Piliero Mazza & Pargament, PLLC   Vol. 6, Issue 7,  July/August 2004

Addressing Tribal and Alaska Native Corporation Legal and Business Issues

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  A R T I C L E S

ASK THE ADVOCATE - Changes to DOD 's Indian Incentive Program
EMPLOYMENT - National Labor Relations Board Upsets Precedent
SMALL BUSINESS -New Rules and Proposed Regulations for HUBZone Program
SMALL BUSINESS - SBA's Office of Hearings and Appeals Releases Size Appeal Decisions


Changes to DOD 's Indian Incentive Program

How has DOD’s Indian Incentive Program changed?

Until recently, the incentive payments were not allowable if the acquisition involved commercial items. However, in Section 8021 the DOD Appropriations Act for Fiscal Year 2003, Congress authorized payments for the acquisition of commercial items produced or manufactured, in whole or in part by Indian organizations and Indian-owned economic enterprises. Further, on October 1, 2003, DOD issued an interim rule implementing regulations in accordance with the law allowing for the acquisition of commercial items if they are produced or manufactured by Indian organizations and Indian-owned economic enterprises. As of May 17, 2004, the interim rule was in its final drafting stage, and a final rule is expected to be issued soon.

What is meant by the term "Commercial Items?"

Essentially, a "commercial item" is an item or type of item offered to public and private consumers, or an innovation of the same that could be released in time to satisfy a solicitation. Further, services provided to a customer related to such an item are considered commercial items if the provider also makes similar services available to the general public. Fixed price services are also considered commercial items, but not services that are billed on an hourly basis without an associated market price. Finally, goods that are not available to the general public, but are competitively sold to governments, are considered commercial items. A more detailed definition is available in the Federal Acquisition Regulations at 48 C.F.R. § 2.101.



National Labor Relations Board Upsets Precedent

In a departure from long-standing precedent, the National Labor Relations Board (Board) has upset thirty years of precedent by holding that the reach of federal labor law extends to tribal enterprises located on reservation land. The dispute in the matter of San Manuel Indian Bingo and Casino and Hotel Employees & Restaurant Employees International Union arose when the labor union complained about being barred from organizing at a casino owned by the San Manuel Band of Serrano Mission Indians, even though the tribe permitted another union to organize there. The conventional wisdom was that if the casino was located on tribal land, then this otherwise clear violation of labor law could not be pursued for lack of jurisdiction. This decision is a surprising break from past Board decisions.

The Board has repeatedly held that location is the factor that determines whether the National Labor Relations Act (NLRA) extends to tribal enterprises, and thus gives the Board jurisdiction. Prior to this decision the law could apply, but only to an enterprise located off of tribal land. In the San Manuel decision, the Board criticizes decisions along this line, stating that those cases "…[have] been inadequate in striking a satisfactory balance between the competing goals of Federal labor policy and the special status of Indian tribes...." Though in its decision the Board does not specifically identify what particular facts or events precipitated its change in reasoning, it did point to the increasing growth and competitiveness of tribal enterprises in the broader economy. The opinion of the Board argues two main points: first, that Federal law should not have been interpreted to exempt enterprises on tribal land; second, that Federal power over such tribal enterprises exists to the extent that it does not interfere with critical issues of self-governance.



New Rules and Proposed Regulations for HUBZone Program

The Small Business Administration (SBA) has issued the long awaited final regulations governing the HUBZone program. The regulations implement changes to the HUBZone program required by the Small Business Reauthorization Act of 2000 (Reauthorization Act). The law amended, among other things, the eligibility requirements for small business concerns owned by Tribes. Because the statutory amendments required regulatory changes, the SBA not only amended the regulations to make them consistent with the law but also made substantive and technical changes to clarify how the program works.

By way of background, the SBA issued proposed rules on January 28, 2002, describing the contemplated changes to the program. According to the SBA, the agency received over 900 comments on the proposed rule. On May 24, 2004, the SBA issued the final regulations that are to go into effect on June 23, 2004. As discussed below, the final rules make some significant changes to how the HUBZone program will work.

Tribally-Owned Concerns

One of the most significant changes in the regulations concerns the eligibility requirements for Tribally-owned concerns. In accordance with the Reauthorization Act, the SBA’s final rule provides that HUBZone SBCs owned by Tribes or Tribal corporations must certify that: (1) they are owned in whole or in part by the Tribe or Tribal corporation and/or another SBC or U.S. citizen and (2) when the concern obtains a HUBZone contract, at least 35 percent of the employees engaged in performing the contract will reside within the Indian reservation of the Tribe or reside within any HUBZone adjoining any such Indian reservation.

The 35 percent employee requirement is more stringent than the requirement that applies to other HUBZone SBCs. Other eligible HUBZone SBCs can satisfy the 35 percent employee requirement by hiring employees that reside in HUBZones located anywhere in the United States. In other words, unlike Tribes, there is no requirement that they meet the 35 percent employment requirement on a specific contract or a particular location. The contract specific requirement for Tribes was established because Tribal-owned HUBZone SBCs are deemed government owned entities that, according to Congress, should be eligible to participate in the program only if they agree to advance the goals of the HUBZone program – job creation on their reservation.



SBA’s Office of Hearings and Appeals Releases Size Appeal Decisions

In early June, the Small Business Administration Office of Hearings and Appeals (OHA) issued two size appeal decisions related to businesses surpassing the size standard applicable to current contracts. As you know, current purchase order contract regulations require small businesses to certify that they are small at the time they submit a proposal including price to the procuring agency. Last year, the GSA issued a deviation from this rule to require its schedule holders to recertify at schedule renewal time. The SBA’s April 25, 2003 proposed rule requiring annual recertification on maintenance and operations contracts and GSA schedules is still pending. The conclusion we draw from these cases is that OHA believes that recertification of size is required when an agency issues an RFP to GSA’s small business schedule holders. However, recertification is not required for task orders issued under multiple award contracts.

In the size appeal of Advanced Management Technology, Inc. (AMT), OHA held that when a business makes an offer pursuant to a Federal Supply Schedule solicitation against a current contract, the offeror implicitly self-certifies as small at the time each offer is made. One week later, in the size appeal of Systems Resource Management, Inc. (SRM), OHA held that businesses need not recertify as small when bidding on a task order pursuant to a multiple award contract.




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