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Tribal Contractors Shortchanged

Heavy indictment leveled against federal contracting regime

WASHINGTON - Alone among the many organizations that work under contract to
the federal government, tribes must play a guessing game as to what they'll
get paid for the work they've performed. They sign a contract to provide
government services to their people with federal funds, yet the federal
budgeting process is such that when the indirect cost funding runs out,
tribes must meet them with direct cost funding - meaning direct cost
program services will not be provided, or will be provided but not paid for
by the government.

Among the words used to describe the arrangement at an April 28 hearing of
the Senate Committee on Indian Affairs on S. 2172, the Tribal Contract
Support Cost Technical Amendments of 2004, were "discriminatory," "unfair,"
"unthinkable," "illegal" and "unconstitutional."

Witnesses for the Interior Department and Indian Health Service, which
oversee most of the contracts under discussion, were quick to point out
that S. 2172 proposes quite a lot more than technical amendments. "Section
3 attempts to make contract support costs similar to an entitlement by
eliminating all references within the [Indian Self-Determination and
Education Assistance] Act that make payment of funds 'subject to the
availability of appropriations,'" testified William Sinclair, director of
the Office of Self-Governance and Self-Determination within the Interior

"Implementation of this provision would make the department vulnerable to
costly and time-consuming litigation as we could not fully fund all
contracted and compacted [tribal] programs, and their related contract
support costs without significantly affecting other equally important
federal programs."

Similarly, the Indian Health Service refused to support the bill.

But Indian country was just as quick to say some dislocation is worth it if
it would reform, or abolish, the current contract support cost payment
practices of the federal government. "The current system simply should not
go on any longer," said Chad Smith, principal chief of the Cherokee Nation
in Tahlequah, Okla. The nation is party to a consolidated lawsuit over
contract support cost that has reached the U.S. Supreme Court.

Sen. Ben Nighthorse Campbell, the bill's sponsor and the committee
chairman, gave a bit of a tongue-lashing to the agency representatives,
Sinclair in particular. The Colorado Republican will retire at the end of
the current 108th Congress, but he served notice that he's not through
advocating for Indians.

"What is the answer?" to fair treatment of tribes in the payment of
contract support costs, he asked Sinclair, if it's not S. 2172. He went on
to voice his frustration with official Washington, filled with supposed
Indian sympathizers who are "scared to death of anything that will benefit
Indians." Faced with proposals that would do so, they "dissect it 17
different ways and ... come in and oppose the bill."

Later in the hearing he observed that people in Washington who "want to
take away what's left" for Indians outnumber those who would assist with
tribal self-determination, adding, "We don't need more people up here with
expertise, we need more people with good heart ... They need to read the
good book more than the law books."

The law, properly construed, does provide strong support for fair payment
to tribes of federal contract support costs, according to two witnesses.
Herbert Fenster, a contract law attorney with the Denver firm of McKenna,
Long and Aldridge LLP, said government contracts must be fully funded at
the time they are awarded. But with Indian contracts, to the contrary, "It
would seem that the government, after awarding these contracts, assumes
that it can adjust the amount of money it will pay for the performance of
the work covered by the contract. The premise is that, if the government
determines that the amounts in its accounts at the [national] Treasury are
inadequate, it can simply pay less than the indirect costs incurred even
though the contract otherwise requires such payment. This notion is
directly contrary to law...

"... In other words, it is legally impermissible for a government agency to
award a contract in the first place and later determine that it lacks
adequate funds to pay for the contract work." Fenster said the Office of
Management and Budget circular that governs indirect cost payment in
federal Indian contracts intends "that such costs are to be paid in the
same manner as in any other government contract."

Another attorney, Lloyd Miller of Washington-based Sonosky, Chambers,
Sachse, Endreson & Perry, said government practices in tribal contract
support costs relegate tribal contractors to "second-class status, somehow
with fewer rights than Boeing or General Electric..."

He called those practices "unconstitutional" because the Constitution
requires that no funds be taken from the Treasury except as appropriated by
Congress - the "power of the purse" belongs to Congress. The executive
branch, so the courts long ago decided, cannot "augment" appropriated funds
outside the appropriations process by shifting indirect costs onto tribes,
Miller explained. This is what happens, he implied, when executive budget
requests to Congress knowingly shortchange tribal contractors on indirect

W. Ron Allen, chairman of the Jamestown S'Klallam Tribe, testified for the
National Congress of American Indians. He described the ritual shell game
of tribal federal contracting, in which the executive branch claims it
can't fully fund indirect costs for Indian contracts (as it does for
virtually all other federal contractors - it's an expected expense, not
special treatment) because the agencies that administer the contracts don't
request adequate funding for such costs in their submitted budgets. The
agencies in turn say the executive has signaled them it won't honor an
adequate funding request anyway. And once the agencies submit a budget, the
executive doesn't correct the shortfall in indirect costs for tribal

"We're not the problem," Allen said of tribes.

Campbell again gave vent to his frustration, noting that Indians, few in
number, must become more politically engaged if they are going to get basic
fair treatment from a Congress beholden to much larger population groups.

"Very frankly, I hope the Indian people will register their displeasure
this November."

Allen concluded the hearing with an assurance that Native people will be
involved in the November election as never before.

After the hearing, Campbell clarified that he's not suggesting Indians
necessarily vote Democrat in the presidential elections. Indians have
friends on both sides of the aisle, he said. It's not a question of party
politics, but of the positions candidates take on Indian-specific issues.
"This place yields to pressure."