Effective May 9, 2022, Native tribes, workers, and businesses may face fewer hurdles when competing for federal construction projects due to several revisions the Department of the Interior has published to its Department of the Interior Acquisition Regulations (DIAR), codified at 48 CFR parts 1401-1499, to better comply with the Buy Indian Act and policies from the Biden Administration.

Shortly after entering office, President Biden signed Executive Order 13985, Advancing Racial Equity and Support for Underserved Communities Through the Federal Government. Focused on racial equity, Executive Order 13985 requires each federal agency to consider its “[p]otential barriers that underserved communities and individuals may face in taking advantage of agency procurement and contracting opportunities.”

The recent revisions to the DIAR are products of that consideration. Examining the existing DIAR, the Interior Department found that they inhibited job creation, failed to maximize economic development in Indian Country, and hampered full participation in procurements subject to the Buy Indian Act.

In an effort to respond to those issues, the DIAR revisions:

• Eliminate barriers to Indian Economic Enterprises (IEEs) from competing on “covered” construction contracts issued under the Buy Indian Act,
• Give greater preference to IEEs and Indian Small Business Economic Enterprises (ISBEEs),
• Expand IEEs’ ability to subcontract work subject to the Buy Indian Act consistent with other government socio-economic set-aside programs, and
• Update the process and thresholds for deviations.

Elimination of Restriction for “Covered” Construction Contracts

Before the new revisions, the DIAR in 48 CFR 1480.401, barred the Interior Department from “us[ing] the Buy Indian Act to give preference to IEEs through set-asides when acquiring construction that is not covered construction.” That limitation was due to the U.S. Supreme Court’s decision in Andrus v. Glover Construction Co., whereby the Court held that the Bureau of Indian Affairs had to comply with general bidding requirements when contracting to construct a road.

As the law underpinning Andrus had changed, the Interior determined when drafting the new DIAR that it no longer had to distinguish between “covered” and non-covered contracts. Instead, the Interior Department can set aside any construction contract in its jurisdiction for IEEs. The new revisions remove all references to “covered” construction throughout the DIAR and expand the construction contracts that can be set aside for IEEs.

Preference for Indian Small Business Economic Enterprises

Prior to the recent changes, 48 CFR 1480.4 only gave contracting preference to ISBEEs for commercial or simplified purchase acquisitions. With the new revisions, contracting officers (COs) will have to give a contracting preference to ISBEEs for all purchases subject to the Buy Indian Act.

The current language of section 1480.403(b) also directs COs to solicit purchases as an unrestricted small business set-aside open to firms that are not ISBEEs if the CO determines that two or more ISBEEs would not provide competitive offers and the CO has an approved deviation. The new rule deletes this language as non-compliant with the Buy Indian Act. Instead, it provides that if a CO determines there is not a reasonable expectation of obtaining competitive offers, then the CO will give priority to IEEs. The updated language also allows sole source awards to ISBEEs or IEEs authorized under the Federal Acquisition Regulation System (FAR) to be compliant with the Buy Indian Act.

Expansion of Indian Economic Enterprises’ Ability to Subcontract

Native-owned companies play an increasingly important role in the construction economy. As a result, they often subcontract certain work to non-Native entities. Former 48 CFR 1452.280-3 restricted IEEs from doing so, allowing them to subcontract no more than 50% of the work to firms other than IEEs. The Interior Department concluded that these restrictions exceeded those in other government set-aside programs.

Accordingly, the new DIAR allow IEEs to subcontract up to 75% of the work for construction by special trade contractors and up to 85% of the work for general construction, thereby providing IEEs more flexibility in project planning. These changes do not, however, affect the 50% limitation on subcontracting for supplies and services contracts.

Updates to Thresholds and Deviation Process

The existing DIAR allow COs to deviate from the requirements of the Buy Indian Act where an IEE’s offer is not competitive in price, quality, or delivery. The new revisions identify acquisitions that do not require a deviation. These include contracts that follow the requirements of FAR 6.3 or were previously subject to a deviation. Further, COs can award sole source contracts to IEEs or ISBEEs without a deviation.

COs may now approve deviations under $25,000 under section 1480.403(c). At the next tier, the DIAR formerly allowed the Chief of the Contracting Office (CCO) to approve deviations up to $550,000. Henceforth, instead, the CCO or any officer one level above the CO can approve similar deviations up to $700,000.

Conclusion

Since its passage, the Buy Indian Act’s impact has been reduced by court decisions and regulatory hurdles. In heeding the Administration’s call to consider equity in procurement, the new DIAR eases the clearing of those hurdles. IEEs and ISBEEs will now enjoy preference on more contracts. They may more freely subcontract construction work. And the process to obtain deviations will be simpler.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.