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Tribes Must Pull Together to Protect Indian Self-Determination

Indian self-determination is the most enlightened Indian policy the United States has ever had. Yet it is still plagued by funding problems and existential issues.

The Supreme Court’s decision in Salazar v. Ramah Navajo Chapter highlighted the precariousness of the entire policy by listing the various ways Congress could change and even abolish it.

The ink was still wet on the Supreme Court’s ruling when the BIA and the IHS proposed a way around it. The Ramah decision rested on a fundamental principle of federal contracting law called the Ferris rule: any federal contractor that performs its end of the contract must be paid in full if the appropriated funds were sufficient to pay that contractor, even if appropriations had all been used for other purposes, unless a specific provision in the contract said otherwise. What did your trustee do?

The Administration proposed to Congress that, for FY 2014, each Tribe or tribal organization with a contract or compact under the Indian Self-Determination Act would be named in the appropriations bill, with an exact dollar amount limiting what it could be paid. By this simple means, the agencies tried to skirt the Ferris Doctrine. Fortunately, Congress rejected this ploy out of hand, largely because of the loud protests from Indian country. But the plan could be revived for future years.

Contract support costs are the engine oil of Indian self-determination. Without enough oil, the machine sputters and eventually stops. Contract support costs enable contractors to pay overhead costs. No organization can function without covering its overhead.

In later years, appropriations for this vital funding element have grown closer to nationwide need, particularly on the BIA side, but there has never been enough and distribution of the appropriated contract support cost funding has often been spotty.

Congress has commanded the BIA and the IHS to come up with a plan for the future, after first consulting with the Tribes.

So what's to be done?

Above all, Congress must reassert the fundamental principle of program parity: Tribes should be free to contract but not be forced to contract and a Tribe’s decision whether to contract should not be influenced by the level of services to its members one way or the other.

In 1970, President Nixon told Congress he would submit a bill to end the dismal Termination Era and replace it with a policy which would reaffirm Federal trust obligations to Indian Tribes while giving them the right to operate their own Federal services by contract.

He emphasized the fundamental principle: The choice to contract or not contract was to be free of worry that levels of program services would be affected by the decision.

No tribe would risk economic disadvantage from managing its own programs; under the proposed legislation, locally-administered programs would be funded on equal terms with similar services still administered by Federal authorities. . .

Thus, Nixon made PARITY OF PROGRAM DELIVERY the foundational guiding principle of his new policy. But there was a hitch.

Originally, the Indian Self-Determination Act required that the BIA and IHS turn over to the Tribes only the money that they would have spent to operate the same programs. No mention was made of overhead costs. To its credit, the BIA quickly realized that what the BIA and IHS spent would not provide the full amount needed to keep contracted programs in parity with those provided directly by the agencies. It therefore created an administrative budget category called “contract support costs.” In 1978, James McIntyre, the Director of the federal Office of Management and Budget supported the policy. He wrote then-Secretary of the Interior Cyrus B. Andrus:

We believe that the Department, through the proper management of its existing resources, can and should provide to the tribal contractors the full amount of contract support costs which are rightly due them. Therefore, we expect that Bureau’s own overhead costs to decrease as the overall level of Self-Determination Act contracting increases

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That did not happen. Contract support costs were provided to tribal contractors only by administrative policy and not as a statutory right. Tribes complained that the contract support costs they received were insufficient. In 1988, after 13 years of controversy, Congress made contract support costs a statutory right and gave Tribes the same rights to sue available to other federal contractors. In 1994, Congress beefed up these protections.

But a poison pill had been inserted in 1988. Someone, we don’t know who, planted a proviso into the amendments to the Indian Self-Determination Act just before they hit the floor of Congress. No hearings were held on the proviso. Later, some courts held this proviso trumped everything else in the Act, giving the BIA and IHS the power to withhold payments to contracting Tribes in order to protect services to Tribes that the agencies served directly. This undermined the principal of parity; whenever appropriations were insufficient, the programs run by the agencies would always be better funded than the programs run by Tribes under self-determination contracts. Capped appropriations for contract support costs followed in FY 1994 and so started the war over caps.

 It took until 2012 for the courts to sort out the law created by that combination of the ambiguous 1988 proviso and caps on contract support costs appropriations. But Tribes still face the threat that the agencies may once again try to gut the Indian Self-Determination Act.

So now we come to the heart of the problem: the never-ending turf war between the agencies’ infrastructures and Indian Tribes over control of Indian monies, lives, and property.

 To justify their existence, these agencies have promoted contract monitoring and micro-oversight to maintain domination. At the same time they have resisted a full accounting of their own budgets. For years they have been telling Congress that contract support costs are too expensive. Yet they have never submitted to a systematic economic and financial evaluation of their own programs. There are savings when programs are contracted out. But they only look at the tribal cost side while maintaining the secrecy of their own in-house budgets and the savings realized when they no longer operate the programs. When the BIA and IHS hand over control of a program to a tribal contractor, their own overhead costs are reduced. What’s more, other federal agencies—for example, the General Services Administration, the Office of Personnel Management, and the Department of Justice—no longer must provide the same level of services to the BIA and the IHS, so their costs are also reduced.

The principle of parity has become obscured by the smog of bureaucratic rhetoric and the intimate familiarity of the BIA and the IHS with the levers of Congress. Despite a significant Supreme Court victory, the self-determination engine continues to wheeze.

Until the turf war between Indian Tribes and the trustee agencies is decisively ended in the Tribes’ favor, the Nixon promise will never be fully realized. The true irony is that Congress is paying for both sides.

Finally Indian country is waking up. In February, the Great Plains Tribal Chairman’s Association called for expedited settlement of past-due contract support claims under the Salazar v. Ramah decision. It asked “the Administration to drop all proposals to sidestep the Ferris rule” and “working together, Interior and HHS and Tribes . . . [to] develop a solution . . . fully and fairly fund(ing) contract support costs by absorbing the costs at the department level rather than looking to BIA and IHS alone.”

And in March, the NCAI urged full funding of contract support costs, with consultation, swifter settlement and supporting parity of opportunity between contracted (and) non-contracted program delivery” and asked “the Administration to dramatically speed up the settlement negotiations with the Ramah Class” and to “develop a rapid and equitable system for resolving past claims brought by individual Tribal contractors of the Indian Health Service.”

Every Tribe and every tribal organization should support these powerful voices. Nearly every Tribe in the Nation has at least one contract or compact under the Indian Self-Determination Act. Tribes that also receive services directly from the BIA or IHS should recognize they are losing an intangible but very basic right – the right to decide whether to exercise greater self-government without risk to basic services. Full funding of contract support costs is the key to freely exercising that option and their submission to agency operation is depriving themselves of its full flower.

Now is the time to organize, unite around the parity principle, protect and extend self-determination and realize the dream of confident, stable self-governments free of the shackles of distant Federal infrastructures whose institutional aim, like all institutions, is first and foremost their own preservation.


Among positive ideas to meet Congress’ call for a permanent solution already circulating among Tribes and their legal counsel are these:

  1. Remove the proviso in 25 U.S. C. § 450j-1(b);
  2. Require an annual accounting by the Indian service agencies of all major categories of their budgets including inherent federal functions; the agencies’ true overhead costs of running direct services to Indian tribes; and the savings to the agencies and to other agencies of the Federal government when services are contracted out to Indian tribes.
  3. Insert a provision allowing tribal contractors and compactors to reimburse their indirect costs at full indirect cost rate levels from all other Federal agencies which they have received, notwithstanding any restrictions in such grants;
  4. Create a separate permanent and indefinite appropriation to cover all contract support costs of Indian Self-Determination contractors; and
  5. Introduce forward funding and two year budgets for all self-determination contracting.

All of these proposals assume that capped appropriations for contract support costs will never reappear and that the agencies’ budgets will be constrained by the annual accountings. Other ideas may be forthcoming as Indian country begins systematic discussion of this issue.

Michael P. Gross is an attorney in Santa Fe, New Mexico. He is lead class counsel in the Ramah Class Action. Daniel H. Macmeekin assisted in editing.