Piliero Mazza & Pargament, PLLC   Vol. 5, Issue 1  January 2003

Addressing Tribal and Alaska Native Corporation
Legal and Business Issues

The articles shown here are excerpts -- if you'd like to subscribe to Tribal Advocate, please contact Susan Brock at (202) 857-1000 or at   

  A R T I C L E S


New and Proposed Regulations Affecting Government Contracting

An Analysis of Certain Procurement Aspects of the Homeland Security Act of 2002

ON THE HILL - Legislative Update

SUPREME COURT - Supreme Court Hears Oral Arguments in Two Tribal Trust Cases


New and Proposed Regulations Affecting Government Contracting

Traditionally, agencies issue new and proposed regulations at the end of the year.  This year, the Bush Administration has issued several proposals that will impact government contractors.  Some are final rules, while others while are proposed rules and open for comment.  All merit the government contractor's attention.

DOD's Final Rule on Section 803 - On October 25, 2002, the Department of Defense issued new regulations implementing Section 803 of the National Defense Authorization Act of 2002, requiring DOD to promote competition in the purchase of services under multiple award contracts (MACs).  The new regulations apply to task orders over $100,000 issued under MACs, including GSA Multiple Award Schedule contracts, as well as multiple award indefinite quantity task order contracts.  The rule also applies to orders placed by non-DOD agencies on behalf of DOD, although it does not apply to architect engineering services, which are governed by FAR Subpart 36.6.

For GSA Schedule buys, the regulations require DOD contracting officers to conduct more comprehensive market research to "reasonably ensure" that offers will be received from at least three contractors.  Accordingly, the DOD contracting officer must contact as many schedule holders capable of doing the work "as practicable."  If at least three responses are not received, the contracting officer must be able to show that reasonable efforts were used to contact all schedule holders. 

The new regulations also require that orders using Macs be awarded on a "competitive basis," and that the contracting officer provide to all contractors " fair notice of the intent to make the purchase," as well as the basis upon which the selection will be made.  The contracting officer must also give all responding contractors a fair opportunity to submit an offer and to have that offer fairly considered.  Finally, when awarding MACs, the rule requires contracting officers to keep submissions to a minimum, to use streamlined procedures and consider past performance on earlier orders under the contract, including quality, timeliness and cost control.


An Analysis of Certain Procurement Aspects of the Homeland Security Act of 2002

On November 25, 2002, President Bush signed into law the Homeland Security Act of 2002 (Act), creating the new Department of Homeland Security (DHS).  This new agency will rank fourth in discretionary spending, with an expected budget of $37.5 billion for Fiscal Year (FY) 2003 and authority to enter into Other Transactions (OTs), personal service contracts and simplified acquisitions.

President Bush has often stated that, "in the war against terrorism, America's vast science and technology base provides us with a key advantage."  Accordingly, one of DHS'  To accomplish these goals, Section 831 of the Act authorizes the new DHS Secretary during a five-year period to carry out basic, applied, and advanced research and development projects through OTs.  The importance of OTs is that they are not subject to traditional government procurement statutes or regulations, including the Federal Acquisition Regulations (FAR), the Competition in Contracting Act and the Federal Acquisition Streamlining Act.

However, the House Report accompanying the Act suggests that Congress may not be using the term "OT" in its traditional sense.  In particular, the report reveals that Congress' intent in providing DHS with the OT authority was to allow the Secretary " streamlined procedures . . . for the acquisition of goods and services that the Secretary determines are essential to the Department's mission of fighting terror."  The House report explains further that OT authority "would provide the Secretary with enchanced, but specifically defined, flexibilities while maintaining adequate safeguards." This statement, however, is inconsistent with other OT authority, which is for the acquisition of basic, applied and advanced research and development (R&D), not goods and services.  In fact, Section 831 of the Homeland Security Act specifically states that DHS can only use an OT "after making a determination that the use of a contract, grant, or cooperative agreement for such project is not feasible or appropriate."  Accordingly, there is confusion as to whether Congress intended DHS to use OT authority as a deviation from FAR for the acquisition of goods and services or as it is meant to be used in acquiring andvanced R&D.



Legislative Update

Prior to its adjournment in late November, Congress passed several bills of interest to tribes that were signed into law by President Bush.

On November 13, 2002, President Bush signed S. 1210, a bill to reauthorize the Native American Housing Assistance and Self-Determination Act of 1996.   Sponsored by Senator Ben Nighthorse Campbell of Colorado, this bill reauthorizes block grants, federal loan guarantees, training and technical assistance, and the Indian Housing Loan Guarantee Fund through fiscal year 2007. 

The Homeland Security bill, H.R. 5005, was signed by the President and became law on November 25, 2002.  The law, as passed, includes Indian tribes, authorized tribal organizations, Alaska Native villages, and Alaska Regional Native Corporations within the definition of the term “local government.” 

On December 13, 2002, President Bush signed S. 2017, a bill to amend the Indian Financing Act of 1974 to improve the Indian loan guarantee and insurance program.  Also sponsored by Senator Campbell, this new law increases from $100,000 to $250,000 the amount of loans insured by the Bureau of Indian Affairs that a lender can offer to a borrower.  Among a host of other things, this law pledges the full faith and credit of the United States behind Indian loan guarantees and loan insurance.



Supreme Court Hears Oral Arguments in Two Tribal Trust Cases

On December 2, 2002, the Supreme Court heard oral arguments in two cases appealed by the government from the Federal Circuit Court of Appeals dealing with the federal government’s trust responsibility towards Indian tribes.   By taking arguments in both cases on the same day, the Court may be seeking a means to set forth a new standard that will define the nature and limitations of the government’s ongoing trust responsibilities to tribes. 

These cases follow two Supreme Court decisions from the early 1980’s, United States v. Mitchell, 445 U.S. 535 (1980) (Mitchell I) and United States v. Mitchell, 463 U.S. 206 (1983) (Mitchell II).  According to Mitchell I, the government holds title to Indian land allotments as a “bare trust” without management responsibilities.  Under Mitchell II, the government acts as a fiduciary when statutes and regulations require government management of Indian resources and land for the benefit of tribes.  Under these decisions, which framed the testimony on December 2, government liability to tribes for monetary damages depends on the existence of a fiduciary relationship.

In United States v. Navajo Nation, the government has appealed the Federal Circuit Court’s holding that the Secretary of the Interior violated common law and statutory fiduciary duties in acting to benefit the Peabody Coal Company to the detriment of the Navajo Nation.  The Secretary had suppressed a decision of the Interior’s Board of Indian Appeals that would have increased the royalty rate on a coal lease agreement between the Navajo and Peabody to 20 percent.  Unaware that this decision had been made in their favor and facing economic pressures, the Navajo agreed to a royalty rate of 12.5 percent.  The Court found that the Secretary failed to follow the Indian Mineral Leasing Act by not obtaining the maximum return for the Navajo’s mineral resources.


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