Buy Indian Act: Implementation Needs Improvement, Says GAO

The implementation of the Buy Indian Act set-aside program suffers from inconsistencies and uncertainties–including the fundamental question of whether Buy Indian Act set-asides are to be prioritized over other set-aside contracts.

In a recent report on the Buy Indian Act, the GAO uncovered a disturbing lack of effective oversight and implementation, and made several recommendations to enable the government to maximize the effectiveness of the Buy Indian Act.

First things first: what exactly is the Buy Indian Act, anyway?  If you do not do business with the Bureau of Indian Affairs or the Indian Health Service, you may be unaware of a special set-aside program applicable to these agencies.  Under the Buy Indian Act, the BIA and IHS may give reference to Indian-owned businesses when acquiring supplies and services.  The set-aside program is not available to other agencies.

The regulations implementing the Buy Indian Act establish three main criteria to qualify for the set-aside preferences.  First, an eligible company must be at least 51% Indian owned.  Second, a firm awarded a contract under the Buy Indian Act must give preference to Indians in employment and training opportunities, and preference to Indian-owned firms in the award of any subcontracts.  Third, a firm awarded a contract under the Buy Indian Act cannot subcontract more than 50 percent of the work to non-Indian firms.  Unlike the five major set-aside programs (small business, 8(a), SDVOSB, WOSB and HUBZone), a company need not be a small business to qualify for a Buy Indian Act set-aside.

When the Buy Indian Act was adopted in 1910, William Howard Taft was president and my Chicago Cubs were only two years removed from their last World Series victory.  However, Buy Indian Act regulations were not adopted for the IHS until 1975; the BIA waited until 2013.  According to the GAO, “BIA officials could not identify a specific reason as to why finalization of the regulations took so long.”

But although both agencies now have Buy Indian Act regulations in place, the program is suffering from implementation problems.  For example, neither the BIA nor the IHS has a clear policy regarding whether Buy Indian Act set-asides are to be prioritized over other set-asides.  The BIA says that Buy Indian Act acquisitions are prioritized, but “this policy is not currently documented.”  The BIA was “uncertain exactly” when a policy would be issued.

At the IHS, things are even more unclear.  IHS officials told the GAO that “the agency prioritizes awarding contracts to vendors that help the agency meet its federally mandated small business goals, and that awarding contracts under the Buy Indian Act is secondary to those goals.”  However, IHS “was unable to provide documentation related to this practice, and was only able to produce a 1995 policy that, contrary to what we were told, indicated that the Buy Indian Act takes precedence over other set-asides.”

The GAO also uncovered other problems with Buy Indian Act implementation.  For instance, the GAO determined that “BIA and IHS headquarters officials have limited insight into the Buy Indian Act implementation in the regional offices.”  Specifically, headquarters-level officials had “little knowledge about challenges to a firm’s self-certification of Indian-owned status that might have occurred at the regional offices,” and collect no data about such challenges.  “Given this lack of insight,” GAO concluded, “it is difficult for BIA and IHS officials to know whether the Buy Indian Act is being consistently implemented among the regions, or for the agencies to determine the extent to which mechanisms to implement key requirements are working as intended.”

The GAO concluded that the BIA and IHS should take several remedial steps, including to “clarify and codify their policies related to the priority for the use of the Buy Indian Act, including whether the Buy Indian Act should be used before other set-aside programs,” and improve data collection.  BIA and IHS both reviewed and concurred with the GAO’s recommendations, and indicated that positive changes will be forthcoming.  In light of the previous delays in implementing the Buy Indian Act, let’s hope those changes occur before the year 2118.

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