Government Contests Cost Payments

Government Contests Cost Payments

Carol Berry
12/26/11

Even if Uncle Sam is short on cash, the government may have to pay—or not—contract support costs (CSC) under a law designed to increase Native participation in federal services to Indian communities.

The federal government has raised the question in the context of a 10th Circuit Court decision about payments to the Southern Ute Indian Tribe of southwest Colorado.

The Supreme Court is being asked in a petition filed December 19 to hear the issue that arises when a tribe submits a proposal under the Indian Self-Determination and Education Assistance Act (ISDA) but that may or may not be approved because Congress has not authorized appropriations that would pay the tribe’s CSC.

The issue of CSC payments to the tribe despite inadequate Congressional appropriations is closely related to another government-requested hearing in a Ramah Navajo Chapter, New Mexico decision and in an Arctic Slope Native Association petition to the Supreme Court.

Rulings that a lump-sum Congressional appropriation was insufficient have created an apparent contradiction in which Indian self-determination law has encouraged tribes to take over programs and mandated full funding of CSCs but Congress then failed to appropriate enough money to pay them.

CSCs include program operational costs and indirect costs that may apply to more than one contract objective, generally calculated by multiplying the funding base by a negotiated rate.

After lengthy litigation between the government and the Southern Utes, the 10th Circuit Court of Appeals upheld a lower court that the ISDA requires full funding for contractors so long as there are appropriations for individual contractors considered separately.

When the tribe wanted to run the Southern Ute Health Center in a proposed contract in 2005, the Indian Health Service balked, contending that an appropriations shortfall conflicted with the ISDA mandate and it initially refused the request, but the 10th Circuit this year said IHS and the Department of Health and Human Services had to allow the Southern Utes to operate the clinic. The agencies are contesting the issues raised in connection with that approval.

In the Ramah ruling under government appeal December 15 to the Supreme Court, a three-judge panel of the 10th Circuit in a split decision ruled in May against the government’s contention it could not pay full CSC needs because CSC payments to other tribes had used up the entire appropriation.

“At base, the government’s argument rests on an improper conflation of more than 600 tribes and tribal contractors into one amalgamated contractor,” the court said, observing that the failure to appropriate enough funds to cover all contractors doesn’t relieve the government of liability.

Although Congress could revise the ISDA or limit appropriations on a contract-by-contract basis, “what the government cannot do is breach its contractual obligations and avoid liability based on an improper reading of the phrase ‘subject to the availability of appropriations,’” the court said.

The National Congress of American Indians in support said the ISDA “represents the cornerstone of this nation’s federal policy toward tribes for more than one-quarter of a century” and Congress subsequently found the single greatest hurdle for tribal administration of federal trust programs was the “consistent failure” of the Bureau of Indian Affairs and IHS to pay full fixed CSC’s, amounting to “partial termination of the federal government’s trust responsibility.”

Citing a split among federal circuit courts, the Arctic Slope Native Association in July asked the high court to consider whether the Federal Circuit appeals court “erred in holding, indirect conflict with the 10th Circuit, that a government contractor which has fully performed its end of the bargain has no remedy when a government agency overcommits itself to other projects and, as a result, does not have enough money left in its annual appropriation to pay the contractor.”

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