Statement of S. Bobo Dean 93-638 contract. These provisions in the April 3 draft should be retained. It is equally clear that failure by the Bureau or the IHS to approve a modification providing funds for a subsequent year of a multi-year contract is subject to appeal and a tribal right to a hearing just as in the case of a refusal to approve an initial contract proposal. The April 3 draft makes this clear by making declination to amend an award subject to declination appeal procedures, as well as a declination to make an award. This language should be retained. Regulations pertaining to contract modifications should reflect that bilateral modifications do not require a resolution of the tribal governing bodies served unless such action is required by the tribal resolutions requesting the initial contract. The present draft does not recognize that a tribal resolution may limit the authority of the tribal organization which operates a program. The IHS also wishes to weaken the statutory time frame in which to award a contract under the Act. The IHS would provide in regulations that a contract which was not declined on the 60th day is deemed approved on the 90th day "to the extent the proposal conforms to the law and regulations" and would delete language which would allow the Indian tribe to incur contract costs from the 31st day after approval of the contract. We urge that the April 3 language providing that the contract shall be deemed approved on the 90th day (or the 120th day if the tribe grants an extension) be retained. Program Standards. Another controversial issue in the regulation drafting process has been the question of program quality assurance, program standards and data requirements contained in the program management subpart of the draft. The reason for this controversy is that this section goes to the heart of the contracting debate; namely, how much authority are the Federal agencies willing to relinquish to Indian tribes and tribal organizations which contract under the Act. It is a question of who will ultimately exercise control over the lives of Indian people. The Act and P.L. 100-472 answer this question in favor of the Indian people themselves. In the area of program quality the IHS and tribal representatives reached à compromise on the issue of tribally developed standards and data requirements. The IHS still has Statement of S. Bobo Dean some reservations but has recognized the right of Indian tribes to develop their own standards which must then be reviewed and approved by the agency. The Bureau is still reviewing this provision and has yet to comment. Its representatives have suggested that for some Bureau-funded programs there must be specific mandatory program requirements. While this may be so in some instances (i.e., proper training for police officers carrying firearms) such requirements should be minimums which are clearly stated in regulations to assure fairness to all tribes and to deter the agencies from imposing detailed requirements as to program content which would inhibit innovation and the tailoring of programs to meet tribal needs. Contract Monitoring. In the area of contract monitoring and contract modification, the Bureau has yet to embrace the intent of Congress to transfer the responsibility for the planning, operation and implementation of Federal programs from the Federal agencies to the Indian people themselves. The Bureau appears reluctant to decrease the Federal contract monitoring bureaucracy which has replaced the Federal service bureaucracy. This is illustrated by the Bureau's desire for a provision giving the BIA discretion to increase contract monitoring and reporting based on "reasonable cause." The monitoring and reporting reasonably required should be specified in the regulations to prevent harassment of tribal contractors. Property Management. We support the Bureau's conclusion in the property management subpart of the draft that the agencies have the legal authority to transfer title to excess real property of the Federal government to tribal contractors. Unfortunately, however, the IHS does not share this opinion. We urge this Committee to encourage the IHS to follow the Bureau's lead in this instance. We fail to understand why the two agencies take opposite positions. Personnel Quarters Management Closely related to the issue of real property management is the management of housing for employees. Statement of S. Bobo Dean One of our clients, the Bristol Bay Area Health Corporation, has objected to IHS that federal rent-setting procedures have caused unreasonably low rental rates for government quarters since the rates are pegged to the urban Anchorage market, rather than to the rural, isolated Dillingham community near the Kanakanak hospital where the quarters are located. The BBAHC Board has decided to establish reasonable rental rates based on the rents charged in the adjacent Dillingham community rather than continuing to be bound by the IHS determination under OMB Circular A-45 to charge much lower rentals based on the Anchorage market. BBAHC's desire to increase rents complies with the command of federal law and OMB Circular A-45 that rents be set at the reasonable value of the quarters and not be set so as to provide a housing subsidy. We are concerned that IHS may attempt to cancel the BBAHC contract unless the Board backs down, and we urge that this Committee contact IHS and the Office of Management and Budget in support of BBAHC on this matter. The IHS is also unwilling to allow tribal contractors which are responsible for the operation and maintenance of government rental quarters to retain rental receipts. The IHS has insisted that such receipts must be paid over to the IHS to be placed in a central fund with no guarantee that the facility will receive operation and maintenance funding at a level equal to the rental receipts submitted or the level of funding required for adequate maintenance. In the consultation process, BIA concluded that it has legal authority to permit contractors to retain rental proceeds for use in the maintenance and repair of quarters (as both BIA and IHS had done for years). IHS looking at the same law reached the opposite conclusion. While we have heard that IHS has reconsidered this position, we have seen nothing in writing. We urge the Committee to encourage both agencies to permit such revenue to be retained and used by tribal contractors. - Procurement Standards. In the procurement management subpart of the draft, the agencies allow tribal contractors to develop their own procurement procedures in lieu of procedures provided by the Secretaries. We recommend, however, that the authority to approve such procedures be delegated to Area staff, giving the contractor the right to appeal, rather than place such authority at the Secretarial level as the April 3 draft currently provides. The regulations should also make clear that procurement procedures which have already been approved by BIA or IHS need not be approved again. Statement of S. Bobo Dean Financial Management. The regulations governing financial management contain some improvements but also need further modification to carry out the intent of the legislation. We urge that all tribal organizations be permitted to follow the cost principles for governments in OMB Circular A-87 (with specific exceptions to be included in the regulations) as to "allowable costs" since all are instrumentalities of their tribal governments (while tribal "non-profit organizations" should be permitted to elect to follow OMB Circular A-102, if they wish). This approach is followed in the April 3 draft, but we understand that the Bureau still would prefer simply to incorporate all applicable OMB Circulars (A-87, A-102, A-122, or 48 C.F.R. Part 31, as applicable). These general federal cost guidelines were not developed in the light of goals and provisions of P.L. 93-638 so they do not necessarily further its purposes. The April 3 draft includes a number of selected cost principles which would apply to principles contained in Circular A-87. For example, contractors would be allowed to depreciate the cost of federally-financed facilities owned by the tribal contractor and used in a contracted program. This provision is especially important for tribes which operate health programs in facilities constructed with federal grant funds. The clause on lobbying costs is modified to permit tribal contractors to communicate with the Congress (clearly a vital tool in the achievement of tribal self-determination). A special cost principle permits professional service costs when a tribal contractor has a dispute with the federal agency up to the point that a final agency decision is made. The April 3 draft also allows "638′′ funds to be treated as tribal funds to meet non-federal matching requirements in other federally-funded programs. These modifications will provide specific practical assistance to tribes in their efforts to realize the goals of the Act. In some areas the financial management guidelines still need clarification. It is obviously the intention that "cost reimbursable" and "fixed price" contracts should both remain available options. At the last Albuquerque conference, the draft was clarified to reflect that savings in a fixed price contract was not "program income" (and thus subject to restrictions on the use of such income) but merely part of the price paid to the contractor for the product or service. However, language needs to be added to the regulations to expressly authorize both the cost-reimbursable and the fixed-price method Statement of S. Bobo Dean of contracting and define the general circumstances in which each may be used, as the present regulations do. See 48 C.F.R. S 380.405. We The The Bureau suggests that advance payments may now be improper in the absence of Federal Acquisition Regulations which have been made inapplicable to P.L. 93-638 contracts. We cannot believe that the Congress intended to do away with such payments by exempting contracts under the Act from FAR regulations. urge the Committee to review this matter with the Bureau. elimination of "advance payments" would render selfdetermination contracting impracticable for many tribes. intent of making FAR inapplicable to "638" contracts was to give the two Secretaries the authority to develop appropriate selfdetermination regulations without being bound by FAR constraints. Certainly, the agencies have the authority to provide for advance payments to contractors in these regulations. The The financial management subpart in the April 3 draft clearly states that the receipt of program income will not otherwise reduce funding amounts from the Secretary. This provision reflects existing agency policy guidelines as well as the clear intent of section 106 of the Act. We are especially concerned that the Bureau and IHS are seeking a one-year extension of the requirement in S 102(c) of the Act which requires the Secretaries to obtain or provide general liability insurance. Ever rising insurance premiums divert scarce resources away from the service population. We urge that your Committee review carefully with the agencies the steps they have taken to comply with Section 102(c) and insist that they move ahead to provide the protection which the law requires. The April 3 draft contains useful language clarifying the scope of FTCA coverage and spelling out procedures necessary to assure its effectiveness to replace the need for IHS contractors to purchase medical malpractice insurance. We are pleased that on May 23, 1989 the Department of Health and Human Services at last gave some guidance to IHS field offices as to how this coverage works. Guidelines need to be issued promptly to tribal contractors, however, containing the procedures outlined in the April 3 draft. Secretary's Report to Congress and Budget Consultation. In enacting P.L. 100-472, Congress was keenly aware of the need to provide greater accountability by the Bureau and IHS to Congress and the Indian tribes on funding allocations and |