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New Congressional Budget Reimburses Tribal Contract Support Costs

The Democratic Senate and Republican House have ordered full payment of contract support costs under their new budget plan.

Despite an effort by the White House Office of Management and Budget to cap the payment of contract support cost (CSC) reimbursements to tribes, the Democratic Senate and Republican House have ordered full payment under their new budget plan.

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Tribal leaders and advocates are widely celebrating the budget arrangement, announced this week by congressional negotiators, which will reimburse tribes money that they are forced to spend in 2014 on contractors to deliver health services to their tribal citizens.

The new budget calls for tribal contractors to be treated the same way as any other government contractor—that is, they will get reimbursed for work that they perform. Until 1999, that’s how the tribal CSC system worked as well, but at that time the Indian Health Service (IHS) instituted policies that allowed the agency to avoid responsibility for paying tribal CSC claims. Over that time, tribes have racked up hundreds of millions of dollars in claims that they say were necessary to aid the health of tribal citizens. Recent Supreme Court decisions have found that the U.S. government is responsible for paying those claims.

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Going forward under the new budget, federal agencies, including IHS, will not be able to ignore tribal CSC claims. The agencies must find money in their budgets to pay the claims. If more money is needed than the agencies can find, they will be forced to ask Congress for supplemental funds. If the contracts are not honored, contractors will be able to file lawsuits in order to be paid.

IHS leaders have long argued that their budgets are stretched thin, which is one reason they say CSC payments have not taken a priority.

For much of 2013 the Obama administration attempted to avoid paying full CSC as part of the federal budget, insisting that the amounts owed to tribes should be capped. But 70 tribal leaders and many Democratic and Republican lawmakers said the administration’s policy amounted to a subversion of federal-Indian treaties and law, while ignoring recent Supreme Court decisions that said full reimbursement was necessary.

“The congressional budget agreement is a wholesale rejection of this administration’s and past administrations’ flawed approaches to contract support costs,” said Lloyd Miller, an Indian affairs lawyer with Sonosky Chambers involved in several tribal contract support disputes with the federal government. “This agreement requires the federal government to reimburse Indian contracts just as it would pay any other contracts. And it rejects the midnight effort by this administration to cheat tribes out of services they render to the United States.”

President Barack Obama, during a tribal summit with tribal leaders in Washington last November, said he was aware of their concerns about his White House’s attempt to cap CSC, but he did not say then how he planned to address the problem.

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Miller said the new budget deal will force the White House to think seriously about respecting tribal contracting authority in all of its future policy and budget proposals. “They are dealing with a Senate and House that think paying for full CSC is important, so that will play into their considerations,” Miller said.

Sen. Lisa Murkowski (R-Alaska), who has many Alaska Native constituents who raised this issue with her, played a lead role in getting her colleagues in the Senate to avoid the White House cap proposal. A spokesman for the senator said that because the budget comes in the form of an annual funding bill, this budget only removes the proposed White House caps for 2014, but it does create a precedent for adhering to the law and respecting the federal trust responsibility to tribes.

The hundreds of millions of dollars in back contract claims that tribes say they are owed were not addressed under the new budget. IHS leaders have testified before Congress that only 16 of approximately 1,600 past claims were settled as of last summer.

IHS officials have taken the position that tribes should only be reimbursed costs tribes incurred for running contracts, but tribes are widely saying that they should be paid money they never received, but that they should have received—not just the costs they incurred. The difference is a matter of hundreds of millions of dollars, according to Miller.

“Tribes that are in desperate need of funds, due to the effects of delayed federal budgets, sequestration, and other issues not of their own doing may be compelled to go along with lowball settlements that do not properly compensate them,” Miller said.

Tribes have requested hearings with the House Subcommittee on Indian and Alaska Native Affairs and the Senate Committee on Indian Affairs in an effort to help the administration come up with a plan for reimbursing these past due payments on agreeable terms.