of the Indian tribes and their members. The proposed 

regulations do not, in the words of the Congress, "move beyond the 

tendency to develop 'generic' policies applicable to all tribes 

regardless of needs or conditions.• They impose uniformity and 

rigid adherence to Federal guidelines and standards -- without 

regard to whether they meet Indian needs, 

The proposed regulations state that when a statute, 

regulation, order, policy, manual, guideline or industry standard or other requirement which is identified prior to contracting is 

subsequently revised, the contractor must comply with the revised 

standards unless the contractor 'satisfies" the Federal 

contracting officer that compliance with the new standard would 
194 

Ms. Betty J. Penn 

July 29, 1994 

Page 72 

•materially increase its cost• under the contract ~ supplemental 

funding is not available. This criterion is entirely subjective 

and therefore subject to inconsistent application by contracting 

officers. Revised orders, policies, manuals, guidelines or industry standards should not be automatically applicable without 

negotiation since the Act prohibits unilateral contract modification by Interior. 

Onder the proposed regulations, a contractor may propose an alternative means of meeting the performance level provided that 

the Secretary finds that the alternative standards, (ll promote 

the purposes of the Act, {2) meet the trust responsibility to Indians, (3) assure the performance of functions or activities at a level •comparable" to that of the government. Requests for 

variance may be submitted at the time of contracting, or as a modification request. The regulations should be revised to make 

clear that program standards are subject to negotiation and that 

the Department may not impose its own program guidelines as a condition for contracting, but may only act to decline a proposal 

(subject to appeal and hearing) based on the statutory declination 

criteria and must carry the burden of proof that a standard on which the agency insists is essential to avoid declination under 

such criteria. 

Recommended Beyi«ion• 

We recommend deleting section 1501(a) through (d) and 

inserting the following in lieu thereof: 

1900.1501 GEHERAL PROGBAM BJiOV:IBEIIRJTS 

(a) Purpo•• and scope 

( 1) 'rhi 1 •ubpart add:re• •e• contract program 

requir-enta. 'rha Sacratary•a requir-nt• may be u•ed in 

evaluating propo•ala to deteraiae whether to approve or decliZle a contract. 

( 2) Where the Secretary determiae• that the 

contx-act propo•al a• 1ubld.tted will aot produce minimum •ati•~aetory re•ult• in accox-d with the •tatutory 

deeliaation critex-ia, negotiation• •• well •• technical 

a••i•tance will be u•ed to avoi4 declination. 

(3) General px-ograa x-equir ... nt• ~or 

con1truction co:atracta are i:a Sul::lpax-t J o~ thi• part1 

apecial px-ogr&:lll. x-equiremeat• !or particular Departme:at o~ 

the :Interiox- con•tructio:a progr&JIUI may appear in thi• 

aubpart. 

(b) :Identification of P:r:ogr&:lll. 1.\equix-ement 
195 

Ms. Betty J. Penn 

July 29, 1994 

Page 73 

(l) The contract proposal shall identify the 

program requireJIIents to he used in carrying out the 

program to be contracted. Such program requirements shall 

comply with applicable statutes. 

Additional requirements utilized in the 

Secretary's direct operation of his program may be found 

in Departmental Manuals (DM) and shall be provided to 

tribes upon request. The requirements will not be 

unilaterally imposed on the tribes. 

( 2) Program requirements selected or developed 

for a contract involving trust resources may not be less 

than the Secretary adheres to at the time the proposal is 

submitted. A progra:m requiremeJ>t selected may be higher 

than that maintained by the Secretary, but such choice 

must be identified in the contract. 

The Secretary shall not require a contractor to adhere 

to any program requirements other thall thoae identified in 

the contract. 

(d) coordination of Programs 

The Secretary ahall coordinate the program(s) or 

portion(a) thereof carried out by him, with those carried 

out by a tribal contractor(a). A contract propoaal shall 

include an assurance that the Indian tribe or tribal 

organization will coordinate its programa with the 

program(a) or portion(a) carried out by the Secretary or 

by other tribes or tribal organizations. The proposal 

shall describe the methods for coordination with other 

governments &J>d organisations in carrying out the 

contract, if appropriate. 

To provide for the orderly transition in the delivery 

of programs to individual Indiana and Indian tribes, a 

period of tr&J>eition or co-management may be provided to 

meet the requirement• of the Indian tribe and the 

Secretary• e reaponeibility. This period of transition 

must be executed within available funds by a cooperative 

agreement between the Indian tribe &J>d the Secretary. 

Conflicts of Interest (900.150l(e)) (3247) -- The September, 

1990 Joint Draft merely required that a contractor which operates 

a trust resource proqram give an assurance that conflicts of 

interest or apparent conflicts of interest would be avoided. Now, 
196 

Ms. Betty J_ Penn 

July 29, 1994 

Page 74 

under the proposed regulation, all tribal contractors and their 

employees are, for all intents and purposes, treated as Federal 

~ 

employees 

Qf J;hl;: 

for conflicts 

contract. 

purposes 

The proposed 

~ 

regulations 

~ .tQ 

impose 

J;hl;: ~ 

upon 

tribal contractors requirements which are more stringent than 

requirements imposed upon procurement contractors. 

Interior's insistence on policing intra-tribal matters is one 

more example of the federal attempt to use the opportunity to 

issue new regulations to narrow, rather than to enhance, tribal 

autonomy. It reminds us of BIA's attempt to transfer an agency 

superintendent on conflict-of-interest grounds when a tribe 

elected his brother as tribal chairman. The Bureau insisted that 

there must be a "conflict" although there was no statutory or 

regulatory basis for applying federal conflict of interest rules 

to that case. Indeed, under federal conflict of interest 

regulations, ~ ~ no conflict. The BIA lost in court. See 

Oglala Sioux Tribe v, Aodrus, 603 F.2d 707, fn. 13 {1979). We 

recommend a return to the compromise language which was carefully 

negotiated between federal and tribal representatives and 

incorporated in the 1990 Joint Draft. 

Recom=ended Revision: 

We recommend that this section be deleted and a new paragraph 

(e) be substituted in its place, as follows: 

{e) Avoiding Conflicts of Interest 

A contract proposal to operate trust resource programs 

shall include an eaaurance that conflicts of interest, or 

appearances of conflict of interest will be avoided among 

the contractor, contractor• • employees, tribal governing 

body, the el.ienta being aerved, and individual truat or 

restricted property owner&. 

Fair and Uniform Provision of Services ( 900, 1502) ( 3248 l --

The Interior Department appears to have used a provision similar 

to the IHS standard set out in Subpart N concerning the Fair and 

Uniform Provision of Services. In existing Interior regulations, 

the Fair and Uniform Services clause is one sentence long. "The 

contractor agrees that any services or assistance provided to 

Indians under the contract shall be provided in a fair and uniform 

manner.• 41 C.F.R. § 14H-?0.617. Under the proposed regulations, 

services must be provided under a contract •consistent with 

applicable priorities, policies, and regulations and shall make no 

discriminatory distinction among beneficiaries.' A lengthy, but 

non-exhaustive list of 'discriminatory distinctions• is then set 

out. This more complex and restrictive language has been adapted 

by Interior from present IHS regulations (48 C.F.R. § PHS 352.280-

4(a) Clause No. 37), 
197 

Ms. Betty J. Penn 

July 29, 1994 

Page 75 

This change was developed in response to a congressional 

directive to streamline "638" requirements and increase ~ 

flexibility. It certainly gives a new meaning to "streamline" and 

"flexibility", 

Recommended Revi•iqn: 

We recommend elimination of § 1502 and retention of the 

current language set forth at 41 C.F.R. § 14H-70.617, as follows: 

The contractor agrees that any services or assistance 

provided to Indians under the contract shall be provided 

in a fair and uniform manner. 

SUBPART P REGULATION ADMINISTRATION 

ParticiPation and Presentation (900.1603) (3249) -- Under the 

proposed regulations, except for changes to OMB Circulars, 

regulations and other "codified directives• referenced in these 

regulations, the Secretary of the Interior and the Secretary of 

DHHS are to consult with, and solicit the participation of, Indian 

tribes and tribal organizations in developing amendments to these 

regulations at least 60 days prior to presenting the proposed 

amendment to the Congress. We view changes to OMB Circulars and 

other referenced regulations to be just as significant, if not 

more so, as regulation amendments. Such changes will normally be 

made to circulars and regulations by agencies having no experience 

in or authority over Indian matters with no consideration as to 

whether such modifications benefit or harm Indian tribes. Under 

the September 1990 Joint Draft, tribal contractors had the option 

of whether to be bound by changes to OMB Circulars once its 

contract was negotiated. Further protections were afforded tribes 

by having such changes reviewed by the Secretary and tribes in 

consultation. If it were found that the change was neither 

detrimental to tribes nor inconsistent with the Act, the Secretary 

would then amend the regulations to reflect the change. 

We recommend replacing the language of the proposed 

regulations with the compromise language included in the 1990 

Joint Draft. 

~ (900.1605) (3249) -- The revised language authorizes 

the Secretary to grant a waiver of "any Federal contracting law or 

regulation" as well as "a provision of these regulations" for good 

cause shown on the ground that the waiver is in the best interests 

of persons to be served under the contract. When deciding whether 

to grant a waiver request, the Secretary shall consider (1) 

whether there are unusual circumstances which make the law or 
198 

Ms. Betty .1. Penn 

July 29, 1994 

Pag~ 76 

regulation inappropriate for the contract; or {2) whether the 

waiver will alleviate •substantial hardship.• 

Neither agency, however, permits a contractor to appeal the 

denial of a waiver request, and waivers, when contained in a 

contract proposal, •may be considered separately from the proposal at the discretion of the Secretary. The declination criteria ... do not apply to such requests for waivers.• This means that the 

Secretary may decline a waiver request, even if granting it would not result in unsatisfactory services, inadequate protection of trust resources or prevent the completion of the services to be 

contracted. 

Under the proposed regulations, the initial decision on a waiver request is final for the Department and, unlike current regulations of the Interior Department, contain no time~frame by 

which a decision must be made. Tribes will, however, be notified 

of the reasons for the denial although no appeal rights are provided them. In our opinion, a regulatory waiver request 

included in a contract proposal may legally be declined only on the basis of one of the three statutory declination criteria 

{which under the third declination criterion would permit a refusal to decline if the regulation proposed to be waived is 

required by statutory law). Consequently, the proposed regulatory 

clause on waivers is contrary to law and should be revised to provide that waiver requests will be approved unless declined 

under the declination criteria. 

Recommended Reviaion: 

Delete the second and third sentences in 900.1605{a) and 

insert the following: 

For a •pecif'ic: contract or contract•, the secretary 

ahall, when requ.eate4 by a tribe or tribal orgaDization in 

a contract propoaal or a contract modification propoaal., 

waive a federal contracting law or regulation provided, 

however, that auch a requ.eat may be declined in the .....,..er 

aet forth in 900.207 and any auch declination ahall. be 

subject to appeal •• provided in Subpart B. In 

conaidering whether to decline a waiver requeat of a contracting l.aw on the ground atated in 900.207(b) (3) the 

Secretary ahall approve the xequeat in the abaence of a specific fin4ing that the application of the l.aw in 

qu.eation to the contract or contracta ia consiatent with 

the govexnment-to-govexnment relationahip between the 
199 

Ma. Betty J. Penn 

July 29, 1994 

Page ·n 

United States and the J:ndian tribes and with the findings 

and policies set forth in a actions 2 and 3 of the Act. 

Sincerely, 

At:t:achment:s 
200 

ATTACHMENT A 

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w••"'•NOTO,.., o.c. aooo• 

laoaJ 7'a3-ecoo 

l"EU:.CO~DII (ZOZ) aee-ea3.-

April 15, 1994 

MEMORANDUM 

TO: Tribal Clients 

FROM: 

RE: 

Hobbs, s;rau~-------- The Irrel~o et al 

and the Appointments Clause 

PORTLANO 01',.1C£,; 

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O#'COUNSEL. 

L.LOI:!It..A~AI'Y'AJI'IIS: 

~..I. "-IN~ 

CINDY o.uteY 

The discussion of contractibility in the proposed regulations 

at 59 Fed. Reg. 3168 suggests that the scope of contractibility is 

to be defined by reference to the Buckley y Yaleo, 424 U.S. 1 

(1975), line of cases, so that 'significant authority pursuant to 

the laws of the United States' may constitutionally be exercised 

only by Officers of the United States appointed pursuant to the 

Appointments Clause of the Constitution. Reference is made to 'a number of cases after ~· in which, it is said, the Supreme 

Court has upheld delegations only where the President 'retains 

sufficient control." 

Curiously, no effort is made to explain how these Supreme 

Court decisions bear upon any realistic hypothetical contracts 

that might be entered into under Public Law 93-638. In fact, 

these decisions have no conceivable bearing on contractibility. 

Every one of the cited decisions is concerned only with the 

separation and/or delegation of powers among the Executive, 

Legislative and Judicial branches. The issue in all of these 

cases was the extent to which Executive-type functions could be 

exercised by persons outside the Executive Branch when the person 

performing thgse functions is doing sq by yirtue of an appointment 

by some authority (e g Congress) gutside the Executiye Branch 

A good example of this is found in a recent decision by The 

U.S. District Court for Oregon in Confederated Tribes of Siletz 

Indians of Oregon y United States, Civ. No. 92-1621-BU (D. Or. 

Dec. 22, 1993). ~ involved § 2719(a) of IGRA which prohibits 
201 

Memorandum to Tribal Clients 

April 15, 1994 

Page 2 

gaming on off-reservation lands acquired in trust by DOI after 

October 17, 1988, and § 2719(b) (1) (A) which made the prohibition 

inapplicable under certain conditions. These conditions were a 

determination by the Secretary, after consultation with relevant 

interests, including State and local officials, that a gaming 

establishment on such land •would be in the best interest of the 

Indian tribe and its members, and would not be detrimental to the 

surrounding community, but only if the Governor of the State in 

which the gaming actiyity is to be conducted concurs in the 

Secretary's determination • (emphasis added). ~- at 8 (citing 

25 u.s.c. § 2719(a)). 

The District Court said the underlined language in the above 

quote violated the Appointments Clause "when it granted a state governor veto power over a discretionary determination made by an agency of the Executive Branch legislatively charged with making 

that determination.• ~- at 24. In reaching this decision the 

court observed that the Appointments Clause •specifically 

addresses separation of powers between Congress and the Executive 

Branch, • and that its •core concern is to ensure that executive 

power remains independent.• ~- at 18. These principles were 

violated when •congress, in effect unconstitutionally empowered 

the Governor to act as if she were an officer of the United States 

appropriately appointed by Congress to 'serve' pursuant to federal statute and to exercise significant authority over federal govern- ment actions through a congressional grant of power.• ~- at 17. 

Clearly, it is not the exercise of an executive function by 

an outsider that runs afoul of the Appointments Clause; it is the 

fact that the outsider was an agent of the Congress, not the 

Executive. If Congress had enacted a statute that simply authorized the Secretary to grant exceptions to the prohibition in 

§ 2719(a) in accordance with such rules as he might promulgate, 

and the Secretary promulgated a rule identical to the language in 

§ 2719(b) (1) (A) giving the Governor a veto over the Secretary's 

determination, this would not implicate the Appointments Clause 

because there would be no impingement on the separation of powers 

principle. 

The use of the ~ line of authority in the proposed 

regulations to limit the scope of contractibility flies in the 

face of long established and accepted authority and federal practice. The Atomic Energy Commission and its successors, including 

the Department of Energy, have from the beginning used management 

and operating contractors to run all phases, including construc- tion, of its national laboratories and other major facilities and 

programs. Similarly, it is a well-known fact that the mainstream 

of the space program is managed and operated by contractors. 
202 

Memorandum to Tribal Clients 

April 15, 1994 

Page 3 

In a 1969 article, we find an appendix setting forth an AEC 

"management contract document" of the kind then in use. The contract recites that the Government engages the contractor to 

manage, operate, and maintain the Government-owned facilities 

"in accordance with such directions and 

instructions not inconsistent with this contract which the Commission may deem necessary 

and give to the Contractor from time to time. 

In the absence of applicable directions and 

instructions, the Contractor will use its best 

judgment, skill, and care .... • 

Hiestand & Florsheim, The AEC Management Cgntract Cgncept, 29 Fed. 

Bar J. 67, 103 (1969). 

The responsibilities of the contractor explicitly include 

procurement "by subcontract [of] the construction of new 

facilities or the alteration or repair of Government-owned 

facilities.• ~at 103. 

Although the Government has the full power to supervise and 

control all aspects of the contractor's work, the principle underlying such contracts is that the contractor is expected to operate 

in a largely independent way so that the Government will have the 

full benefit of its managerial and technical expertise. 

In 1982, the Supreme Court, in United States y New Mexico/ 

455 U.S. 720 (1982) considered whether the intimacy of the contractual relationship between such contractors and the Government 

protected the contractors from State use taxes. The Court held 

unanimously that the contractors were required to pay the tax 

(although they would be reimbursed by the Government). Justice 

Blackmun wrote the Court's decision, noting that "[w]hile subject 

to the general direction of the Government, the contractors are 

vested with substantial autonomy in their operations and 

procurement practices.• ~- at 723. 

Nothing in the ~ line of cases has any relevance to the 

question of what functions the executive branch may contract out. 

Where an agency of the Executive Branch enters into a contract, 

the contractor performs its function for, and in effect as an 

extension of, the Executive Branch, and is subject to the control 

of the Executive Branch to the extent provided in the contract. 

Nothing in the cited decisions bars an agency of the 

Executive Branch from contracting with a private party to manage 
203 

Memorandum to Tribal Clients 

April 15, 1994 

Page 4 

the development or conduct of major Federal programs; from 

retaining private law firms to litigate on behalf of the United 

States; or operates as a bar to any P.L. 93-h18 contract that has a realistic subject matter. We are not aware ~- any instance 

(other than the present proposed regulations) in which the Buckley 

line of decisions has been cited as a basis for limiting the scope 

of executive agency contracting. 

Indeed, it is significant that in 1992, the Office of Management and Budget issued a Policy Letter (57 Fed. Reg. 45103) on inherently governmental functions to provide guidance to the dep~tments and agencies as to which functions are inherently 

governmental, i.e., must be performed only by government personnel; and which are contractible, but so closely support 

Government personnel in their performance of inherently Governmental functions that their terms and performance of the contracts 

require closer scrutiny and monitoring. It is particularly 

~ 

significant, that this Policy letter makes no reference to the 

line of cases or to the Appointments Clause. 

The OMB Policy letter clearly does not involve bright-line 

distinctions, but calls for review of the totality of the circumstances in each case to assess such factors as the role of the 

contractor in making decisions and the locus of the ultimate 

decision-making. The erroneous application of the~ principles produces arbitrary bright-line distinctions as to whether a particular function 'involves the exercise of significant authority pursuant to the laws of the United States.• The answer to 

this question can always be •yes• if the agency does not want to 

contract. 

In short, ~ and its prodigy are totally irrelevant and 

inapplicable to the question of contractibility under P.L. 93-638. 

Whether or not a particular function is contractible should be 

decided case-by-case on the basis of the totality of the circumstances, including particularly whether the P.L. 93-638 contract can be drafted in a manner that will adequately protect the 

Government's interest (such as its 'trust responsibility• to the 

Indians). The reliance by the agencies on the irrelevant Buqkley 

line of cases suggests that at least some of the officials of 

these agencies are seeking by any means, including grossly misleading interpretations of the law, to protect the Indian service 

bureaucracy against the federal policy of Indian selfdetermination. 
CAIIIOL.~~ftiC 

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204 

HOBBS, STRAUS, DEAN & WAL.KI!:R 

Wl.W Ofi'I"'IC:Ca 

1818 H STAEE'T. N.W .. SUITE •oo 

WAaHINOTON, D.C. liOOOa 

{20.2) 7a3•SIOO 

TEU:COPtER (302) aee-aa34 

April 14, 1994 

MEMOMNIJUM 

TO: Tribal Clients 

FROM: 

RE: 

Hobbs, Straus, Dean & Walker 

Indian Preference Proyisions -

Proposed Joint P L 638 Regulations 

ATTACHMENT B 

~llrri..AND Ot'I"ICE: 

~a.W.~:rnotCitT 

~~ 

... O 

...,........,.,. ... ~ 

~ ~- 0~ IOC:. ... D. FL) 

i(AIQHN SMITM, .Jilt I"'£) 

OlEAN .. SUAOEE !CCI 

.JAY W. UNOitAM.-.N (TX) 

C# COUNSEL. 

U:OISLJrt.TIVE Al'l'"lt.IAS: 

~N...LIFUNK 

CINDY OAACY 

Section 7(b) (1) of the Indian Self-Determination Act ("P.L. 

638") provides that any contract or grant, or sub-contract or subgrant, under that Act or any other federal act for the benefit of 

Indians must require a preference for training and employment of 

Indians to the greatest extent feasible. Section 7(b) (2) requires 

that preference in the award of such sub-contracts and sub-grants 

be given to Indian organizations and Indian-owned economic 

enterprises. The proposed joint regulations reflect a disagreement between the Department of the Interior ("DOI") and the 

Department of Health & Human Services ("HHS") as to whether the 

Indian preference must be without regard to tribal affiliation. 

The disagreement stems from the DOI solicitor's 1986 and 1992 

opinions that the Section 7(b) (1) and 7(b) (2) preferences, 

respectively, must be implemented without regard to tribal 

affiliation. 

I. HISTORY OF THE "TRIBAL AFFILIATION" LIMITATION: 

1964: Title VII of the Civil Rights Act of 1964 prohibits 

discriminatory employment practices, but exempts employers on or 

near an Indian reservation with respect to a publicly announced 

practice for giving employment preference to Indians living on or 

near a reservation. 42 U.S.C. Sec. 2004(e). 

1975 (January): P.L. 638 was enacted with Indian preference 
provisions in Section 7(b). 

205 

Memorandum to Tribal Clients 

April U, 1994 

Page 2 

1975 (November) : DOI promulgated 25 CFR 271-277 implementing 

Section 7(b) 's Indian preference requirements, but added a provision that "a tribal governing body may develop its own Indian 

preference requirements to the extent that such requirements are 

not inconsistent with ... [Section 7(b)] .• 

1976: On June 25, 1976, the Department of Labor ("DOL") 

published proposed amendments, which were adopted later in 1976, 

to 41 CFR adding a new Section 60-1.5(6) which for the first time 

introduced an Indian exemption from the Equal Employment Opportunity Contract Compliance regulations. In the discussion of the 

proposed amendment at 41 Fed. Reg. 26229, it was stated that the 

proposed amendment would parallel Section 703(i) of the 1964 Civil 

Rights Act, and that neither the Indian preference obligations of 

P.L. 93-638 contractors, nor the Indian preference provisions of 

25 CFR Parts 271-277, would be altered. However, language was 

added without explanation or comment that the preference "shall 

not ... discriminate among Indians on the basis of religion, sex, 

or tribal affiliation ... • 

1984 (April): DOI promulgated 48 CFR 1404.70 and 1452.204-70 

and 72 which require an Indian preference clause in certain DOI 

contracts, ~~in~ ila contracts, which clause includes 

the "tribal affiliation' language. In addition, however, 48 CFR 

1404.7005 authorizes supplementation of the clause by specific 

tribal preference requirements. The preamble to the Federal 

Regulations publication of the proposed rule at 44 Fed. Reg. 

62511-62512 (1979) states that no such tribal preference requirement, including one based on tribal affiliation may be inconsistent with the intent of P.L. 638 or hinder the government's right 

to award or administer contracts. 

1988 (May 16) : The EEOC issued a Policy Statement signed by 

its chairman, Clarence Thomas, on Indian Preference Under Title 

VII of the Civil Rights Act (8 BNA Labor Rel. Rep. (Fair Employ- ment Practices Manual) 405:6647, at 6653-54. One aspect considered was that of "Tribal Affiliation." The Statement referred 

to Section 7(b) of P.L. 638 and to the regulations in 48 CFR 

"issued by the Department of Interior governing the implementation 

of Section 7(b) ." It also referred to the regulations issued by 

the Office of Federal Contract Compliance of the DOL at 41 CFR 

Section 60-1.586 which prohibited preferences that discriminated 

on the basis of tribal affiliation. The EEOC stated that "although Title 7 is silent in this regard, the Commission considers 
200 

Memorandum to Tribal Clients 

April 14, 1994 

Page 3 

the prohibition expressed in these regulations to best serve the 

purposes intended by Section 703(i)' of the Civil Rights Act. In 

EEOC's view, Congress intended in enacting Section 703(i) to 

encourage the extension of employment opportunities to Indians 

generally without allowing discrimination among Indians of 

different tribes. 

The Statement notes that there may be de facto discrimdnation 

in favor of members of a particular tribe who live on or near the 

particular reservation on which an employer affording the preference operates. It notes Chat under such circumstances the 

preference may operate to favor members of that tribe without 

disadvantaging members of other tribes who do not live on or near that reservation. Nevertheless, the bottom line of the Policy 

Statement is that extension of employment preference on the basis 

of tribal affiliation is in conflict with Section 703(i). 

A passage at the end of the Statement 'emphasizes that only 

'employers' within the meaning of Title VII are affected by the 

Commission's position, and that since tribes are exempt under 

Title VII, preferences based on tribal affiliation under the 

employment practices of an Indian tribe do not violate the Act.• 

Thus, under the EEOC Statement, when a tribe itself is the P.L. 

638 contractor, its preferences for its own members would not 

violate Title VII. 

II. THE BACKGROUND OF THE DQI POSITIQN 

In an opinion, dated July 21, 1986, the Associate Solicitor, 

Indian Affairs, considered a question raised by Peabody Coal Company as to whether a Navajo ordinance requiring employers to give 

preference to Navajos, rather than to Indians generally, violated 

Title VII of the Civil Rights Act. The Associate Solicitor did 

not really answer this question, since Peabody had also put the 

question to the Equal Employment Opportunity Commission which had 

lead responsibility for interpretation of.Title VII. The Associate Solicitor deferred to EEOC, which apparently got rid of this 

question without any published ruling. 

The opinion of the Associate Solicitor does, however, make 

clear his view that it is unlawful to take tribal affiliation into 

account for purposes of implementing Indian preference. This is 

accomplished largely by reference to the applicability of the 

Navajo ordinance to federal contractors. Referring to the Indian 

preference provisions of P.L. 93-638, the Associate Solicitor dis-
207 

Memorandum to Tribal Clients 

April l4, 1994 

Page 4 

cussed the DOL regulations at 41 CFR Part 60-1 under the equal 

opportunity contract compliance program (E.O. 11246) administered 

by DOL. As discussed above. these regulations required an equal 

employment opportunity clause in government contracts, but provided an exemption essentially identical to that in Title VII, ~. except that it also included a provision barring discrimination among Indians •on the basis of religion, sex. or tribal 

affiliation.• 41 CFR 60-1.5(6). The Associate Solicitor's opinion 

concluded that •federal contractors would violate this provision 

if they granted employment preference to Navajos and not to other 

Indians.• 

The Associate Solicitor then went on to say that P.L. 93-638 

contains Indian preference provisions, and that DOI • implementing 

provisions at 48 CFR Subpart 1404.70 Sections 1452.204-71, (sic) 

1452.204.72 require the insertion of an Indian preference clause in~ Interior Department contracts (emphasis added) .• 1 The 

supposedly required clause is quoted and includes the •regardless 

of ... tribal affiliation• language. The Associate Solicitor then 

recognizes the fact that 48 CFR 1494.7006 authorizes the federal 

Indian preferences to be supplemented by specific Indian preference requirements of the tribe on whose reservation the con- tract is to be performed. To protect his view as to the unlawfulness of tribal affiliation preferences, however, the Associate 

Solicitor claims that the preambular discussion in the Federal 

Register publication of the final version of the regulations (44 

Fed. Reg. 62511-12 (1979) "makes it clear that this provision is 

not intended to authorize a tribe to impose a .•. preference based on tribal affiliation which is inconsistent with the federal 

regulations. • 2 ' 

By letter of October 18, 1992, the Associate Solicitor res- ponded to a request by a Department of Education attorney for 

DOI'S position on the permissibility of tribal preference rel Tile regulations in 48 CFR can not now be reqarde<i as ilnplementing P.L. 93-038 for the s~l• reason that the provisions ~ 48 CFR ar• 

expliciely inapplicable to P.L. 93-638 contracts (except in tile limited 

case of construction contracts and# even in that case, the Secretary may 

waive any FAR provision inappropriate or inconsistent wieh P.L. 93-638). 

~ 

2 We find no such reference to •federal regulations• in the cited~ 

material. The ~ ~ matarial does :t'efer to the 

requirement for consistency witll Section 7 (bl of P.L. 638 (even though the r~lations in 4S CFR are inapplicable to P.L. 638 contracts}. 
208 

Memorandum to Tribal Client:s 

April 14, 1994 

Paqa 5 

quirements with respect to Section 7(b) {2) of P.L. 93-638. She 

referred to the three provisions in 48 CFR referred to above as "implementing regulations• l requiring insertion of an Indian 

preference clause which is quoted in part, and which includes the 

•regardless of ... tribal affiliation• language. However, a 

footnote in her letter states that the so-called implementing 

regulations under 48 CFR chapter 14 are inapplicable to P.L. 93-

638 contracts and solicitations. 

The footnote then mentions that DOI regulations for P.L. 93-

638 contracts are to be found in 25 CFR Section 271.44. 41 CFR 

Section 14H-70.608, and 41 CFR Sec. 14H-70.6l0 {none of which. 

incidentally, includes the •tribal affiliation• language). 

Weirdly, the next sentence in the footnote observes that the 

Associate Solicitor's conclusions with respect to preferences 

based on tribal affiliation •with respect to regulations under 48 

CFR Chapter 14 [which, it will be recalled, are inapplicable to P.L. 638 con-tracts] also apply to the r~~lations'under 25 CFR 

Sec. 271.44 ~~d 41 CFR Part 14H-70" [which, as noted in the first sentence of this paragraph, do apply to P.L. 93-638 contracts but 

do not contain the •tribal affiliation• language]. 

Finally, it is stated that it would be inconsistent for preferences based on tribal affiliation to be prohibited for purposes 

of section 7(b) (1) and permitted for purposes of Section 7(b) (2). 

The prohibition for purposes of Section 7(bl (1) is said to be 

based on the July 21. 1986 letter's determination that the DOI 

regulations in 48 CFR prohibit preferences based on tribal affiliation for purposes of Section 7(b) (1). This is remarkable in view 

of the footnote statement in the letter that the regulations in 48 

CFR do not apply at all to P.L. 638 contracts. 

III. ANA,LYSIS OF THE SIQN!FIGANCE OF TRIEAL AFFILIATION IN 

THE APPLICATION OF SEGTION 7\bl 

The Section 703(i) exemption from Title VII of the 1964 Civil 

Rights Act of publicly announced preference for hiring Indians 

living on or near a reservation by employers on or near the 

reservation was the only Indian preference law for more than a decade, (other than 25 U.S.C. § 47 an old law applicable to the 

Interior Department) and there was no limitation relating to tribal affiliation. When L~acted in 1975, P.L. 93-638 included an 

3 See note 1, ~ 
209 

llfllllorandulll to 'l'rib&l Clients 

April l4, 1994 

Page 6 

explicit Indian preference prov1s1on, without any hint that 

preferences basad on tribal affiliation would be ba=ed. Indeed, 

in November of 1975, the Interior Department issued regulations 

that ~ llJ.iA implemented Section 7(bl of P.L. 93-638, and added an explicit clause permitting tribes to supplement the Section 

7 (bl preference with their own Indian preference requirements (25 

C.F.R. §§ 271-277). It is difficult to conclude that the principal purpose of such supplementation would be anything other than 

a tribal preference, within the Indian preference, for members of 

the particular tribe or persons living on or near the reservation. 

Prior to 1976, the Department of Labor regulations implementing the executive orders barring discrimination, and requiring 

affirmative action, in government contracts and subcontracts did 

not contain any exemption for Indians. Such an exemption was introduced into the DOL regulations in 1976 with the addition of a new provision, 41 C.F.R. § 60-1.5(6). When notice of this proposed addition was published in the Federal Register the Department of Labor characterized it as being parallel to that in Section 703(1) of the Civil Rights Act, and asserted that neither the 

Indian preference obligations of P.L. 93-638 contractors, nor the 

OOI regulations implementing that Public Law would be altered. 

This suggests that the Labor Department believed that this new provision with respect to Indian preference would not be 

applicable to P.L. 93-638 contractors. This hypothesis is 

supported by the fact that some 17 years after the DOL provision on 'tribal affiliation• was added, the Interior Department has 

still not modified its Part 25 regulations implementing P.L. 93-

638 to add similar language. 

Indeed, the fact that Interior promulgated regulations in 

1984 requiring Indian preference clauses, including the •tribal 

affiliation• language, in contracts other than those under ~.L. 

93-638, {48 CFR §§ 1404.70 and 72) suggests that Interior itself 

believed the 'tribal affiliation• language would be inconsistent 

with the intent of P.L. 93-638. On the other hand, the Associate 

Solicitor used these provisions in the 1992 opinion to "bootstrap' its way to a conclusion that a P.L. 93-638 contractor's preference 

based on tribal affiliation would be in violation of law. 

Similarly, the 1992 EEOC Policy Statement 'bootstraps' on the 

basis of these provisions and those in 41 C.F.R. § 60-1.586 

The EEOC sees in the •tribal affiliation• prohibitions of 48 

CFR §§ 1404.7000, ~ ~- and 1452.204-71 and 72 provisions that 

'best serve• the purposes of Section 703{i) of the Civil Rights 

Act, i.e., extending employment opportunities to Indians generally 
210 

M~randum to Tribal Clients 

April 14, 1994 

Paqa 7 

without allowing discrimination among Indians of different tribes. 

But the real issue is not the surmised purposes of the Civil 

Rights Act of 1964; it is the purposes of P.L. 93-638, and the answer on this seems much more obvious. 

It is probably correct to say that one of the purposes of 

Section 713(i) of the Civil Rights Act was to help Indians 

generally without allowing discrimination among Indians of 

different tribes. but the purpose of P.L. 93-638 was to give 

greater opportunities for self-government to ~ generally, 

than existed under prior law.' Tribes were to be freed from 'the 

prolonged Federal domination of Indian service programs' which, 

according to section 2(ai of P.L. 93-638 'has served to retard 

rather than enhance the progress of Indian people.• Indians 

through their tribal governments were to he given 'an effective 

voice in the planning and implementation of programs for the 

benefit of Indians which are responsive to the true needs of 

Indian co~~ities.• Congress further found that 'the Indian 

people will never surrender their desire to control their relationships both among themselves and with non-Indian governments, 

organizations and persons.• 

Opportunities for Indians under P.L. 93-638 were derivative 

from those afforded their tribes. It is clear that Indian selfdetermination was linked with economic development of tribal 

lands, which in turn would •create jobs and support businesses on Indian lands.• s. Rep. No. 100-274 (1988). It was contemplated 

that self-determination contracts would result in jobs for members 

of the contracting tribe, which i~ of course, consistent with 

giving employment preferences for members of that tribe. This 

would appear to be the case regardless of whether the tribe itself were the contractor or an instrumentality of the tribe, i.e., a 

•tribal organization,• were the vehicle. 

!n short, the question is whether the allowability of pre4 The Senate Committee on Indian Affairs stated in its report on the 

legislation enacted in 1988 to amand ehe original P.L. 638: 

The change in the statement of policy (in Section 1021 is intended 

to ... emph4size Che need for th~ Federal government to recognize 

the diversity of individual Indian tribes. It is also intended to 

emphasize the need for the Federal government to consider tribal 

needs on A tribe-by-tribe basis. and to move beyond the tendency 

to develop •generic policies applicable to all tribes regardless 

of needs or conditions ... • s. Rep. No. 100-274 (1988) 16. 
211 

MemorandUIIl to Tribal Clients 

April 14, 1994 

Page 9 

ferences, based on tribal affiliation, should be determined by the 

Indians themselves through their recognized tribal governments, or whether the agencies, without a single word of support in the 

language of section 7(b) itself, may decide that question by 

federal fiat. If the agencies heed the clear purposes and intent 

of P.L. 93-638, there can be only one answer -- Tribes should 

decide. 

Obviously, this interpretation is completely consistent with 

'Indian preference, • and it provides a natural, effortless reading 

of the statutory provision. The Indian preference is completely 

intact, although there may be a first preference to members of the 

contracting tribe. Giving the contracting tribe the right to provide a first preference to its own members can hardly be said to violate Indian preference. At the very most, it might be said, as 

EEOC suggested in its Policy Statement, to produce some discrimination among Indians of different tribes, but this type of minor 

discrimination seems to be contemplated by ?.L. 93-638, at least 

when it is mandated by tribal government. The DOI interpretation 

in the proposed joint regulations may make sense with respect to contracts other than those under P.L. 93-638. With respect to P.L. 

93-638 contracts, however, it represents a strained reading that 

(1) does not rest on any kind of logical or intellectual footing, 

{2) operates at cross-purposes with the statute, (3) has never been justified by DOI, DOL, or EEOC in any reasoned manner, and 

(4) is contradicted by DOI's own regulations authorizing tribal 

preferences. 

In short our conclusion that a P.L. 93-638 contractor's 

preference. for m~ers of its own tribe, or residents on or near the reservation, is neither inappropriate nor unlawful so long as a second preference is given to Indians generally. This 

conclusion is supported by the commentary in Felix S. Cohen's 

Handbook Qf ~ ~ ~ which asserts at page 672 that 

federal civil rights statutes 'should not extend to tribes 

discrLffiinatinq between their members and others' (citing ~ ~ 

District 

~ 

~. 424 U.S. 382 (1976) and Slattery ~ Arapapge ~. 453 F.2d 278 (lOth Cir. 1971). 

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