The BIA has seen fit to include a meaningful statement of policy. There can be no rational basis why such a statement could not be included in the DHEW regulations. One wonders however, why it was removed in view of the fact it was in one of the original specifications.

Recommendation.-A statement of policy be included in the very front of Part III of the proposed regulations where all DHEW employees will have an opportunity to read it. The statement of policy should make clear the DHEW support of the Act and to require its employees to support the letter and the spirit of the Act to the fullest. Furthermore it should make clear that the Secretary expects that if the regulations are not clear, that the decision be made in favor of self determination. The following Statement of Policy is recommended: "Public Law 93-638 represents the intention of the government of the United States and the people of the United States through their congress to provide a vehicle to accelerate, encourage, and assure the development of the Indian people through Indian self-determination of their destiny.

All contracting officers shall be familiar with the policy established by the Public Law quoted below:

"Sec. 3. (a) The Congress hereby recognizes the obligation of the United States to respond to the strong expression of the Indian people for self-determination by assuring maximum Indian participation in the direction of educational as well as other Federal services to Indian communities so as to render such services more responsive to the needs and desires of those communities.

"(b) The Congress declares its commitment to the maintenance of the Federal Government's unique and continuing relationship with and responsibility to the Indian people through the establishment of a meaningful Indian self-determination policy which will permit an orderly transition from Federal domination of programs for and services to Indians to effective and meaningful participation by the Indian people in the planning, conduct, and administration of those programs and services.

"(c) The Congress declares that a major national goal of the United States is to provide the quantity and quality of educational services and opportunities which will permit Indian children to compete and excel in the life areas of their choice, and to achieve the measure of self-determination essential to their social and economic well-being."

In furtherance of these objectives, the Secretary of HEW has published regulations to encourage affirmative action to provide the orderly transition of his functions and responsibilities to the Indian people. These regulations can always be interpreted in many ways. In the event of apparent or real uncertainty in interpreting any provision of the regulations, the contracting officer is to be guided by the policy that the burden must always be upon HEW whenever it intends to decline an application, reassume a program, terminate for cause, or take any action which inhibits the assumption of HEW programs or responsibilities by the Indians."

Section 103.

This section directs the Secretary to enter into certain contracts upon the request of Indian tribes. While there is discretion, it is highly controlled and subject to appeal.

However, the fact that the Act directs the award of contracts under certain controlled circumstances, cannot be read to limit the authority of the Secretary to enter into contracts on the basis of other statutory authorities, such as the Johnson-O'Malley Act, Buy Indian Act, and Snyder Act. The AFN, Inc.'s position in this regard is wholly consistent with that taken by Michael P. Gross, Esq., counsel for the Ramah Navajo School Board, Inc.

Recommendation.-Section 36.205 should be amended to read :

"Any tribal organization of any Indian tribe is eligible to apply for a contract or contracts with the Bureau to plan, conduct and administer all or parts of Bureau programs under Section 103 of the Act. When such a contract is requested by an Indian tribe, the Secretary is directed to enter into the contract, except in cases meeting declination requirements. In cases where contracts are requested by tribal organizations other than tribes, the Secretary will exercise his discretion under previous contracting authority not repealed or modified by the Act to determine whether the contract should issue."

Section 36-212. Review

I PROBLEM IDENTIFIED

The review procedure is totaly negative. It fails to reflect an effort affirmatively advise the tribal contractor of his deficiencies and provide the necessary real assistance for him to overcome the obstacles to the contract.

II ANALYSIS

The purpose of the Act is to further Indian Self Determination. It is not to establish a contract review procedure. Any Government agency can review contracts and provide causes why the contracts are refused. The Act requires that contract be awarded unless certain conditions prevail. The burden is upon the agency to make the Act successful. It may be too much to ask someone to assist the Native to take over one's job, but that is the law, and the regulations should make it extremely difficult or bureaucratic red tape to slow down the process.

However, this section does nothing to encourage the Indian that DHEW is behind the Congressional Act. It is incredible that the DHEW takes the trouble after the declination to advise the unfortunate tribal organization "promptly" of why he was rejected. How magnanimous. How supportive of the spirit espoused in House and Senate Hearings. Interestingly, there is no requirement BEFORE disapproval to notify the tribal organization in writing of the deficiencies. However, after disapproval—and after the DHEW employee has retained his employment the DHEW does advise the tribal organization in writing why his request was declined. At this time the DHEW finds themselves willing to advise the tribal organization of its rights of appeal. There should be more front end help and less rear end appeal.

It is enlightening to review the BIA coverage in their Section 401.

"(2) If it is felt that there are declination issues that must be resolved, the Area Director will notify the applicant and/or tribal governing body of this fact in writing. The notice shall include a list of the declination issues identified by the Area Director, the reason(s) for such identification, a copy of any documents used in arriving at the issues, recommendations for resolving the issues and the technical assistance available for this purpose. The notice shall also request a meeting with the applicant and/or tribal governing body, to discuss the issues and seek agreement on a course of action to resolve them. The meeting shall be held within 15 days of the applicant's and/or tribal governing body's receipt of the notice or at a time mutually agreed to by the parties."

The BIA coverage is not perfect. But it goes on and does offer many checks and balances to arbitrary, capricious, narrow headed action at the grass roots level. It represents a concept light years ahead of the DHEW coverage.

One can only conclude that DHEW and lawyers implementing the same ACT for the same class of people do not speak to each other, or that the concept of what the Congress meant when it enacted this Act has been unconscionable twisted by DHEW. Continuation of either course would be a calamity for the Indians.

Recommendation.-Section 36-212 should be rewritten to require a positive approach to assisting the tribal contractor to avoid declination.

Section 106.

Section 106 (a) provides that the Secretary, under either Sections 102 or 103 waive any provisions of any contracting laws or regulations. On the face of it, there seems to be no rationale or legislative history which supports a distinction between a waiver for contracts and a waiver for grants. Many of the same reasons for requiring a waiver under a contract are sure to also be present under a grant situation. There is every reason to believe that the exclusion of grants from Section 106(a) was oversight since, in the contractual sense, there is more similarity between the grants and contracts than there is difference.

Recommendation.-Section 106 (a) be rewritten to add the following to the present coverage for contracts:

"Grants with tribal organizations pursuant to Section 104 of this Act shall be in accordance with all Federal laws and regulations pertaining to grants, except that the appropriate Secretary may waive any provisions of such grant laws and regulations which he determines are not appropriate for the purposes of the grant involved, or inconsistent with the provisions of this Act."

Section 3-4.6013.

Clauses 47 and 48. Price Reduction for Defective Cost or Pricing Data

I PROBLEM IDENTIFIED

These clauses should not generally be applicable to the contracts to tribal contractors.

II ANALYSIS

In order to review the applicability of these clauses to the contracts under Public Law 93-638, the purpose behind Public Law 87-653 (from whence these clauses came) should be thoroughly understood. The Congress developed that Law, called the Truth in Negotiation Act," because of the wide introduction of incentive contracting into Government defense contracting. The Law spawned regulations throughout the DOD and the other Federal agencies. It is one of the most complex pricing laws on the Government contracts books. The interpretations of individual words are set forth in long cases before the administrative boards and the courts, and thousands of speeches and symposiums.

It was designed to prevent contractors from lying to the Government in order to achieve higher profits. Or at least to cause them to be more careful in the submission of data upon which the Government depended to agree to a price. Before we apply these extremely complex and bureaucratic regulations, it should be understood that the conditions under which P.L. 93-638 contracts will be awarded are different, and the motive of the tribal contractor is not the same as the normal Government contractor. The Health Authorities of the various Regions, and the AFN Health arm is not profit oriented. It does not negotiate with the Government for a contract price on the same basis that the normal Government contractor does.

The blanket application of these regulations will cause the Native tribal contractor to spend an inordinate amount of time to insure compliance for little net gain for either the Government or the contractor. The cost data being submitted for the approval of the contract is not a basis for accumulating profit. The incorporation of these clauses on a blanket basis will cause an undue administrative burden upon the Native contractor. In addition, it will place an equally unnecessary burden and obligation upon the Government auditors to insure compliance. And, finally, if after an audit it was determined that the cost and pricing data submitted by the tribe caused the DHEW to award a CPFF contract in excess of what it might otherwise have done, what then? Does HEW actually believe they would file a claim against the non-profit arm of the AFN Health arm and demand a return of the money? The funds were used for the purpose of the contract. There was no gain to the Native. If the budgeted funds under the contract were not used, then it will be carried over.

What has occurred here is the blanket application of a clause normally required by statute under unique circumstances in which that clause would not be useful. It would be wiser to issue a blanket waiver of the clause since, in most cases, it will not be applicable. During the approval cycle of the contract application, the necessity for such a clause can be reviewed in light of the specific circumstances of that particular contract. The Secretary has the total authority to waive this clause.

Recommendation.-Blanket waiver for these clauses 47 and 48 be issued by the Secretary. Furthermore, that the application procedure include a review for the need of these clauses, and if it is agreed between the parties, that only then should they be included.

I PROBLEM IDENTIFIED

There are both duplications and inconsistencies between the BIA and HEW regulations.

II ANALYSIS

There is absolutely no excuse whatsoever for placing upon the Indian the burden of administering contracts under a single law through the use of two separate agency regulations. The BIA and HEW regulations are repleat with inconsistencies. Advance payment and reassumption are just two examples. They approach the implementation of the Law differently and obviously reflect a different understanding between those two agencies of the intentions of the Congress.

Many years ago each of the military services had their own procurement regulations. They differed greatly both in form and substance. These differences

greatly increased the cost of contract administration by Government contractors. These increased costs were ultimately paid the Government. In 1960, under Mr. McNamara, a project was started to eliminate the separate agency regulations and provide Government contractors and the Department of Defense with a single regulation. This was done, and the results still exist today. Without that single regulation, procurement as accomplished today in the Department of Defense would be virtually impossible and the increased cost to the Government would be in many millions.

It is our considered opinion that the reluctance to develop a single regulation stems primarily from HEW. HEW is apparently requiring the regulations which implement the Act to conform generally to the larger part of the HEW operational responsibilities. This is contrary to the Act.

In order to be responsive to the intentions of the Congress, there is no alternative but to develop a single regulation. If it can be done within the Department of Defense, there is hope that HEW can do the same.

Recommendation.-That HEW vigorously support the establishment of a formal working group to develop a single regulation to implement the Act. The exact composition and objectives of the group will be included in the final AFN, Inc. paper and Statement to the Committee.

Section 36.203. Amendment of Regulations

I PROBLEM IDENTIFIED

The revision process of these regulations is much too slow and bureaucratic, particularly in view of the quality of the proposed rules.

II ANALYSIS

Consultation with the Indian tribes is a useless exercise in futility as was proven during the formation of these regulations. The process involves the expanding of countless hours within HEW to develop draft regulations and specifications, all of which have intense ego value to the particular person or persons who write them. Then, after they have been written, the Indian is provided an opportunity to comment. He is at a disadvantage, not only because he may lack the technical sophistication of the regulation writers but also because he has not been privy to the logic (assuming some existed) that went into the proposed regulation.

It is apparent to even the most casual observer that the BIA and HEW regulations must be merged unless it is the purpose of the Administration to defeat the intention of the Act. To do this, there must be more than "consultation," whatever that maens. Success in developing a new regulation demands the active day-to-day participation by Indians or representatives of Indian interests at the very time that the first pencil is laid to paper. If that is not done, we shall end up two years from now with another regulation debacle.

Recommendation.-Immediate action must commence to consolidate the HEW/

BIA regulations.

Section 36.216. Waivers

I PROBLEM IDENTIFIED

There is no Provision for advising the Native why his request for waiver may not have been approved.

II ANALYSIS

The Act makes it clear that it is the intention of the Congress that contracts under this Act are something special. As a rule, in regular government contracting, there is a heavy burden upon the sophisticated contractor and contracting officer to obtain a regulation waiver from any senior staff, be it DOD, or HEW. That should not be the case here.

Tht requirements to support the waiver are not objectionable, but the section should be amended to include a requirement upon the Secretary to justify in specific detail why he did not grant the waiver, if in fact that is his action. Furthermore, a request for waiver is often involved with an immediate request for a contract. Therefore there must be a limitation of the time in which the Indian tribal organization must wait for a reply. Under no circumstances should the time for approval or refusal of the waiver exceed 30 calendar days.

Recommendation.-Amend Section 36.216 as follows

The Secretary shall specify in precise detail the reasons why he may have chosen to decline a request for waiver, either in whole or in part. A request for waiver not replied to within 30 calendar days will be assumed to have been granted.

Section 3-4.6013.

Clause 10. Subcontracting

I PROBLEM IDENTIFIED

The clause requires an excessive degree of DHEW involvement in subcontracting.

II ANALYSIS

The subcontracting clause is the regular clause used by the Government and DHEW in the FPR. It requires approvals on all subcontracts over $1,000 and in certain cases over $200. This will place an unnecessary burden upon both the Government and the tribal contractor. It appears to be much more cost effective to leave approval levels as a matter to be determined by negotiation or during the approval of the contract request. The approved level for subcontract approvals should depend upon such variables as the type of contract, and the skill level of the procurement people of the tribal contractor. It also should depend upon the dollar value of the prime contract. In some cases it may be appropriate to gear subcontract approval levels to a percentage of the prime contract rather than to a basic dollar figure.

The basic problem with this entire clause is that the DHEW failed to tailor it to the purpose behind the Act and the regulations. DHEW has provided the Indians with the same clause that it uses with its other contractors throughout the Federal Government. It represents the predisposition of the DHEW to avoid any special contractual approach to the P.L. 93-638 contracts.

One of the primary results of the low approval level requirement is the assurance that the approval authority will not run out of work. He will have a great deal of paper work to review each day on which he cannot possibly make any meaningful decision. There is very little one can analyze about a $1,000 subcontract which will provide you with sufficient information to disapprove it. However one can develop a very time consuming bureaucratic task out of subcontract approvals.

Paragraph 10(e) is the normal government disclaimer of any responsibility with respect to the approval of subcontract clauses. However the DHEW is cautioned to review a recent Comptroller General decision. Optimum Systems, Inc. which develops somewhat the relationship and responsibility of the Government with respect to the subcontractor. It is clear in the relationship intended by the Act, that the tribal contractor stands in a different relationship with the Government that the normal government contractor. The same will be true with the tribal contractor's subcontractor.

It is error to merely use a standard government contracts subcontract clause when the total relationship between the parties is substantially different. It is not immediately known what the impact of that might be upon government liability in a wide range of circumstances, but it is worth exploring immediately. Until that time, it is suggested that the CPFF tribal contractor has a much closer agent relationship with DHEW than the normal contractor. The approval of the subcontract by DHEW, notwithstanding the disclaimer could be important in terms of liability.

Recommendation. That upon the approval of the proposed regulations, separate committees be established to develop a subcontracting clause which is practical in view of the Act and the contracting involved. In the interim period, the $1,000 figure should be raised immediately to $50,000.

Section 36.206. Tribal Clearance Initial Contract

1. PROBLEM IDENTIFIED

No blanket renewal provision.

II. ANALYSIS

In the past, the Indian Health Service has been contracting with designated Regional Health Corporation as well as the Regional Non-profit Association which have been delegated by the Profit Corporations to address Health and