IHS Issues Final Rules Implementing the Buy Indian Act

On January 13, 2022 the Secretary of the Department of Health and Human Services (HHS) issued its Final Rule governing the implementation of the Buy Indian Act (Act). This rule clarifies the preference for Indian-owned and controlled businesses and removes barriers by alleviating unnecessary regulatory burdens. If you’re a frequent visitor to our blogs, you may be thinking, “wait what, didn’t you just blog about this last November?” Actually, the subject of the blog about the Buy Indian Act from November was the proposed rules governing the Buy Indian Act issued by the Department of Interior (DOI) covering procurements of the Bureau of Indian Affairs (BIA). HHS’s Final Rules issued on January 13th  (Final Rule) supplement and amend regulations guiding implementation of the Buy Indian Act for procurements by the Indian Health Service (IHS).

Given the long scattershot implementation of the  Buy Indian Act, how the Act it is applied to different agencies, the multiple notices of proposed changes to the Buy Indian Act, along with the general decentralized structure of procurement regulations, it can all be a bit confusing. A bit of background may help to put it all in context.

Application of the Buy Indian Act

The Buy Indian Act Authority was passed into law in 1910. The Buy Indian Act provided the Secretary of the Interior, Bureau of Indian Affairs (BIA),  the authority to set aside procurement contracts for Indian-owned and controlled businesses. The Buy Indian Act originally applied only to the DOI (which houses the BIA).

In 1955 the Public Health Service under the Transfer Act of 1954 (Transfer Act) moved health care from BIA to the Department of Health Education & Welfare and established the IHS. The Transfer Act authorizes the Secretary of HHS to ‘‘make such other regulations as he deems desirable to carry out the provisions of the [Transfer Act]’’. The Secretary’s authority to carry out functions under the Transfer Act is vested with the Director of IHS.

The BIA and IHS are the only agencies allowed to use the set-aside program under the Buy Indian Act. This differs from some other government set-aside programs.

The 2020 Buy Indian Act Amendment

In 2020 Congress passed the Indian Community Economic Enhancement Act of 2020 (ICEE) that sought to expand contracting opportunities under the Buy Indian Act. ICEE amended the Buy Indian Act to expand the scope of the authority of the DOI and HHS to make acquisitions subject to the set-aside preferences under the Buy Indian Act. To apply this authority, ICEE directs the Secretaries of DOI and HHS to create regulations to implement the objectives of ICEE and to “harmonize the procurement procedures of the Department of the Interior and the Department of Health and Human Services, to the maximum extent practicable.”

Prior to ICEE, the Buy Indian Act provided very little detail as to how Indian set-aside procurements were to be conducted. The extent of the direction included in the Buy Indian Act is a provision which states to “[s]o far as may be practicable Indian labor shall be employed, and purchases of the products (including, but not limited to printing, notwithstanding any other law) of Indian industry may be made in open market in the discretion of the Secretary of the Interior.”  25 U.S.C. § 47. The provision proved to be much more aspirational than directive.

DOI Rules

In response to the ICEE directive, the DOI issued its proposed rules to revise and supplement Department of the Interior Acquisition Regulations (DIAR) and  Federal Acquisition Regulation (FAR). As discussed in detail in the earlier blog, the rules addressed barriers identified as limiting Indian owned business from fully participating in DOI procurements. The DOI’s proposed rules are pending adoption and final comments on the proposed rules were due on December 27, 2021.

IHS Rules

Now we’re back where we started. The Final Rule is the IHS’s response to the ICEE directive from Congress. Since the IHS and BIA are the only two agencies authorized to utilize the Buy Indian Act, an overall objective of the Final Rule is to align IHS’ processes with those of the DOI. The goal being to ensure uniformity of the procurement process for offers submitted by Indian owned businesses under solicitations set-aside under the Buy Indian Act.

The Final Rule revises and supplements the FAR and the HHS Acquisition Regulation (HHSAR) and has ten main components:

1)    Alleviates unnecessary regulatory burden on Indian Economic Enterprises;

2)    Expands application of the Buy Indian Act to all construction including the planning, design and construction of health care facilities, personnel quarters, and water supply and waste disposal facilities;

3)    Conforms language of the Buy Indian Act in its acquisition policies and procedures to better align with the BIA to provide consistent implementation and transparency for Indian-owned and -controlled businesses.

4)   Includes definitions to identify the requirements of the parties for eligibility for preferences under the Buy Indian Act. For example:

Indian Economic Enterprise (IEE) means any business activity owned by one or more Indians or Indian Tribes that is established for the purpose of profit provided that: The combined Indian or Indian Tribe ownership must constitute not less than 51 percent of the enterprise; the Indians or Indian Tribes must, together, receive at least a majority of the earnings from the contract; and the management and daily business operations of an enterprise must be controlled by one or more individuals who are Indians.

An “Indian Small Business Economic Enterprise (ISBEE) means an IEE that is also a small business concern established in accordance with the criteria and size standards of 13 CFR part 121.”

5)    Strengthens oversight of the Buy Indian Act to reduce the potential for fraud and abuse;

6)    Clarifies the preference for granting Indian Economic Enterprises Buy Indian Act set-aside awards ahead of other small businesses.

7)    The Final Rule also provides for tiered priority for set-aside purchases by IHS, similar to the small business Rule of Two or VA Rule of Two.

First, “[t]he CO will give priority to ISBEEs for all purchases, regardless of dollar value, by utilizing ISBEE set-aside to the maximum extent possible.” The CO may consider the ISBEE for either a set-aside or as sole source award.

After market research, if the CO determines that “there is no reasonable expectation of obtaining offers from two or more ISBEEs that will be competitive in terms of market price, product quality, and delivery capability.” If not, then the CO may consider an IEE for either a set-aside or as sole source award.

If, after market research,  the CO determines that there is no reasonable expectation of obtaining two or more offers that will be competitive from ISBEEs and/or IEEs, then the CO follows the Deviation process included in the Final Rule.

8)    The Final Rule provides for subcontracting limitations for ISBEE and IEE set-asides by incorporating FAR 52.219-14, Limitations on Subcontracting. Also, all awards to ISBEEs and IEEs will be subject to the Indian Economic Enterprise Subcontracting Limitations provided in the Final Rule.

9)    The Final Rule applies the Buy Indian Act  to “all acquisitions, including simplified acquisitions, made by IHS” and HHS purchases on behalf of IHS. However, the Buy Indian Act may not be used to obtain services through the Purchased/Referred Care program (healthcare services referred to providers in the private sector.)

10)  The rule also requires the IHS to update its internal Indian Health Manual in support of the Buy Indian Act to provide for specific processes with respect to deviations, challenges and how IHS will report on the Buy Indian Act contract activities.

There is no certification process under the Buy Indian Act regulations. An Indian-owned or tribal-owned firm self-certifies that it qualifies as an IEE in its response to set a-side procurements.

The Final Rule becomes effective March 14, 2022.


The collective effect of the DOI and IHS supplements to the Buy Indian Act regulatory structure is the elimination of many bureaucratic impediments for Indian owned businesses. The changes should open doors to new opportunities for these businesses, encourage new partnerships, and generally make the process easier for all involved. The coordination of the rules will also bring the procurement process under the Buy Indian Act closer to the standards for other set-aside programs.

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